G&G Associates Tax & Financial Consulting
Record-Low Rates Here to Stay? What to Do Now
Hotep (Peace & Blessings) G&G Readers,
As I write, interest rates are at record lows…
Mortgage rates (at 4.5%) are the lowest in a quarter century (as far back as I have data).
Here in the United States, companies and the government can borrow at the lowest interest rates since we went off the gold standard (For more details of this, visit www.gngassociates.net, click on audio archive and listen or download audio file, “Good as Gold” and “The Creature from Jekyll Island.)”. It's great for borrowers, but terrible for retirees earning interest.
With the economy preparing for that next fall, you need to stay on top of your game and manage your “OWN Finances.”
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Could interest rates go lower? Yes! Could they stay low for a long time? Yes!
So what should you do? I'll show you…You might think rates couldn't go lower than they are today… After all, we've never seen them this low in our lifetimes. And you might not imagine rates will stay this low for a long time, with all the government stimulus and "money printing."
But the Japanese faced the same thing in the early 1990s (Remember, history repeats itself). Here's how it played out:
In 1995, the Bank of Japan did the unthinkable… and cut interest rates below 1%. Today, 16 years later, Japanese interest rates are STILL below 1%.
In the early 1990s, Japan was struggling to recover from an extraordinary real estate bubble (like we are today…hmm). Residential real estate prices there peaked in 1991.
The Japanese government threw everything it could at the problem – it cut interest rates to zero and it went crazy borrowing and spending to try to keep the economy afloat.
We are doing those same things today in the U.S.
You could easily argue these things didn't work in Japan… Today – two decades later – Japanese real estate prices and stock prices are still well below their peak.
Meanwhile, with interest rates below 1% for all this time, retirees in Japan earn next-to-no money on their savings (Hmmmmm). And the massive government debt is still there – it still has to be paid back, somehow.
Japan's government debt is now at a crushing level… near 200% of the economy (GDP). That's the highest in the world, except for Zimbabwe.
The U.S. isn't nearly in Japan's kind of trouble… YET. But the U.S. is heading down the same road. The Congressional Budget Office forecasts government debt will hit 180% of GDP by 2035.
So could interest rates in the U.S. stay below 1% for 16 years? Absolutely!
In the U.S., rates went below 1% back in 2008. It is now 2010. And there is nothing on the horizon that suggests rates will be going up.
The economy is not recovering as much as hoped. Interest rates will stay at record low levels until the economy shows signs of coming back to life and inflation starts to appear. We're not seeing those signs yet.
What can you do? How can you earn income in a zero-percent world? Even on a million dollars, zero percent interest is still zero dollars in income.
G&G Associates has offered up many ways for you to make high income to GGIS Subscribers. Our favorite way has been through Hard Assets, but there are alternative resources for those who still don’t trust themselves to hold their own money and prefer to give it to someone else to hold it for them.
All of these ideas are definitely outside of the norm. But when the norm is zero percent (give or take), you HAVE to force yourself do something outside the norm.
You can hope that the interest rates on your savings will go up. Your hope might come true. But in the meantime, hope isn't going to pay the bills. You can't plan on hope.
Instead, you're going to have to consider outside-the-norm strategies, like the ones we've shared with you this year.
Unless you want to live on nothing, you must roll up your sleeves, do your homework, and act. I’m doing my best to help you… to share my best ideas for earning high-yields in a zero-percent world. And I'll keep doing it.
But it's up to you to act. Do your homework and get started.
We are far away from that right now. As I’ve said for the past three years now…for starters…buy real money…”Gold & Silver.”
If you missed a past G&G article, click on the link below to visit G&G Associates archive:
Until the next time!
Asante Sana (Thanks)
Tax & Financial Consultant, RFC
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P.S.#2 If you are looking to Travel and looking for steep discounted travel or want to learn how to deduct your travel as a business, visit www.gngassociates.net, click on the “G&G Travel” link and let your travel planning begin. Let us know where you want to go anywhere in the world and we’ll do our best to find you the best deal your money can buy and how to deduct it.