Economic Expert Jim Grant Anticipates Persistent High Interest Rates Post-FOMC
Market participants, including both investors and traders, are eagerly awaiting the upcoming Federal Open Market Committee (FOMC) meeting scheduled for December 13, 2023. Speculation is rife about whether Fed Chair Jerome Powell will maintain the current elevated benchmark interest rate. Renowned economic expert Jim Grant, known for his four-decade-long work on Grant's Interest Rate Observer, firmly believes that interest rates will remain at a higher level for an extended period.
Currently, the federal funds rate is at its highest point in 22 years, ranging between 5.25% and 5.50%. This rate is crucial for banks and other financial institutions for inter-lending and serves as a pivotal mechanism for central bank officials in steering U.S. monetary policy. This week, the investment community is eagerly anticipating the Federal Open Market Committee's (FOMC) announcement, as well as Fed Chair Jerome Powell's press remarks after the meeting.
Market sentiment suggests that there will be no rate increase by the Fed in the upcoming meeting. According to CME's Fedwatch Tool, the likelihood of a rate hike stands at a mere 2.9%. On the other hand, the odds favor the rate remaining unchanged at 97.1% as of December 10, 2023. Additionally, a significant number of market observers predict that the U.S. central bank will have to lower rates in the near future. Wall Street Journal journalist Justin Lahart stated on December 9 that the Fed "can't put off preparing for rate cuts."
According to Lahart's analysis, a shift towards lower rates seems likely, with early 2024 potentially requiring Powell to start preparing for it. However, not everyone shares this view of imminent rate reductions. JPMorgan's leader Jamie Dimon anticipates an increase in interest rates and a looming recession. On December 9, esteemed financial author and publisher Jim Grant shared his insights with Forbes, asserting his belief in persistently high rates for an extended duration.
With over four decades of monitoring the U.S. central bank through his publication, "Grant's Interest Rate Observer," Grant voiced concerns in his Forbes interview about an impending economic crisis. He highlighted the U.S. economy's burgeoning debt problem, which has worsened due to years of almost zero interest rates. Grant anticipates that the federal funds rate will remain "higher for much, much, much, much longer."
"It is the historical track record, it is the pattern, that interest rates exhibit a tendency to trend over generation-long intervals."
However, there are opposing views suggesting a shift towards rate reductions by the Fed in mid-2024. In an interview with CNN, KPMG's chief economist Diane Swonk remarked, "We're moving into higher-for-long-enough." Additionally, futures markets indicate a high likelihood of a rate cut by the Fed in March 2024.
As the financial sector awaits the FOMC's verdict, opinions are sharply divided. Meanwhile, Grant expresses concern over the credit market, which has been burdened by years of inexpensive debt affecting businesses, consumers, and governments. Grant's opinion aligns closely with Dimon's, who emphasized at the 2023 New York Times Dealbook Summit that he wasn't trying to scare people.
What are your thoughts on Jim Grant's insights? Share your opinions on this subject in the comments section below.
Frequently Asked Questions
Is a gold IRA worth interest?
It depends on how many dollars you put into it. If your income is $100,000, then yes. You can't if you have less than $100,000
How much money you place in an IRA will determine how it earns interest.
If your annual retirement savings contributions exceed $100,000, you might want to open a brokerage account.
There you will earn more interest, but also be exposed to higher risk investments. You don't want to lose all of your money if the stock market crashes.
A IRA will be more beneficial if you can only contribute $100,000 annually. At least until the market starts growing again.
Are silver and gold IRAs a good idea for you?
This is a great option if you're looking for an easy way of investing in both silver and gold simultaneously. There are other options as well. We are happy to answer any questions you may have about these types of investments. We are always happy to assist!
Are gold IRAs a good investment?
The best way to invest in gold is by buying shares in companies that mine for it. These companies are a great way to make money investing in precious metals like gold.
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You can lose money if you hold onto your stock too long. When stocks decline, they fall further than their underlying asset (like gold). This could mean that you lose money rather than making it.
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If you prefer to keep your investments apart from your finances, physical gold is still an option. A gold IRA will help protect your portfolio from inflation and diversify it.
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- If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal so that you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (forbes.com)
- The IRS also allows American Eagle coins, even though they do not meet gold's 99.5% purity standard. (forbes.com)
- Depending on your financial situation, most experts recommend you invest no more than 5% to 10% of your retirement funds in precious metals. (forbes.com)
- SEP-IRA”Simplified employee pension” For self-employed people like independent contractors, freelancers, and small-business ownersSame tax rules as traditional IRASEP IRA contributions in 2022 are limited to 25% of compensation or $66,000, whichever is less4. (sltrib.com)
- Gold IRA: Add Some Sparkle To Your Retirement Nest Egg
- Understanding China's Evergrande Crisis – Forbes Advisor
How to buy silver with your IRA
How to buy silver with an IRA – Direct ownership of physical bullion is the best way to invest. Silver bars and silver coins are a popular way to invest because of their liquidity, diversification, convenience, and ease.
There are many options available if you wish to purchase precious metals such as gold and silver. You can buy them directly from their producers such as refiners and mining companies. Or, if you don't want to deal with the hassle of dealing directly with a producer, you can buy them from a dealer who buys and sells bullion products.
This article will explain how to invest in silver with an IRA.
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- Buying Precious metal from Dealers-A third option is buying bullion through a dealer. Most dealers are experts in one part of the market: gold or silver. Some dealers specialize exclusively in certain types or bullion, like rounds or minted money. Others specialize in specific regions. Others specialize in bulk sales. No matter what dealer you choose you will find that they offer great prices and flexible payment options.
- Investment in Retirement Accounts: Buying precious metallics through retirement accounts – Although not technically an investment, this is another way to get exposure to precious metals. You must make investments in precious metals via a qualified retirement account to be eligible for Section 219 tax benefits. These accounts can be IRAs, 401 (k)s or 403 (3(b) plans). These accounts can offer better returns than other investment options because they are specifically designed to help you save money for retirement. Most accounts allow you the ability to diversify between different metals. The drawback? Investments in retirement accounts aren't available to everyone. These accounts are only available to employees of employers who sponsor them.
By: Jamie Redman
Title: Fed Observer Jim Grant Foresees Long-Term High Rates as FOMC Meeting Approaches
Sourced From: news.bitcoin.com/fed-observer-jim-grant-foresees-long-term-high-rates-as-fomc-meeting-approaches/
Published Date: Mon, 11 Dec 2023 17:30:03 +0000