Raising Interest Rates is a Good Thing
Investors everywhere are flocking to the land down under. With a 13 week high and the strongest it has been vs the dollar and the euro, the Australian dollar is poised to gather all investors of the world. With a continued policy toward raising interest rates, the Australian Central Bank is set to stabilize its economy, eradicate unemployment and create an attractive environment for investors.
“The trend is still positive for Australia and jobs growth is still there, so interest rates will remain on the way up,” said Jim Vrondas, a manager at the online foreign-exchange dealer OzForex Ltd. in Sydney. “There’s a slight upside bias in the short-term” for Australia’s dollar, he said.
Swaps traders bet yesterday that the Reserve Bank of Australia will raise its benchmark rate by 1.17 percentage point over 12 months, from 89 points on March 5, according to a Credit Suisse AG index. The Reserve Bank of Australia raised the benchmark rate March 2 and Assistant Governor Philip Lowe said March 10 that the nation’s economy will expand at or above its average pace over the next couple of years.
“Upward pressure on interest-rate expectations in the wake of the decision suggests policy makers expressed more confidence in the economic pick-up than anticipated,” New York-based Todd Elmer and London-based Michael Hart, strategists at Citigroup Inc. wrote in a note to clients yesterday. The bank expects the RBA’s next increase in June with one percentage point of advances by year’s end.
Benchmark interest rates are 4 percent in Australia and 2.5 percent in New Zealand, compared with 0.1 percent in Japan and as low as zero in the U.S., attracting investors to the South Pacific nations’ higher-yielding assets. The risk in such trades is that currency market moves will erase profits. – Bloomberg
With a continued policy of 0% interest rates, the U.S. federal reserve private bank is determined to destroy all investment in the U.S. No other conclusion can be surmised from such action. While the populous screams for higher interest rates, the fed continuously ignores the clamor and refuses to raise interest rates. Meanwhile no one questions why a central bank should even be able to manipulate a clearly market driven phenomenon. The fed continuously voices its dedication to keeping housing prices overblown at current levels, and not to fall. Yet all of its actions are set to tumble the prices. They are determined to not let the market determine the true value of home prices. But, their stranglehold cannot staunch the inevitable. Everyone refuses to admit that home values are drastically inflated, still even after the slight slump they have taken.
Why are home values even mentioned? The entire U.S. economy and the baby boomer retirement is dependent on home values remaining inflated. While everyone mentions the housing bubble, no one is willing to let the bubble burst. Just like the dot com bubble was not allowed to completely burst or more accurately, the bubble was shifted, to avoid notice, so too is the housing bubble being avoided from true investigation and real discussion.
Tied to the housing bubble is the USD value. It is being dragged, kicking and screaming along with real estate value. Commercial real estate defaults and foreclosures have just begun to surface. They are going to dwarf the housing bubble to such a degree, so as to render it a mere fraction in comparison. If the dollar is tied to it, it will be the end of the fiat currency.
Run to the Australian dollar. Their central bank, while just as corrupt and ponziish as the federal reserve, have at least their countries best interest, somewhat at heart. Perhaps it is their distance from the Rothschilds. Who knows?