On December 16th, it is expected that the Fed will begin raising interest rates. That move, we believe, will have a far greater impact than what may seem logical from a small .25% hike. And simply looking at the size of the rate hike may be misleading. What should be considered instead is the length of time that interest rates were kept at 0%, and the tremendous distortions and imbalances that have been created as a result. Have we become addicted to the medication? Will we have massive withdrawal pains when the medication is taken away?
We aren’t the only ones asking these important questions. The following two minute video from CNN Money highlights some of the concerns and things to expect once interest rates begin to go higher. The most important question is this; If 0% interest has inflated the stock market to all-time highs, what will happen when the free money party ends?