Banks continue to inventory unprecedented numbers of houses on their balance sheets. They are controlling foreclosure volumes to keep houses off the market thus propping up property values. If values decline further, their portfolio loses value and they take a greater hit to their suspected insolvent state. The Central Bank will accommodate this behavior in order to keep the current system afloat. Low rates provide buyers with incentives for these larger houses that were built during the boom.
1% increase in bond rates would mean an increase in $500 billion in interest on an annual basis. There is no reason to let the yield rise on bonds until the market demands action. Debasing the currency will continue and the purchasing power will diminish, moving toward zero. Physical assets will skyrocket when the public wakes up and attempts to trade dollars for physical assets. The only plausible response would normally be to increase interest rates. With current debt structures in place, that will not happen. It looks like they are between a rock and a hard place. The public will suffer and the truth of the matter is extremely difficult to find.
The interest rate would normally follow the inflation rate. Below is the calculated rate (in blue) by shadowstats.com. If broad inflation is at 5% and you are being paid 1% on your bank savings, you are losing 4% in purchasing power per year. Depending on what you buy, your inflation rate may be higher. In 25 years, you will have nothing left in savings thanks to the money printing philosophy that is currently in place. If at the same time you had a 1 oz silver coin, 25 years from now you would still have 1 oz of silver and could trade it for something else of value. How simple is that!
