In advance of the FED’s next big rate hike meeting and the current bank crisis, let’s look back at history to what we’ve seen happen before with necessary sharp rate increases.
This week’s series of bank troubles can be traced to quick changes in fed rates which were necessary to fight inflation.
We have gone from 14 years of near-zero fed funds rate to now being 4.5% and probably higher after next week’s meeting.
Anytime there is a move that sharp it’s going to cause serious financial pain as we get adjusted.
But this is child’s play compared to the 80s when During the Volker era we saw a peak fed funds rate of 20, can you imagine if we got to these numbers now?
The point is anytime we see rate hikes go up high like this in a short amount of time we are going to our economy struggle and in turn metal prices go down because the dollar gets stronger.