Swiss Central Bank Delivers Third Straight Rate Cut by 25 basis points to 1%. Really!

Will a new era of too cheap money begin again fueling the next financial crisis? Most likely other central banks will follow like lemmings!

A 1% interest rate on money is ridiculous! The real interest rate again is is zero and/or negative!!!!

How many more times will the lessons of economic history and economics be ignored! As an economist myself, I can only despair!

Even the otherwise level headed Swiss people can not resist foolishness in this respect!

Swiss Central Bank Delivers Third Straight Rate Cut - WSJ "The Swiss National Bank lowered its key rate to 1% from 1.25%, having cut borrowing costs by the same amount in June"

Bank of Israel cuts interest rate for the first time since early 2020. What will other central banks do next?

Will this move trigger a downward trend of interest rates in other countries?

"... The Bank of Israel Monetary Committee ... announced this afternoon that it is cutting the interest rate by 0.25% to 4.5%. ..."

Bank of Israel cuts interest rate - Globes This is the first interest rate cut in Israel since March 2020, as the Bank of Israel Monetary Committee seeks to support the war-hit economy.

Why So Many US Companies Are Going Bankrupt. Higher interest rates

Very recommendable! The long period of ultra low interest rates was reckless and irresponsible! Loading up on debt was cheap for too many businesses.

Even private hospitals are affected via private equity investments.

Russia raises interest rate to 13% as economy struggles

Not all is well in the empire of Putin the Terrible!

China trims key lending rate as new data shows flagging recovery

Is this the first major global economy to reverse the rise in central bank interest rates? But a very special interest rate and not by much! What kind of signal might this be?

"China cut a key lending rate on Thursday to lower borrowing costs, as property sales and industrial production weaken while youth joblessness deepens.

The People's Bank of China announced it is trimming the rate on 237 billion yuan ($33 billion) worth of one-year, medium-term lending facility loans to banks by 10 basis points to 2.65%, from 2.75%."

China trims key lending rate as new data shows flagging recovery - Nikkei Asia Property investment down 7.2% in first five months, youth joblessness rises

Fed raises rates by 0.75 points for third time in a row. A comment

High inflation is what you get when cheap money lasts for too many years!

Western central banks were irresponsible and reckless when the kept short term interest rates at ultra low or even negative levels since about 2008! I have blogged about this situation multiple times before!

Plus, the ultra low interest rates facilitated and incited massive government borrowing and spending at low cost!

Now, Western central banks are in a rush to raise interest rates amid a looming recession. What a great timing! Had they acted years ago, this would have been avoided!!!!

These facts were well known to most economists, but few have publicly protested and educated the public!

Fed raises rates by 0.75 points for third time in a row | Financial Times

Mortgage Rates Hit 5.78%, Highest Level Since 2008

On top of a tightening labor market and rising inflation, this sure will hurt American consumers and home owners!

With an economic incompetent demented and senile 46th President it can only get worse!

"The surge from 5.23% last week marks the largest weekly increase since 1987."

Mortgage Rates Hit 5.78%, Highest Level Since 2008 - WSJ Fed’s moves to raise rates and wind down its purchases of mortgage-backed securities push up mortgage rates

Two decades of cheap money in Western countries finally begets inflation

I have blogged here multiple times over the years about the insanity of keeping short and long term interest rates artificially low for two decades. Short term interest rates hovered at around zero percent. This was unprecedented in recent history!

Private savings were discouraged! People bought real estate or stocks!

All loans were cheap. In particular, Western governments loaded up on debt! Central banks eagerly bought government debt by the billions year after year.

Cheap money for about two decades has come home to roost! Most economists should have known it, but few were warning about it!

The federal funds rate and U.S. long term government bond yield are representative for the short term and long term interest rates in other Western countries as well!

South Korea Raises Interest Rates, First Developed Economy in Asia to Do So During Pandemic

Good news! Perfect timing just shortly before the famous Jackson Hole Economic Symposium starts (8/27/2021), one of the most important meetings of dozens of central bankers etc. from around the world.

Since the financial crisis of 2008, many Western central banks have engaged in a reckless and irresponsible extreme low interest rate policy! Cui bono?
Western governments were able to cheaply pile up government debt! With normal interest rates, the interest payments would have eaten up a larger and larger share of public expenditure!

Hundreds of millions of savers were punished by not earning any interest on their savings!

South Korea Raises Interest Rates, First Developed Economy in Asia to Do So During Pandemic - WSJ Delta variant disrupts supply chains, but policy makers see rising household debt and inflation as bigger threats

Zinswende in Asien: Die Bank von Korea erhöht den Leitzins von 0,5 auf 0,75 Prozent Kurz vor der Zentralbank-Tagung im amerikanischen Jackson Hole setzt Koreas Zentralbank ein geldpolitisches Zeichen. Trotz erneut steigenden Corona-Infektionen verteuert sie Geld.

Grafik: Gibt es überhaupt noch Zinsen?

Der helle Wahnsinn einer unverantwortlichen und ruecksichtslosen staatlichen Zinspolitik! Diese hat Ende 2000 in den USA angefangen.
Wer sind die groessten Schuldner und Vorteilnehmer? Politiker jeder coleur!

Grafik: Gibt es überhaupt noch Zinsen?





U.S. Federal Funds Rate from 1954-2019