Wow, I looked at my bank's website, and they were offering 5% for a 12-month CD. I haven't seen such good returns in a very long time. This is the work of the Fed's rate hikes, isn't it? I don't know why we should fret and worry about Fed rate hikes because all of the savings options are giving out good rates of returns now. It's good for savers.
People refer to it as "the Fed raising rates", but actually, that is not really what's going on. Rather it's that the Fed is not keeping rates down. It costs a lot of money to keep rates down, much below what the free market wants, for long periods of time. Or rather it adds to inflation. So with inflation rates so high, the Fed felt it needed to stop. It's not the Fed's rate that they will hike, it is the Fed's target rate. If the target rate is already close to what the market wants, then the Fed doesn't do anything about it. So that's why I said that the Fed "raising rates" is all about the Fed stopping what it was doing before. Doing nothing is causing rates to rise. Think about it like a thermostat setting on a heater. If you lower the setting on your thermostat, then the heater will not turn on, and the temperature will lower. That does not mean you changing the thermostat setting is actually the cause of lowering the temperature. When you "lowered the temperature" what you actually did was lower the temperature on the thermostat setting. Or another analogy could be "increasing the amount of money" you have by not spending money. (trying to spend less money than you usually do) This might seem like a silly meaningless semantic point, but actually it is important because when these type of words are used it can imply things and make ignorant people think certain things that are not true.
But here in Canada the elected officials know that Canadians are in debt to our ears..... so they know that hiking interest rates will produce lots and lots of defaults on mortages and other debts.... which is exactly what many people want at this time...... ... just before the Biden Digital Currency is rolled out....
