1% July Interest Rate Hike

Real Estate News TV

1% interest rate hike. Is that going to happen here in July? I’m not sure, but I think it probably should. Let’s talk about what’s going on here with the economy. Let’s talk about inflation roaring out of control. It’s just like crazy on fire. And we have to raise interest rates so you can rein it back in a little bit. Right. So let’s kind of talk about some of the big picture things that are going on. And if we just look at like the whole world economy and the things that are currently going on. So we have inflation, inflation’s high and it continues to be high. And they’ve tried to reduce it by doing all these different measures like raising interest rates. And they raised it more than expected in kind of like a lot. And did it change anything? I don’t know. Inflation seemed to be out of control again when they reported the the most recent number. I think there’s a lot of people that are kind of scared about this. So why is that important? Well, it’s important because if you have inflationary times, then what you have are your current money is essentially worth less if you do nothing. Right. So let’s assume that you have $1,000,000 just like sitting here. And that’s just like a round simple number. But you’ve got $1,000,000 sitting here on this plate. If you do nothing with it and you wait one year and money now is worth 10% less. If inflation runs at 10%. So now you have that same million dollars, but it only has the borrowing power or the buying power of 10% less than it had last year. But mathematically, because inflation goes up, it’s actually a little bit less. You might have 89%. So now you have that, but you don’t go from 10% inflation to zero. Right. Or back to some type of normal number, like 2% that they really want. You’re going to go like a number like ten, eight, five, three. Maybe you will get there. Well, add all those numbers up, but add them on top of each other and see what that number is. And suddenly you look at it like, holy cow, no matter what they do, it’s going to be 30% inflation total over the next X amount of years. Right. When you add in compound an increase on things and then realize we’ve already had some. So now you look at it, you’re like, wow. So the reason that that’s an issue is because it forces people to be active. You have to do something with your money. You can’t sit there and hold on to it. It’s like this analogy all the time that I talked about is if you love the beach and you go to the beach and you pick up a handful of sand and you’re like, I love this. I’m going to squeeze it. I’m going to hold it. I’m going to do nothing. But like, I want this memory and you squeeze onto it, and then suddenly you look up and it’s all gone. That’s the same type of thing with money, if you just hold it is during these inflationary times. If you do nothing, nothing at all, then what happens is you have less. So people are forced to do things. So to get this under control, what they’re trying to do is slow down the economy. And to do that, they’re raising interest rates. Well, they’re raising interest rates relatively quickly because they realize they can’t get this under control. So we have a couple of large things going on. Some of the larger things is the dollar is now strong. So the dollar compared to other currencies, it just keeps gaining on them. So we’re now back to near parity with the euro. So check that out and take a look. But like $1 equals pretty much €1 now. Right. So they’re like they’re equivalent. Well, for a long time, I think it’s been 20 years since they were at parity. And it looks like the euro is going down even more. I might say it goes down to like 9.92 and goes the other way. And it’s because here in the US we have a strong economy. We’re doing the things that we need to do to get inflation under control. We can talk about did we do it quick enough and are they doing enough to do it? I don’t know. But I’m just saying that we do have inflation and we’re tightenin --- Send in a voice message: https://podcasters.spotify.com/pod/show/realestatenewstv/message