Three reasons why interest rates will fall and stocks will rise
Three reasons why interest rates will fall, and stocks will rise:
1. The US government has over 31 trillion dollars of debt on the balance sheet. The rising of interest rates slows down the economy. When the economy slows down, corporations and individuals will make less income. Less income = less tax revenue for the US government. Less income for the US government = increase chances of a debt default. That would create chaos for the world.
2. The government borrows money to pay upcoming maturing debts. (Please advise your children NOT to do this! :D) The US government can't afford to borrow at 6% to pay off upcoming debts that are 3%. That would put them in a really tough spot in 5-10 years. So, while they don't have a choice in the short term, their longer-term goal is to reduce rates as soon as possible.
3. To stay a world reserve currency, they need to lower rates so the US dollar falls in value. When the US dollar becomes too expensive against international currencies, other countries, corporates, and individuals cannot afford to transact with the US dollar and purchase goods from us. This forces countries to rely on a cheaper currency to transact. If the US government keeps rates high for too long, many countries will ditch the US dollar. Ditching the US dollar means less American power in the world. I'm sure the US government doesn't want that.
As a long-term investor, I feel good about the future of our economy. There may be short-term hiccups, but I see them as excellent opportunities.