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Is a Financial Crisis Imminent? Rate Hikes May be A Good Thing

 As an indexer, I shouldn't worry about any market event, right? The market always comes back after all. But, there have been a couple of ugly events for the last 92 years. On average there is one every 18 years or so. Although, past events can't be used to predict future events.

What Could Be Bad?

I would rather see the Fed raising rates. I know the stock pricing would be negatively affected by rate hikes. But the implications of rate hikes are good economic.

I think one tragic event is when the Fed has to keep the rate at 0% to 0.25% for longer or, even worse, lowering rates into the negative territory, that no one has ever witnessed in history.

What Can We Do?

Spend money, work hard.

The stock market is only healthy when the fundamentals are healthy. Economic fundamentals' health follows the good-old fashion of supply and demand rules. 

"Supply" is the working hard portion, while "demand" is spending more portion.

When the Fed set the target federal funds rate to 0% - 0.25%, I am happy to see companies start borrowing money to expand businesses and people buying more stuff. This can push inflation up and makes the Fed consider raise the rates.

Conclusion

The worst thing that could happen right now is that the Fed's 0 rate strategy fails. WIll there be a recession? I don't know. But I know it's very bad.

 
 

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