There

 

isn't any "may" in this equation.

Fed’s interest rate hikes may mark start of tough new economic climate

"Decades of falling rates give way to higher borrowing costs and new math for investments"

"The U.S. central bank also launched a high-stakes test of the economy’s ability to shed its dependence on limitless credit and tolerate higher borrowing costs for consumers, businesses and the government."

(Good luck with that, its a catch 22 any which way we go, we have to do it but we cant afford it.)

"For 40 years, the formula for U.S. economic growth has been the same: cheap money. Consumers could borrow easily to buy homes and cars. Companies, whether profitable or not, could tap bond investors for cash to fund their operations. And Washington could afford to bail out both Wall Street and Main Street by running eye-popping budget deficits made possible by borrowed funds.

Whenever the stock market wobbled — beginning with the 1987 crash — the Fed rode to the rescue by slashing rates and flooding markets with cash.'

(Not the next time it wobbles it wont, it wont be able to)

“It’s just a completely different environment,” said Eric Winograd, senior economist with AllianceBernstein in New York.

"As the economy adjusts, more tumult lies ahead. Consumers, already feeling the pinch of higher prices, will pay more for credit card balances and auto loans. The least creditworthy companies will struggle to raise money needed to hire and expand. And Uncle Sam will face tens of billions of dollars in higher annual interest bills.

(Thats your road map for what lies ahead.)

"The total value of debt considered “distressed” by S&P Global Ratings has nearly doubled over the past month to $49 billion, including securities from companies such as Rite Aid and Bed Bath & Beyond, as investors demand higher yields from such risky issuers."

"The federal government, which spent freely during the pandemic, will also feel the sting of higher rates. Annual interest on the national debt will reach $399 billion this year, according to the Congressional Budget Office."

"But that estimate assumes that the government will pay 2.1 percent to borrow money from long-term bond investors. If instead the yield on the 10-year Treasury security this year averages its current 3.25 percent figure, taxpayers would pay an additional $32 billion in interest, according to the nonpartisan Committee for a Responsible Federal Budget."

"The added interest costs from higher rates alone is more than the combined annual budgets for NASA and the National Park Service."

"Rates began falling in the early 1980s after Fed Chairman Paul Volcker vanquished years of double-digit inflation by raising borrowing costs to previously unheard-of heights. Over the next two decades, the end of the Cold War and economic reform in China brought a massive increase in the global supply of labor and capital, pushing rates down further. Aging populations also contributed to the decline by increasing total savings."

"More recently, financial crises led to painful recessions that the Fed sought to remedy by lowering borrowing costs to near zero."

"But the period of near-zero rates that followed the 2008 crisis and lasted almost without interruption until this year bred financial excess: companies with chronic financial losses that stayed alive thanks to periodic infusions of inexpensive loans; novel investment structures designed to evade regulatory scrutiny; and trendy stocks that rode a wave of public enthusiasm before crashing against financial reality."

"With risk-free savings offering paltry returns, investors flocked to these higher-risk alternatives."

("...companies with chronic financial losses that stayed alive thanks to periodic infusions of inexpensive loans" Zombie companies, and there's tons of them, they are staying alive just to be able to pay the interest on their loans, not to make any $.  It was all just a house of cards and its all about to come crashing down.)

“There was a lot of froth that needed to come out of the markets as a consequence of ultralow rates, which distort the allocation of capital,” said Neil Shearing, chief economist for Capital Economics in London."

"Easy money also lifted the value of assets — which benefited those who already owned some, thus widening inequality. The wealthiest 1 percent of Americans own 54 percent of all stocks and mutual fund shares, up from about 44 percent when the Fed first dropped interest rates to zero, while the poorest half of Americans now own a smaller share, according to Fed data.

(Revelation 6:6

Then I heard what sounded like a voice among the four living creatures, saying, “Two pounds of wheat for a day’s wages, and six pounds of barley for a day’s wages, and do not damage the oil and the wine!” The rich get richer, the poor get starvation wages and continue to get poorer, tell me that's not happening.)

"Even as the Fed vows to raise rates steadily over the next year, some doubt its ability to pilot the $24 trillion U.S. economy back to what Fed Chair Jerome H. Powell last week called “more normal levels” of interest rates and keep it there.

(Yup, some...me included)

"The Fed’s latest projections call for its key lending rate, which was near zero as recently as March, to rise to 3.4 percent by the end of this year and 3.8 percent by the end of 2023, which would be the highest levels since 2008.

(Again with the not telling you why we cant hit 4%. And it wont touch inflation (3.4% that is), because supply shocks are driving it, not overheated demand.)

“This is an economy that is set up for much, much lower interest rates,” said Ajay Rajadhyaksha, global chairman of research for Barclays. “I do not think we will get to 3.8 percent.”

(And again with the not telling you why everything stops just short of 4%. Why? Cause they know what happens, you should too)

"The Fed’s aggressive, if belated, rate hikes are slowing the economy more quickly than policymakers appreciate, he said. That weakness will eventually force Powell to reverse course."

(No, not the rate hikes, gas prices due to lack of refining capacity and sanctions on Russian energy were slowing the economy way before the interest rate hikes, now consumers have both to deal with)

"After the 2001 and 2007 recessions, the Fed cut rates by more than 5 percentage points to spur growth. But once it dropped its key rate near zero and held it there for seven years starting in late 2008, officials warned that such aggressive measures would not be possible in response to future recessions."

(Came to the same conclusion on my own when I was researching about quantitative easing Translation: The can has been kicked down the road as far as it can be.)

"The unusual recovery from the pandemic recession overwhelmed those concerns. Trillions of dollars in federal stimulus, coupled with the impact of supply chain snarls and the war in Ukraine, combined to drive inflation to a 40-year peak of 8.6 percent."

(Covid did exactly what our creator wanted it to do, bring us to our knees and hopefully see the age we are about to enter into.)

"Powell, who was late to recognize the inflation threat last year and was surprised again last month at how quickly prices rose in May, acknowledges the road ahead is unclear.

“No one knows with any certainty where the economy will be a year or more from now,” he told reporters last week."

(I've heard that line before, the, "No one knows what the future holds" line. I'll flat out say it again, some of us know certain parts of it. In particular, one of us who said that we would print to much $ and it would lead us to run away inflation and that the central banks don't have answers to the situation Covid put us in because it hits both the supply and consumer sides of the economy at the same time and said both of those things two years before it all came to fruition by the power of the Holy Spirit resting on him, yeah, he might just know with a high degree of certainty where the economy is going to be in less than a year. I'll show ya...

God speed everybody.