Fed’s Yellen wants to increase interest rates–a disaster for the USA?

US Federal Reserve Chair Janet Yellen is again proposing a raise in interest rates:

November 17, 2016

Federal Reserve Chairwoman Janet Yellen on Thursday reiterated that an increase in short-term interest rates “could well become appropriate relatively soon,” and offered no new signals about what the central bank will do at its meeting next month. …

“Were the FOMC [Federal Open Market Committee] to delay increases in the federal-funds rate for too long, it could end up having to tighten policy relatively abruptly to keep the economy from significantly overshooting both of the Committee’s longer-run policy goals,” Ms. Yellen told the Joint Economic Committee in her prepared remarks. “Moreover, holding the federal-funds rate at its current level for too long could also encourage excessive risk-taking and ultimately undermine financial stability.” http://www.wsj.com/articles/feds-yellen-rate-increase-could-become-appropriate-relatively-soon-1479387604

Now, because interest rates have been artificially low because of actions by the US Federal Reserve, raising interest rates is logical.

But because the USA accumulated more debt than it ever should have, this puts the USA at major risk when interest rates rise.

Notice two items there were posted elsewhere yesterday:

The Fatal Flaw in Trump’s Economic Plan…

Does Trump’s economic plan carry the seeds of its own demise?

Trump’s blasted Janet Yellen and the Fed for keeping interest rates artificially low. But if he’s going to spend over $1 trillion on national infrastructure over the next decade, he might have to whistle a different number…

The Fiscal Times reports the findings of the Committee for a Responsible Federal Budget. Those findings show that if 3-month Treasuries rise to about 4% by 2018, and if 10-year Treasuries rise from today’s 2.24% to roughly 5.2%, “interest payments on the federal debt will soar to $505 billion in 2018.”

That’s $282 billion higher than last year. The point being, debt doesn’t seem to matter… until it does. University of Chicago finance Professor John Cochrane:

Here’s the nightmare scenario: Suppose that four years from now, interest rates rise 5%, i.e., go back to normal, and the U.S. has $20 trillion outstanding. Interest costs alone will rise $1 trillion (5% of $20 trillion) multiplying already unsustainable deficits! This is what happened to Italy, Spain and Portugal. Don’t think it can’t happen to us. It’s even more likely, because fear of inflation — which did not hit them, since they are on the euro — can hit us.

Macro economist Richard Duncan is a Daily Reckoning contributor. Bear in mind Richard’s a boomer for quantitative easing and ultra-low rates. But he says in no uncertain terms that interest rates must not be allowed to rise to normal levels. Richard recently fired off a letter of advice to President-elect Trump. From which:

You have… been elected at a time when the global economy is in grave danger of collapsing into a depression, one from which it might not recover for decades — if ever… If interest rates go up significantly, the bubble will pop and the New Great Depression will begin. One wrong move on your part and the economy will spiral out of control into a depression. It won’t be short and sharp like 1921. It will be long and devastating like 1929–1945.

One wrong move doesn’t allow much wiggle room. Richard says Trump can’t impose trade tariffs or cut taxes, which are both planks of his agenda. They’re both inflationary in Richard’s estimate. And inflation will bring higher interest rates…

Tariffs would drive up the price of imports and fuel inflation. https://dailyreckoning.com/fatal-flaw-trumps-economic-plan/

What’s Trump’s stand on interest rates and taxes?

Trump has been quoted on occasions expressing his views on the country’s current interest rate levels. Most of those times he has indicated that the current interest rate levels are very low for no genuine reason and that they should be increased. While he appears to have since softened his stance, there is no telling that once he is inaugurated he won’t make those changes.

This could have devastating effect on economy if not done cautiously, especially considering his plans on taxation. Trump has expressed that he intends to lower taxes. That does not go down well with his plan to impose trade restrictions on foreign countries especially ones that contribute significantly to the national debt.

How could this affect the American citizens?

Taxation and debt are sources of revenue for the country, so if you cut down taxes and impose measures that could reduce funding from foreigners via debt while at the same time increasing interest rates—it could cause an economic meltdown.

That would mean squeezing money out of the economy which for the one and only good reason would boost inflation. However, as many credit monitoring experts would say, the impact on citizens may not be as positive. http://www.marketoracle.co.uk/Article57217.html

Yes, the USA will again get high inflation.

Yet, the time will come when the USA will face problems worse than high inflation.

While Donald Trump did not accumulate the approximately $20 trillion in USA debt, that debt exists before his presidency even starts.

The Bible teaches that debt accumulation will be far worse than even many pessimists believe. Here is an end-time prophecy given to the prophet Habakkuk by God over 2600 years ago:

2 And the Lord answered me:

“Write the vision;
make it plain on tablets,
so he may run who reads it.
3 For still the vision awaits its appointed time;
it hastens to the end—it will not lie.
If it seems slow, wait for it;
it will surely come; it will not delay.

4 “Behold, his soul is puffed up; it is not upright within him,
but the righteous shall live by his faith.

5 “Moreover, wine is a traitor,
an arrogant man who is never at rest.
His greed is as wide as Sheol;
like death he has never enough.
He gathers for himself all nations
and collects as his own all peoples.”

6 Shall not all these take up their taunt against him, with scoffing and riddles for him, and say,

“Woe to him who heaps up what is not his own—
for how long?—
and loads himself with pledges!”
7 Will not your debtors suddenly arise,
and those awake who will make you tremble?
Then you will be spoil for them.
8 Because you have plundered many nations,
all the remnant of the peoples shall plunder you,
for the blood of man and violence to the earth,
to cities and all who dwell in them. (Habakkuk 2:2-8; English Standard Version)

The USA is the most indebted nation in the history of humanity and those in it should try to understand this prophecy. Perhaps it should be noted that when I checked last week, the United Kingdom was listed as having the second highest amount of total debt (about 1/2 that of the USA).

The Anglo-American world order will come to an end. Accumulation of debt, and then having to pay historically ‘normal’ interest rates will strain the national economies of the USA and UK more than almost anyone will believe.

Those who think the current world order with the USA’s dollar on top will last through the end of this century are in error.

Those who will believe the Bible will take the words that God spoke to the prophet Habakkuk seriously.

Some items of possibly related interest include the following:

America’s Day of Reckoning 2017 Dollar Collapse? Economist James Dale Davidson says that a financial bloodbath will hit the USA and there is nothing that Washington can do to stop it. He claims that at least 57 nations have gotten together to dethrone the US dollar as the world’s reserve currency. He claims this can happen any day or in a few months. He mentions China, Russia, the AIIB, and gold. He claims his track record in predicting massive shifts in the past should assure people that he is right about this. He claims that there will be massive unemployment, near elimination of social security benefits, and more. Is James Dale Davidson possibly right on any of this? Dr. Thiel goes over many of his claims and explains what the Bible shows related to the coming collapse of the US dollar. This is a video.
Collapse of the Euro and Dollar? War in 2020? Larry Edelson of Money and Markets described aspects of current economic difficulties and explained why he felt matters would get a lot worse. He said war, like World War III, could break out as early as 2020. What did he call the ‘granddaddy of all cycles”? Will matters go as he said? What does the Bible teach? Dr. Thiel provides biblical insights that secular sources often miss. This is a video.
Anglo – America in Prophecy & the Lost Tribes of Israel Are the Americans, Canadians, English, Scottish, Welsh, Australians, Anglo-Saxon (non-Dutch) Southern Africans, and New Zealanders descendants of Joseph? Where are the lost ten-tribes of Israel? Who are the lost tribes of Israel? What will happen to Jerusalem and the Jews in Israel? Will God punish the U.S.A., Canada, United Kingdom, and other Anglo-Saxon nations? Why might God allow them to be punished first? Here is a link to the Spanish version of this article: Anglo-América & las Tribus Perdidas de Israel. Information is also in the YouTube sermons titled Where are the Ten Lost Tribes? Why does it matter? and British are the Covenant People. A short YouTube of prophetic interest may be Barack Obama and the State of the Apocalypse.
Will the Anglo-Saxon Nations be Divided and Have People Taken as Slaves? Will the lands of the United States, United Kingdom, Canada, Australia, and New Zealand be divided? What about Jerusalem? What does Bible prophecy teach? Are there non-biblical prophecies that support this idea? Who will divide those lands? Who will end up with the lands and the people? Here is a link to a video titled Will the USA and other Anglo-nations be Divided and Their People Made Slaves? Here is a related item in the Spanish language ¿Serán divididas las naciones anglosajonas?
British are the Covenant People What do ‘British’ and ‘Britain’ mean in Hebrew? Are the descendants of the Anglo-Saxons people of the covenant? Does the British royal family connect to the throne of David? What does the Bible teach? What does history show us? Is there any DNA evidence related to British-Israelism? When did Christianity make it to the British Isles? Could Jeremiah have made it to the British Isles? What type of Christians made it to the British Isles? Did the last King of England believe in British Israelism?
When Will the Great Tribulation Begin? 2016, 2017, or 2018? Can the Great Tribulation begin today? What happens before the Great Tribulation in the “beginning of sorrows”? What happens in the Great Tribulation and the Day of the Lord? Is this the time of the Gentiles? When is the earliest that the Great Tribulation can begin? What is the Day of the Lord? Who are the 144,000? Here is a version of the article in the Spanish language: ¿Puede comenzar la Gran Tribulación en 2016 o 2017? ¿Es el Tiempo de los Gentiles? You can also see the English language sermon videos: The Great Tribulation from the Mount of Olives and Can the Great Tribulation begin before 2020? A shorter video is: Can the Great Tribulation Start in 2016?
Protestant and Church of God views of the United States in Bible Prophecy Is the USA mentioned in Bible prophecy? Some Protestants say yes, while others say no. What does the Bible really teach? Learn the truth about this. There is also a video available: Is The United States Mentioned In Bible Prophecy?
Physical Preparation Scriptures for Christians. We all know the Bible prophecies famines. Should we do something? Here is a version in the Spanish language Escrituras sobre Preparación física para los Cristianos.
The Plain Truth About Gold in Prophecy. How Should a Christian View Gold? What do economists and the Bible teach about gold? Gold and silver may drop in value. Inflation/deflation? What do Christians need to know about gold?
Who is the King of the North? Is there one? Do biblical and Roman Catholic prophecies for the Great Monarch point to the same leader? Should he be followed? Who will be the King of the North discussed in Daniel 11? Is a nuclear attack prophesied to happen to the English-speaking peoples of the United States, Great Britain, Canada, Australia, and New Zealand? When do the 1335 days, 1290 days, and 1260 days (the time, times, and half a time) of Daniel 12 begin? When does the Bible show that economic collapse will affect the United States? Here is a link to a video titled: The Future King of the North.
The Gospel of the Kingdom of God This free online pdf booklet has answers many questions people have about the Gospel of the Kingdom of God and explains why it is the solution to the issues the world is facing. Here are links to three related sermons: The World’s False Gospel, The Gospel of the Kingdom: From the New and Old Testaments, and The Kingdom of God is the Solution.
Donald Trump in Prophecy Prophecy, Donald Trump? Are there prophecies that Donald Trump may fulfill? Are there any prophecies that he has already helped fulfill? Could a Donald Trump presidency be apocalyptic? A related video is titled: 13 Ways President-Elect Trump is Apocalyptic.