“Fed Risks Triggering Panic and Turmoil”: World Bank Warns Against Raising Rates
Mac Slavo
September 10th, 2015
SHTFplan.com
Could things crumble and crash over a simple rate hike?
Many experts say they could, and well, things aren’t so simple after all.
With all things being equal, and with respect to the status quo of the powers that be, the current state of affairs appear very …. um, delicate, and rather prone to disaster.
By the official account, the Federal Reserve has been actively propping up the system with unlimited liquidity and dirt cheap money to the big banks to keep things from going under. Not that this is the whole story, but it’s a decent starting point.
Because they have started something they cannot finish, everything is vulnerable to toppling over the moment that Federal Reserve “stimulus” and “aid” is removed.
Now, even the World Bank is cautioning the Fed against taking action. So what now?
FT reports:
The US Federal Reserve risks triggering “panic and turmoil” in emerging markets if it opts to raise rates at its September meeting and should hold fire until the global economy is on a surer footing, the World Bank’s chief economist has warned.
Rising uncertainty over growth in China and its impact on the global economy meant a Fed decision to raise its policy rate next week, for the first time since 2006, would have negative consequences… It follows similar advice from the International Monetary Fund where anxieties have also grown in recent weeks about the potential repercussions of a September rate rise.
Such a decision could yield a “shock” and a new crisis in emerging markets, Mr Basu told the FT, especially as it would come on the back of concerns over the health of the Chinese economy that have grown since Beijing’s move last month to devalue its currency…. any rise would lead to “fear capital” leaving emerging economies as well as to sharp swings in their currencies. The likely strengthening in the dollar would also hamper US growth, he said.
“I don’t think the Fed lift-off itself is going to create a major crisis but it will cause some immediate turbulence,” Mr Basu said. “It is the compounding effect of the last two weeks of bad news with that [China devaluation] . . . In the middle of this it is going to cause some panic and turmoil.
The Rest…HERE
