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View Full Version : The next bubble.


Steve
11-09-2009, 06:00 PM
I don't think our economy is out of danger yet.


In this article on Newsweek they discuss how keeping the interest rates low, the federal government is setting us all up for another bubble.

http://www.newsweek.com/id/221842

The Fed is holding short-term interest rates near zero. Investors and speculators borrow dollars cheaply and use them to buy various assets—stocks, bonds, gold, oil, minerals, foreign currencies. Prices rise. Huge profits can be made.

But this can't last. Ultimately investors will rush to lock in profits, and the sell-off will trigger a crash. Stock, bond and commodity prices will plunge. Losses will mount, confidence will fall and the real economy will suffer.


It is quite fascinating. In order to lessen the blow of the crash last fall, we end up paying for it over the long haul.