posted on Aug, 15 2013 @ 08:29 PM
Mortgage rates jumping more than a point has ended the house price boom in California according to the latest numbers.
Do the math buyers were looking at houses priced $10,000 to $30,000 higher when 30 year interest rates were 3.1%.
If the recovery gets derailed by these higher interest rates the Fed could respond by lowering the prime rate from 3.25% like these other countries
Netherlands 3.18 31 Dec 2011 est.
Canada 3.00 31 Dec 2011 est.
Taiwan 2.88 31 Dec 2011 est.
Switzerland 2.72 31 Dec 2011 est.
Finland 2.68 31 Dec 2011 est.
Japan 1.48 31 Dec 2011 est.
I know I know the Fed is devoted to low inflation, we have forever stamps now that guarantee we will never ever see any inflation again even though
historically double digit inflation is pretty common.
So the media will be reporting a derailed recovery after a major stock market correction before the Fed reluctantly lowers interest rates and allows
inflation to occur.
Actually Young college graduates carrying large student loans would flourish from wage inflation in an overstimulated economy. And nowadays fixed
income adjustments kind of sort of keep up with inflation.
If real inflation is 5% and bond yields are 4.5% people still buy bonds rather than keep their cash in the sock drawer.