Why The Fed Will Have To Raise Interest Rates

The prospects of the Federal Reserve remaining on track to raise interest rates later this year are still settling in yet people fail to grasp that raising rates will be bullish and it will confirm the capital flows are moving into the USA. We have a serious divergence between the USA and Europe. Not merely is the USA the best situated from the problem of the graying of society, but the lower taxes in the USA remain key as well as the fact that FATCA does not apply in reverse.

Foreign citizens can come to the USA and open bank accounts without a problem, Americans cannot leave the country with the same privilege. So the capital inflows are pointing straight to the USA and as real estate on the high end and stocks look good, more and more capital will travel into the USA. The Fed will be accused of creating the bubble since the domestic press will never understand the complexity of the world economy as a whole. So the Fed will be blamed for creating a bubble both from the media (rich are getting richer) and from Congress.

Meanwhile, there are growing concerns that financial woes could engulf Spain in addition to Greece. Higher interest rates for the world’s largest economy could lessen the the likelihood of economic survival among the allure the emerging markets and add to the problem of Europe going negative. Everything so far appears to be shaping up for a Phase Transition in the USA. That will baffle most and will place the maximum amount of pressure of Asia and Europe. By the time we get to the other end, they will be calling for a one world currency – watch.