High Interest Rates and Crippling Inflation

According to Yahoo Finance, the cost of housing has remained stubbornly high, contributing to the overall increase in living expenses. In nearly all of the top 50 metropolitan areas, rent increases have surpassed salary growth. Additionally, young Americans are feeling the pinch due to rising food prices and the burden of student loan debt, resulting in the need to cut back on nonessential spending.

According to TransUnion, Generation Z, those born between 1997 and 2012, are facing the challenge of higher housing costs that are not in line with their entry-level salaries. As a result, they are often forced to resort to costly forms of revolving lines of debt, such as credit cards, to meet their basic needs.

According to a TransUnion researcher who spoke with the Wall Street Journal, the current generation is experiencing greater financial pressure than millennials did ten years ago.

The average open balance on U.S. credit cards for Gen Z consumers grew to $2,834 last year versus $2,248 a decade earlier. The added $586 is a figure that has been adjusted to take account of inflation.
Debt burdens in general have become harder to shoulder for Americans as a whole, with U.S. consumers’ median minimum monthly debt payments growing by 32% between 2020 and 2023, according to Wise’s company. This easily surpassed the 18% rate of inflation over that same period.

The harsh truth is that individuals who are 60 years or older experienced an increase in their monthly payments of only 11%, which is lower than the overall cost-of-living increase. In contrast, those between the ages of 18 and 29 experienced a substantial increase of 74% in their monthly payments.

The Wall Street Journal provides a breakdown in the following manner...

In 2020, the median yearly income of recent college graduates was $58,858. Fast forward three years, and the figure only slightly increased to $60,000. However, within those three years, the typical monthly rent soared by 22 percent, now standing at $1,987. Coupled with the current food inflation under Biden, the cost of living has become a frightening reality.

It is crucial for the youth to comprehend that the establishment's agenda is to keep them shackled with debt. The authorities in power, including Big Government, Big Business, and Big Finance, desire to confine you to their plantation, where you will labor until your demise due to stress and exhaustion. This way, you will be perpetually indebted, paying exorbitant interest rates on your credit cards, taking medications, renting instead of owning, and continuously working. Your reliance on debt is their goal. It prevents you from disconnecting from the system and keeps the Borg collective operational. More Here

Suppressing Interest Rates Can Have Serious Consequences.

When interest rates are kept artificially low, it can lead to an increase in borrowing and spending. This can lead to inflation and a decrease in the value of the currency. Additionally, low interest rates can discourage saving and investment, as there is little incentive to earn interest on savings or invest in low-yield assets. Finally, low interest rates can lead to asset bubbles, as investors seek higher returns in riskier investments. These bubbles can eventually burst, leading to economic turmoil. Therefore, it is important to carefully consider the consequences of interest rate suppression before implementing such policies.

Decades of interest rate suppression have resulted in debt traps in both public and private sectors which will destroy faith in fiat currencies. This leads to higher, far higher interest rates.

There is a constant political demand for central banks to lower interest rates, which causes a major issue in modern economies. This demand promotes the use of debt for non-productive reasons, creating a significant distortion. The more interest rates are suppressed, the worse this distortion becomes. This results in the existence of "zombie" corporations that rely on cheap debt to stay afloat. However, this problem extends beyond just these corporations and distorts the entire production-based economic system.

Interest rate suppression tends to disrupt the balance between immediate consumption and savings, because savers are discouraged. Reduce the level of savings and you increase immediate consumption. Increase immediate consumption, and you increase the general level of prices. We can see that interest rate suppression begins to have unintended consequences. But perhaps the most acute problem today is in government debt.

The suppression of interest rates by a central bank leads to a rise in government debt. This happens because the government can borrow more at a lower cost when interest rates are low. As a result, funding larger budget deficits becomes easier for the government.

This results in an additional problem. The deficits are being financed while people are less inclined to save, as interest rates are being kept low. This means that the government is relying more on creating new credit rather than using existing savings. As a result, the currency is being devalued, reducing its purchasing power. Consequently, interest rates are likely to increase as trust in the currency decreases.

The act of government spending is counterproductive as it diverts income and profits away from production, which would have been used for reinvestment in production and consumption. Instead, the redistributed funds are allocated based on political priorities rather than genuine economic demand. As long as this disruption of productive activity is limited and governments maintain a balanced budget, free markets have the ability to cover the economic cost. This was the case during the 19th century until World War I, but things shifted in the 20th century with the spread of socialism, leading to an exponential increase in government debt.

When the value of the dollar was threatened by the inflation caused by the wealth bubble, the Fed had no choice but to increase interest rates. This was done to make up for the loss of purchasing power and discourage people from selling their dollars. In the past, higher interest rates didn't cause problems for dollar debt, thanks to government intervention. However, the situation is different now, with the government deeply in debt and unable to escape.

The current situation is dire. Governments are oblivious to the debt traps they're in, and even central bank agents are failing to recognize the severity of the situation. More Here

Federal Reserve policies that have kept interest rates low for extended periods were initially intended to stimulate economic growth.

However, these policies have also contributed to several challenges for young adults.

Low interest rates have led to inflated asset prices, particularly in the housing market, making home ownership increasingly unaffordable for many young people. Additionally, the easy availability of cheap credit has encouraged higher levels of debt among this group, from student loans to consumer debt, complicating their financial independence and stability as they start their adult lives.

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