Tuesday, September 22, 2015

The Fed Yields To Market Forces Just Like Everyone Else

A Yellen lead Fed faces a puzzle that makes Greenspan's conundrum look like child's play in comparison. The world, obviously with access to the Fed's ear, is urging them not to raise rates to protect a large, highly-connected contingent of debtors that borrowed heavily in US Dollars (USD). If the USD continues higher, foreign debtors borrowing in USD to save money, lose big.

Domestic interests - savers, pension funds and insurance companies represent the other side of this puzzle. They desire higher rates to avoid growing insolvency created by an increasing number of emerging market defaults.

Market forces will force the Fed to hike rates when interest rates rise as confidence in governments issuing debt falls as the economy declines.

Headline: A divided Fed pits world's woes against domestic growth

NASHVILLE, Tenn (Reuters) - Federal Reserve policymakers appeared deeply divided on Saturday over how seriously problems in the world economy will effect the U.S., a fracture that may be difficult for Fed Chair Janet Yellen to mend as she guides the central bank's debate over whether to hike interest rates.



Market-driven money flow, trend, and intermarket analysis is provided by an Insights key.