FOMC Meetings Are Irrelevant

by Jeff Nielson
Bullion Bulls Canada

For more than 7 ½ years, the Federal Reserve has been promising to normalize U.S. interest rates. That was the initial promise, back at the end of 2008. Most people in the Western world have forgotten what “normal” means with respect to interest rates, after the past 7 ½ years of monetary insanity.

In general terms, normal interest rates mean rates in the range of 3 – 5%. However, given the extreme levels of indebtedness across the Western world, and the elevated level of “risk” associated with such obvious insolvency, a “normal” interest rate for these regimes would be more in line with a rate of 6 – 7%, if not higher. The financial joke here is that if any of the Western world’s Deadbeat Debtors did raise their interest rate to a rational level of 6 – 7%, that regime would be quickly bankrupted by (at least) a quadrupling of interest payments, on their gargantuan debt.

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