Three Huge Reasons Why the Fed Cannot Let Rates Normalize

The Fed continues to dangle hints of a “rate hike” in front of investors… but the reality is that as far as any significant raise in rates, its hands are tied.

True, the Fed may raise rates from 0.25% to 0.3% or possible even 0.5% sometime in the next 24 months… but these moves will be largely symbolic.

There are three reasons for this:

1) There are over $555 trillion in interest-rate based derivatives trades sitting on the big banks balance sheets globally.

2) The US Dollar carry trade is over $9 trillion in size.

3) Many Western welfare states would go bankrupt if rates normalized.

More