In this week's Off The Cuff podcast, Chris and Charles Hugh Smith discuss:
- Rate Hike!
- The Fed raises interest rates for the 1st time in a decade
- Shock Wave
- Even a small rate increase can disrupt today's highly-leveraged economy
- The Beginning Of The End
- The 'Debt Is Good' Era May Finally Be Ending
- Modern Game Of Thrones
- How The Power Structure Clings To Its Control
Well, they did it: the Fed raised interest rates for the first time in nearly a decade.
What does it all mean?
Not much, and everything.
In the immediate term, such a tiny change (0.25%) will not impact much in and of itself. But the shift from a decade of 'easing' policy to 'tightening' will have tremendous implications. Markets are priced by expectations. The same is true for the direction of capital flows. If investors believe that higher interest rates are coming in the future, much will change.
Debt suddenly becomes much less attractive. And we all know that the mad bidding up of asset prices since 2009 has been fueled by cheap money and easy credit. When lending standards tighten, the capital propping up those assets will start to vanish. Similarly, with other parts of the world at negative interest rates, even more capital will flow into the US seeking a return. This will in turn strengthen the dollar, continuing the hurt US exports as well the value of sales made in overseas markets.
For an economy that is "all
by charleshughsmith 
