Déjà vu- it’s 2008 all over again

Peter Schiff explains what is happening over at the Federal Reserve.

Prior to the Great Financial Crash of 2008 we saw the property markets in both the US and the UK prosper from cuts in interest rates meaning lower borrowing costs for buyers. This credit expansion encouraged many new buyers to home ownership and saw a very active market leading up to 2008.

Sub Prime Mortage Market

After all everyone pays their mortgage don’t they?

US Interest Rates 2000 – 2019
UK Interest Rates 1985 – 2019

The following links explain what caused the Great Financial Crash 2008. There are plenty more to be found if you do some googling.

https://www.thebalance.com/mortgage-crisis-overview-315684

https://www.thebalance.com/what-caused-the-subprime-mortgage-crisis-3305696

Low, Zero and Negative Interest Rates

Since 2008 countries around the world have been faced with the same challenge, and that is how to return their economy back to the status quo but no-one has quite managed that.

We can see very clearly how the Central Banks in the US and the UK reduced interest rates in an attempt to get the economy going again.

The Federal Reserve have attempted to increase rates but they did not get very far before aborting that plan and now back to reducing interest rates, QE, effectively printing more money.

Interest rates are being cut way before reaching pre 2008 levels.

Their are five Central Banks carrying negative interest rate policy in Denmark, Switzerland, Japan, Sweden and the ECB meaning that depositors pay the banks to deposit their savings.

Stock Market and Housing Bubbles

As Peter Schiff explains in the video, following the Great Financial Crisis 2008 interest rates have been cut to and a lot of money printed which has been largely ineffective unless you look at the Stock Market and Property Market bubbles

US Stock Market (DJIA)

House Price Inflation

In the UK the impact of reduced interest rates has resulted in a 50% increase in the average UK house price.