What American Interest Rates Mean for the World Economy

20.12.2016 • Central Banks

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Guest Contributor – Wealth Protection Today (Germany) –

The time of the zero interest is over! We are in a historically important phase, which is barely reported in the mainstream media. After a long time, the American bank has again turned its interest rate and will probably do it again in 2017. In Germany as well, interest rates creep slowly and quietly upwards. Without being noticed by anyone. All this has tangible consequences for us savers and consumers. And fatal impact on the global economy.

 

In Germany the interest rate sheet has been used

So far, little has been reported. Interest rates have risen sharply in recent weeks. Just a few months ago we spoke about negative interest rates. Who borrowed his money from the federal government, had to bring money.

 

Meanwhile the sheet has turned. Interest rates on 10-year Bunds have risen from – 0.2% to 0.4%.

 

A dramatic increase. What does this mean for us consumers and savers?

Quite simply, money becomes more expensive. Anyone who wants to borrow money has to dig deeper into their pockets. Whether it is consumer loans, car financing or installments. The dream of your own home is also becoming more expensive. Building or real estate loans leave a deeper hole in the monthly checkout than half a year ago. Since there are large sums of money in the sale of real estate, interest rate increases of half a percent can be quite painful.

 

The money saved finally brings money back

On the other hand, the investment is also more interesting. Whoever lends his savings, for example to a bank, receives a higher interest rate. The downward spiral could also be stopped in many plant products.

 

The constant lowering of the minimum interest rate for life insurance policies is thus once over. This is a very important signal for insurance companies that would otherwise have been in a state of misery sooner or later.

 

In the US, a dangerous spiral threatens

There are, however, major dangers for the global economy. In the US, the bank raised interest rates again. In 2017 further steps will follow. There is a great danger that the economic stimulus programs and the “We make America great again” by Donald Trump will fuel the economy too strongly.

 

Therefore, overheating can occur within a very short time. As a result, interest rates should be raised rapidly and dramatically. The economy and inflation are thus to be braked. A dangerous spiral that causes great tensions and imbalances. A scenario that I consider to be quite realistic dear readers.

 

Higher interest rates are hard to cope with Europe

This wave of interest rate hikes could also swiftly go to Europe. The big problem is that many countries in the EU are so heavily indebted that they can not bear much higher interest rates. The result would be the collapse of individual countries and then the Eurozone. While the Americans can live with higher interest rates, the chaos would break out in Europe from a certain level of interest rates.

 

Dear readers, the times of extremely low interest rates are over. We are in an interest raising cycle. Also in Europe. Money becomes more expensive. The money saved finally brings money back.

 

Caution when purchasing real estate

If you are planning larger purchases now, you might want to start. Also buying a property can lead to a higher load in half a year.

However, be very careful. Prices have risen dramatically over the last three years. Anyone who now buys too expensive has a low interest rate, but a property that is perhaps less valuable in two years than now. Right now it is particularly important to find the right property at a reasonable price.

-Read more at www.pronomio.de (German)-

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