I am old enough to remember getting a 10% mortgage and being glad to get such an excellent rate. And not long after that, we bought a 17% CD -- even though I was a young adult at the time, I knew something was not right.
There is nothing esoteric about my observations of varying states of the economy throughout my adult life, but it looks to me like this whole century has been a mess -- in so many ways.
The Fed's fear of inflation, resulting in giving away money with insanely cheap, unsupported mortgages, brought us the housing crisis.
We have not seen a 5% CD since around 2005. The banks don't need us anymore. They are in cahoots with the Fed.
The stock market feels like a house of cards. Our parents could back up their pensions (remember those?) with CDs that paid a decent rate, but now we have to be in the market for any hope of ROI.
A big percentage of the corporate tax cut has gone -- and will go -- into stock-buybacks -- good for CEOs and good for stockholders (maybe) but not so good for employees and cap ex. Even though my favorite long holdings have done that, too, I don't like it -- because it feels fake.
The housing market feels fake, too. It is bloated. Across the country, houses are being bid up far beyond their worth. If this housing market does not breathe soon, it is going to bite all of us in the butt. The housing market has a way of affecting almost the entire economy.
You know that a lot of homeowners see the equity in their houses as wealth. If banks start dishing out HELOCs willy-nilly, this mess will get even bigger. We are a nation of instant gratification seeking amnesiacs.
I say the rate needs to be gently raised to slooooooow this collision-course train dooooooown.
Boomer -- not an econ major -- just an observer (a very concerned observer)
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