Traders, Yellen's speech yesterday suggested that the Fed will raise rates. I am not so sure I agree. Here are 4 reasons why the Fed won't raise rates
- The decline in the velocity of money would will not allow for higher rates
- A rise in rates puts upward pressure on the US dollar and that would negatively impact US exports and put downward pressure on pricing.
- The amount of re-leveraging that has taken place in recent years would be negatively impacted by a rise in rates.
- Global growth is not overheating - in fact it is moderating/slowing down to some degree. There is no bubble in growth - only in asset values.
The Fed has been wrong on so many things in recent years - I simply do not put much faith in anything they say or forecast at this time.
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