“You can’t stop a train that’s being fueled by cheap money,” as the Federal Reserve keeps its target interest rate near zero, said Mike Farr, president of the portfolio-management firm Farr, Miller & Washington. “We still have a day of reckoning ahead, but that day is being delayed for now.”
The portfolio manager is conflicted. He WANTS to believe that inflation is on its way and that cheap money is bad. But he also sees that the stock market is improving.
Not sure why I’d trust a portfolio manager. They were the ones who invested in CDOs and MBS in the first place.
I’m ready for higher interest rates. My money market fund paid a 0.01% dividend in November. Even my checking account paid a bigger dividend! Banks are obviously getting free money that they loan out at grossly inflated interest rates, which is one reason the stock markets are doing so well.
if you think mortgage defaults are a problem now, wait until interest rates start climbing. a financial armageddon…