Ian King: The Effects of Interest Rates on the Economy

Ian King is an individual who has considerable experience in the financial industry. He first began his career by working at the mortgage bond trading department for Salomon Brothers. He later began to work in the credit derivatives market for Citigroup. He has even spent ten years working as the manager for a prominent New York hedge fund. Most recently he was hired on by Banyan Hill Publishing Company to be an expert on cryptocurrency. He was chosen due to his unique combination of expertise in the finance industry as well as cryptocurrencies.

Ian King has recently posted his viewpoints on a potential crash to the US stock market that could occur in the near future due to an increase in the rates from the Federal Reserve. So far the market has not responded to increases in interest rates from the Federal Reserve, but this does not mean that this will go on forever. Read more at Release Fact.

The interest rate from the Federal Reserve is better known as the cost of money. This is the rate that is charged by banks to other banks whenever they are lending money to themselves. These interest rates have the ability to strongly influence the economy because they will directly affect the way that businesses choose to spend their money. Whenever interest rates are higher both consumers and businesses are more likely to save money and make fewer purchases which can lead to economic stagnation.

In the past, the Federal Reserve has reduced the interest rate whenever they were seeking to stimulate the American economy. For the most part, each time the Federal Reserve has lowered the interest rate there has been a rebound in the performance of the stock market.

Ian King states that in 2003 there was a decision by the Federal Reserve to not increase rates due to fears of lowering the value of the stock market. This led to a proliferation of easy money which in turn eventually led to the bubble in the housing market that burst in 2007.

After the crash in 2007, the Federal Reserve lowered interest rates to 0%. This led to a period of what is known as quantitative easing. Investors were encouraged to begin taking greater risks by moving away from bonds and into the stock market. Today this trend is beginning to reverse. Ian King believes that the bond market is now beginning to look like a better place to put your money.

Visit: https://www.investopedia.com/contributors/82716/

 

Leave a Reply

Your email address will not be published. Required fields are marked *