YOUR MONEY

Sanity starts to Return

Wednesday, December 16, 2015, will go down in history as the official end to almost 8 years that History will describe as a moderate Depression. 

Yes, Depression.  

For almost 8 years US interest rates (and those throughout the Western World)  have been near ZERO to prop up an economy in rigor mortis and only now is the US on a recovery roll.

The  psychological moment and tipping point has arrived and soon all governments and countries will have no option but to follow suit and raise interest rates or have trillions of dollars currently hoarded by corporations, Sovereignty funds and other Wealthy flee to the USA.

It's capitalism 101.

So why am I happy with rising interest rates?

Even if the prime goes to 4 or 5 percent -- which is the historic norm -- it will keep company and union pension plans solvent as they must hold vast sums in cashable accounts to pay out retires; and are currently in the RED.  The same with national pension plans which may run out in the near future at near zero percent interest rates. 

Same with Insurance companies and annuities.

And those who have saved money over the years and been losing money  held in their bank accounts (thanks to monthly fees) or near zero investments will again be rewarded for their frugality and "saving for a rainy day" or retirement. 

Put simply, with over  25% the population now over age 65 and pensionable seniors in Western countries and Japan and China– with long lives still ahead of 20 years or more --  raised interest rates are essential so governments and companies and insurers can continue to supply the necessary ‘safety nets’ that sooner or later we all need.