It's Official: Interest Rate Cuts Are (Almost) Here

"So now if you were to put your money in the bank, whether it's in a high yield savings account, a regular savings account, a certificate of deposit, CD, now those rates are going to fall."

"But if mortgage rates get affected by this, which they very likely would, that means that mortgage rates could go down, your car loan rates could go down, your refinance rates could go down, your credit card debt rates could go down, which the purpose behind this is to stimulate spending."

"And in 2024, 2025, that debt might be readjusting. At what interest rate? Well, it's going to depend on what the Federal Reserve Bank does. But today, every corporation and every commercial landlord is saying, "Oh my god, I really don't want to have to pay 8% on this same debt because that's going to make our monthly payments double even if we don't increase how much debt we have just because the cost of servicing the debt goes up.""

"But now the Federal Reserve Bank has made it essentially official that they're going to be cutting interest rates soon."

"Now, because of inflation coming down, because unemployment is going up, this is why Jerome Powell says that it is time to start cutting interest rates as a way to not let the economy get any worse."

"So if you're sitting on cash, not so good news. However, if you already have money in a CD, it wouldn't be affected. If you've locked in that rate, but if you want to get a new CD, the new rates after the rates get cut could be lower."

"But if mortgage rates get affected by this, which they very likely would, that means that mortgage rates could go down, your car loan rates could go down, your refinance rates could go down, your credit card debt rates could go down, which the purpose behind this is to stimulate spending."

"The government wants inflation because they have $35 trillion worth of national debt. And inflation means that the value of the dollars are dropping, which means the value of this $35 trillion with the debt goes down because the government can then pay it back with cheaper dollars."

"The S&P 500 has grown even faster than that. The S&P 500 has grown faster than people's incomes. The S&P 500 has grown faster than expenses."

"And then you start to see the growth of things like zombie companies. Zombie companies are companies that don't make money, but they're continuing to operate because they have access to a lot of debt and a lot of venture capital and a lot of angel capital because investors have just a lot of money to spend."

"Meaning, if you are a corporation and you have $100 million worth of debt, you might only be paying 3 or 4% a year in interest because you could get that very cheap debt back in 2020 or 2021. And in 2024, 2025, that debt might be readjusting. At what interest rate? Well, it's going to depend on what the Federal Reserve Bank does."

"Well, 2024 is when those debts start to readjust. Meaning, if you are a corporation and you have $100 million worth of debt, you might only be paying 3 or 4% a year in interest because you could get that very cheap debt back in 2020 or 2021. And in 2024, 2025, that debt might be readjusting."

"The Federal Reserve Bank said that they're not going to cut interest rates until we see 2% inflation, but they changed their mind. Now they're saying they just want to see inflation heading towards 2% to then justify cutting interest rates."

"But now the Federal Reserve Bank has made it essentially official that they're going to be cutting interest rates soon."

"Jerome Powell himself now says that it is time to start cutting interest rates."

"Of course, we also have an election coming later in 2024 which impacts the Federal Reserve Bank."