I am guessing you don't do a lot of investing, or at least do your own investing. That's ok, most people don't, and thus they don't understand the damage the Fed has done with their massive money printing, or more appropriately, their increase of money supply thru phantom money saving.
Read this short article and it will clear up the confusion you are having.
How Does The Fed Control Interest Rates In A Free Market?
Even
as recently as 2007, banks were paying 4% interest. Now you have to go to the hundredth decimal before you find your interest rate. We have the Federal Reserve’s manipulation of the bond market to blame for this change.
I am guessing you don't do a lot of investing, or at least do your own investing.
I do lots of investing.
That's ok, most people don't, and thus they don't understand the damage the Fed has done with their massive money printing,
What damage have they done?
Read this short article and it will clear up the confusion you are having.
What confusion do you feel I'm having? Be specific.
Even as recently as 2007, banks were paying 4% interest.
Yes. And?
We have the Federal Reserve’s manipulation of the bond market to blame for this change.
No we don't. Weak growth and low inflation is the cause. Banks aren't lending because of increased capital requirements. Low demand for new loans means lower rates on deposits.
Ok, believe what you want. How you can think the money printing the Fed has been doing has had no effect on interest rates is silly. Increase the supply of money and the cost of money goes down, Econ 101.
Maybe you should let Janet Yellen know she can't influence long term rates, because she believes she can and has.
How Central Banks Cause Financial Crises
The leaders of the world's largest central banks don't seem overly alarmed by the risks that unconventional monetary policy poses.
Janet Yellen, in a speech at the Economic Club of New York in March, assured investors that the Fed could, if necessary, "put additional downward pressure on long-term interest rates and so support the economy" by using "forward guidance about the future path of the federal funds rate and increases in the size or duration of our holdings of long-term securities."
I gotta ask, are you fully invested in this stock market, have you been buying bonds over the last 10 years? If so, you have done well. The question is will you know when to sell those bonds and those high flying stocks.
Ok, believe what you want.
I just want you to back up your claims.
How you can think the money printing the Fed has been doing has had no effect on interest rates is silly.
What effect did it have? What did rates do when they stopped printing?
Increase the supply of money and the cost of money goes down, Econ 101.
I thought printing too much money caused inflation and rising rates? Econ 101.
Maybe you should let Janet Yellen know she can't influence long term rates,
Influence? Sometimes. Control? Not so much.
are you fully invested in this stock market,
Pretty much.
The question is will you know when to sell those bonds and those high flying stocks.
Slowly, in retirement.
Interest rates are artificially low because of the Fed, the stock market is near all time highs because there is no other place to get a reasonable return (TINA), the bond market has become an exercise in the greater fool theory, that being "I willl buy this bond now and hope rates go down and a bigger fool will buy it from me". Stocks are poised to fall back when the market sentiment inevitable changes, and investors realize the valuations are too high in a slow/no growth environment. When this will happen is anybodies guess, but the longer it takes, the more violent it will be. All this is caused by a hubris central bank that believes they can avoid natural downturns thru monetary policy.
The Fed is robbing savers by not raising rates. It makes it impossible for them to get a reasonable return on their money. Those in retirement are hurt the worst.
"I thought printing too much money caused inflation and rising rates? Econ 101."
Printing money will cause inflation. That is why stocks, real estate and bonds are so expensive, read bubbles. Printing money does NOT raise rates. You really don't think that excessive supply leads to higher cost, do you?
Next, that “injection” of $2 trillion of new money meant that there was a lot of money sloshing around in the financial markets. Some of that new money was invested in bonds, which pushed up the price of those bonds. When bond prices rise, their yields (or the interest rate the bonds pay) fall. Therefore, the creation of paper money by the Fed pushed interest rates lower. Consequently, the cost of mortgages, car loans and other consumer credit all fell. Lower mortgage rates kept home prices from dropping even further than they have; and lower interest rates on consumer credit supported consumer spending (and therefore the GDP).
You might want to read what some very big and successful investors are saying.
These three investing legends are warning of another crash
I hope you have at least some hedge in place against a falling market. Hey, it's your money, do what you want, but every investor is a genius in a market moving up.
Read Marc Faber, Bill Fleckenstein and Fred Hickey if you want a perspective from somebody other than your stock broker.
Good luck, I hope your retirement nest egg is protected.
