CNBC’s Take on How Higher Interest Rates Will Affect You

It’s not wrong, but it might be more fundamental than this (original story click here).
Uh, what about the facts that:

  • A LOT of asset pricing has been largely based on the idea that if asset prices decline, then it has been presumed that the Fed will act. Unpopular opinion alert: this is not yet anywhere close to fully reflected in the price of financial assets.

  • If interest rates are higher, then the cost of borrowing will increase to everyone, and borrower #1A? US government. Those of somewhat-educated in macroeconomics know that the government purchase of its own securities has been very, very weird, almost surreal.

Landing the plane isn’t going to be easy, and note that what isn’t anywhere in here? Ukraine. Perhaps it is that Ukraine has simply been a catalyst to make people somewhat more aware of the fact that we are addicted to low interest rates. As stated in an earlier newsletter, “Withdrawal Can Be Worse Than The Addiction (click here).”