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BA Deere
Honored Advisor

Goldman warning on interest rates

Yup, after we were suckered into going into debt up to our eyeballs now they raise interest rates.  

 

https://www.msn.com/en-us/money/savingandinvesting/goldman-something-strange-is-happening-with-the-u...  

 

 

America's budget deficit and unemployment rate are heading in opposite directions — something that's never happened during post World War II peacetime and could cause a significant jump in interest rates

Goldman Sachs projects, for instance, that the 10-year Treasury note could be yielding 3.6 percent next year.

The deficit increase is coming due to the recent barrage of fiscal stimulus from Congress, including a $1.5 trillion tax cut approved in December 2017 and a $1.3 trillion spending bill aimed at keeping the government operating through the end of the fiscal year.

Normally such moves would come as in the early stages of an economic recovery. The U.S. economy, though, is in the eighth year of its post-financial crisis expansion, middling as it has been.

The unemployment rate is now at 3.9 percent and falling, while the budget deficit was at $668 billion in 2017 and is expected, according to the Congressional Budget Office, to top $1 trillion by 2020. That's a dual phenomenon that is highly uncommon in the U.S., according to Goldman economists.

The chart below shows that the only time since World War II that the deficit has risen while unemployment has fallen was during the Korean and Vietnam wars. An expanding economy normally would help drive down the deficit, but that hasn't been the case as government borrowing continues to grow.

a close up of a map© Provided by CNBCSource: Department of Labor, Office of Management and Budget, Goldman Sachs Global Investment Research 

To meet the growing debt load, the U.S. will have to issue more bonds at a time when the Federal Reserve is no longer a player in the market. 

More supply and fewer buyers will mean the government will have to pay investors more to buy U.S. debt. And that will mean higher interest rates.

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15 Replies
lsc76cat
Veteran Advisor

Re: Goldman warning on interest rates

It's the drunken sailor's version of fiscal conservatism.

Sorry - didn't mean to offend any sailors out there.Smiley Wink

Spoiler
 
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sw363535
Honored Advisor

Re: Goldman warning on interest rates

Or it is ............"we'll punish those ***** waving America first voters one way or another."

 

Time to ask the fed who they want us to vote for?

 

Or maybe just go ask one of the big bank CEO's who they would like to have in control?

 

Or maybe.............. The chickens are coming home to roost after the 14 trillion fling of lunacy.

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sw363535
Honored Advisor

Re: Goldman warning on interest rates

The unemployment rate is too manipulated to provide information.  he % of population on food, disability, welfare, and child care assistance would be a more indicative line.  

Also add the national debt line........ or just the annual interest on national debt payment line.....

 

 

Here is my wager........

 

In the next ten years we are going to see the federal government and its media support, put on an amazing blitz campaign to convince the public that the national debt does not actually exist.

And interest rates need to rise substantially. (the ultimate economic death and handout to the investment rich technology and international banking wealth)

 And a campaign against "nationalism" that will rival our former campaign against "the church"....... and blame national pride for the deaths of billions and billions of good "innocent" people of the world over the centuries.

 

 

just a guess  when I am sitting around thinking where can the ignorance go from here.

 

 

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clayton58
Veteran Advisor

Re: Goldman warning on interest rates

SW,  are you always a glass half empty guy?  Or is it just the reality of the last couple years setting in?  You have a bleak outlook... Unfortunately, give the countries trajectory the last 10 years,  I cannot come up with a good argument to refute that view. Wish I did.Oh well, in 10 years I can turn the farm over to the kids, and sponge of them .  OR NOT!!!

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k-289
Senior Advisor

Re: Goldman warning on interest rates

Clayton  -  10  years  from  now -  will  be  an  interesting  decade - - -

 

Hierarchy  requires  mega  $$$$$  to  keep  their  thirst  for  prominence  afloat  - mega,  different  arena  then  the  past  century  decades - - -

 

Stag - Flation  is  rewriting  history  with  the '' foundering ''   expert -ism  we  hear  about  in  today's  world ,  maybe ? ? 

 

OR  Not ,  good  point - - -          

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sw363535
Honored Advisor

Re: Goldman warning on interest rates

Nail on head........ Clayton.  Sorry I don't want to be that way but at least until that cloud west of us gets here ......... I am just sick of being in this "forsaken" position of extreme this followed by extreme that.  2 dry land crops in the last 8 years and  3 hail,  1 heat damaged, and 2 years of fumonicin damaged corn in 8 irrigated years.

 

I appreciate your comment...... I'll work on it....

 

 

It will be hard when it comes to federal bureaucracy because that glass is less than half full and leaking in 3 places.

 

 

 

I promise............. 

 

 

 

 

 

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clayton58
Veteran Advisor

Re: Goldman warning on interest rates

Radar shows a cloud west of you now.  Hope it blesses you with lots of moisture!!  I agree with you about fed govt.  That is not most peoples definition of draining the swamp

k-289
Senior Advisor

Re: Goldman warning on interest rates

BA  seems  they  forgot  to  high lite  a  couple  of  peaks  on  the  graph  ?  ? 

 

An  interest  rate  graph  might  have  been  useful  als0 -  expertism  maayyybbbeee   ?  ?

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BA Deere
Honored Advisor

Re: Goldman warning on interest rates

Hey K-289, here is the Fed Funds rate..2009 it`s zero all the way until summer of 2016 then it starts creeping up.   Looks to me like the powers that be really, really wanted the president who was in office those years to succeed.   But now, it`s "make to one in office have the hardest row to hoe possible". 

 

 

http://www.fedprimerate.com/   

 

But Look at that 7 years of flat 0%!

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