Rates Up?

Unprecedented low rates in the USA are about to be raised by, what I suggest could be 0.1%. These should have been raised years ago - specifically when the economy in the USA started to recover before stumbling again in 2011.  Now, they are raising rates because they are raising rates.  They have to do it, or face a world of forever-low rates that will pervert the economy and trigger a never-ending wave of building and collapsing bubbles.  Had they raised rates in 2010, they would have built policy room to respond to a slow-down that lasted from 2011 to 2013.

They are saying that the rise in rates is warranted by the recovery in the US economy. The recovery is a fraud, perpetrated to cover five years of policy incompetence culminating in the rise in rates that they will put in place today.

Consider...reported over the last week...

New York State manufacturing has been declining for five straight months...


The Producer Price Index is trending NEGATIVE.  Yes, they have messed this up so badly that they have no choice but to raise rates, but they are doing so when there is an indication of actual deflation.  This has NEVER happened.

Retail sales are trending down...even with free money...

Business inventories are rising, suggesting a very slow retail market...again, even with free money...

GDP growth is now a very tepid 1.5 - 1.8%.  Hardly an indicator of significant growth.

What will they point to as the rational for raising rates?  Jobless claims look good - anything under 300,000 a week represents economic expansion...

But, this is true if you ignore the one in seven Americans who are living on food stamps, which is what the vast majority will do.

Yes, they have to raise rates - right into a looming recession.  Hang on!