Rates Are Going To Be Higher For Longer For 10 years

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Yes I mean it, no I’m not crazy.

Let me talk you through it.

We have multiple inflationary risks on the horizon.

Look at China for one.

Everyone is talking about US debt but China’s debt at national, local and corporate levels is HUGE with some estimating gross national debt to be 300% of GDP.

Their property sector is a bomb that’s been ticking for years.

With nowhere else to invest, that’s where their population has invested – many of them paying for homes years ago that still haven’t been built.

How long would you pay a mortgage on a property that doesn’t exist before you think “screw this it’s easier to go bankrupt”?

If a population does that on mass banks fail – even banks propped up by the Communist Party.

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China’s demographics are so terminal some estimate their population will halve within decades.

Unlike us they’re not going to be able to open the immigration flood gates to prop up their economy.

Which means they’re probably not going to keep buying everything we dig out of the ground.

Which means our dollar will weaken.

Which means stuff costs more because we don’t really make anything here.

Which means inflation.

Despite a declining economy and living standards racing backwards their ruling party will do anything to hold on to power.

Like invading Taiwan or closing down the South China Sea.

They literally keep saying they’re going to take (back) Taiwan.

Which means the US will sanction them (or go to war).

Which means we’re sanctioning them.

Which means they’re not buying our stuff (weaker dollar = inflation) and we’re not buying their stuff.

But we do not make our own stuff.

So when China stops being our factory of everything we will experience MASSIVE supply side inflation.

This inflation will stick until some other country decides to be our factory of everything at a super cheap cost or our manufacturing industry builds back up.

My guess…that will take 10 years, at least.

You dead set could look back at rates we have now and think how cheap lending was in 2024 and wasn’t that a great time to fix some of your mortgage.

Disclaimer: This is an opinion piece and not financial advice.  If you wish to talk an expert about your loan please contact us here.

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