Slow Growth for US Interest Rates

US Interest Rates Will Continue to Rise

In the US, the Fed was sharply raising rates.

So we expect a substantial depreciation premium on US interest rates.

US bankruptcy rates are already up 33 over four years ago.

What accounts for staggeringly high rates in the US and Latin America?

Frankly, higher US personal saving rates would not be a bad thing.

But, even under floating exchange rates, the US retained an advantage given that the dollar remained the key global reserve currency, the US could finance large external deficits at very favorable rates.

The difference between Chinese and US saving rates has been growing for decades.

This enabled US banks to profit by offering low rates of return to foreign lenders while forcing foreign borrowers to accept high interest rates.

If it falls 40 against the yen sometime in the next ten years, US long term interest rates should be four percentage points higher than Japanese rates. If it falls 60 against China s currency, the yuan, sometime in the next ten years, US long term interest rates should be six percentage points higher than Chinese rates.

Homicide rates in the US are roughly five times higher than in northern Europe.

Today, the US Treasury can still borrow unlimited amounts at rock bottom interest rates.

But interest rates on US Treasury securities are very low and are not rising.

Nevertheless, the US is able to borrow at dramatically lower interest rates than Greece can.

At current market exchange rates, the European Union is now larger economically than the US.

There could also be strong pressure from the US Congress not to raise interest rates.

Inflation and interest rates in Japan lately have been even lower than in the US.

First, while the US Federal Reserve continued hiking short term interest rates, long terms rates did not increase in tandem, which allowed housing prices to continue rising.

Back then, Europeans complained that low interest rates in America were driving global inflation now low US interest rates are blamed for driving irresponsible asset price booms.

The US Federal Reserve, for example, is aggressively cutting interest rates to forestall a possible recession.

In the US, demand has not recovered, despite almost three years of near zero interest rates.

This would drive up interest rates in the US and, ultimately, could trigger the dollar s collapse.

Within a couple years, interest rates on long term US Treasury notes could easily rise 3 4 , with interest rates on other governments paper rising as much, or more.

Education Rates, Attendance Rates and Drop Out Rates

The US can finance these deficits in the short term in fact, interest rates on US Treasuries have recently fallen to record low levels.

The US is not the only country with very low or negative real long term interest rates.

It also lowered long term interest rates in the US and made monetary conditions there more expansionary.

Does that mean that these developing countries should raise their interest rates far more than the US?

Yet financial markets are not pricing dollar depreciation and a rise in long term US interest rates accordingly.

However dubious Bush s actions may have been on both counts, interest rates on US public debt actually fell.

None of these measures served to restore US economic growth rates or correct the surpluses of America s competitors.

Floating exchange rates were supposed to prevent countries from manipulating their currencies, but, by accumulating large quantities of US treasury bills, East Asian countries, especially China, kept their exchange rates artificially low.

Birth Rates and Fertility Rates

Most countries that reduced their corporate tax rates have followed this path, while the US has done the opposite.

Even when we look at core inflation, real interest rates in the US are still deep in negative territory.

The policy implications outside the US and Japan, where rates are close to zero, are that central banks can safely cut policy rates and continue aggressive liquidity support operations with little risk of inflation.,..

Easy access to guns in the US leads to horrific murder rates relative to other highly educated and wealthy societies.

Even if the US Federal Reserve continues to lower interest rates, lenders will not rush to make more bad mortgages.

NEW YORK With interest rates near zero, the US Federal Reserve and other central banks are struggling to remain relevant.

Since 2009, quantitative easing (QE) by the US Federal Reserve has resulted in record low interest rates around the world.

The US Federal Reserve promised to hold down longer term rates, but its commitments in that direction now seem ineffective.

Reduced rates of return will lower investment rates.

Because the US Federal Reserve and other central banks have driven their short term interest rates close to zero, they cannot lower rates further in order to prevent deflation from raising the real rate of interest.

Fortunately, the market consensus concerning the dollar s inevitable rise as US interest rates increase is almost certainly wrong, for three reasons.