Will Interest Rates Go Down This Year?

People are worried about interest rates - they keep climbing.

The press and financial commentators have reached a consensus that rates are coming down in the near future—months from now.

This is misleading people into inaction. Many are on the fence on the belief that when rates come down, then... we will spring into action!

To determine whether or not rates are coming down, you can use as a yardstick what I call the principle of the "two faces of interest rates."

Imagine a coin. A coin has two sides. These sides are indivisible, a coin cannot remain a coin without these two sides. These sides co-exist simultaneously in time and space, you cannot separate them. What touches one of the sides inevitably and at the same time, touches the other.

This is very easy to see with a real life coin, however it is not as easy in daily life.

  • Production & Consumption

  • Income & Expenses

  • Lender & Borrower

  • Assets & Liabilities

  • Debits & Credits

  • Profit & Los

The above are different pairs of words used to describe different aspects of this two sided economic life that we must endure while on this Earth. 

This is the reason companies use the "double-entry" accounting system. This method of account-keeping embodies the balance that always exists, simultaneously, between Income & Expenses.

That is not true! you might say. How come that the government can spend recklessly? How come people get an inheritance and didn't work for it? How come I work like a maniac and have nothing to show for?

Because of the above observations, we may have the illusion that Income & Expenses can be separated!

You and I are not alone in this belief! major economists seem to think so too! In fact, one of the "plans" of the Federal Reserve is to give everyone a "Universal Basic Income". The Fed relies on the belief that Production & Consumption are two unrelated aspects of our economic life.

If rates are "coming down," it would mean money is cheaper. Money is in truth just a reflection of production, money is a token that represents production (among other things). If money is cheaper, there must be more of it, production must be up... 

But, production is down...not just in the USA but worldwide! The "pandemic" wiped out thousands and thousands of businesses, thousands lost their jobs, the supply chain now needs years to recover, but it can't because fuel is being restricted, resources are massively being used in unproductive industries, and a big chunk of our wealth is being thrown into the blackhole of war.

(Interesting fact, the United Kingdom never recovered from World War I, yes WWI that's 1918! It does not matter what you do, it does not matter how long goes by, you cannot ever undo the universal bond between Credits & Debits. You could have restored England to its former glory, but you would have had to work with the natural law of Income & Expenses.) 

Now the good news. All of this has happened before. Our ancestors have had to deal with the irrational human behaviour and ineptitude of those in power. All this is not really new...it may be to us, if we have never experienced something like this before.

But you can bypass all this craziness. There is an excellent book by author James Clavell, entitled "King Rat." It is the story of an entrepreneur in a Japanese concentration camp in World War II. I invite you to read it. It's amazing what you can do even in the most oppressive of environments! 

One way to bypass this craziness is by taking the COIN in your hand and YOU taking control of BOTH sides!  

How can this be done?

I invite you to read:

The Two Faces of Interest Rates

Write to me and I can provide further details.

Alejandro Szita

I am an independent mortgage broker for CA & FL, specialized in serving self-employed borrowers—including business owners, artists, self-employed professionals and retirees. I am a Certified Mortgage Planning Specialist®, a member of the Association of Independent Mortgage Experts, and a California real estate consultant. I enjoy helping people get the loan they need, especially when they have a challenging or out-of-the-box situation.

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