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August 17, 2015 | Does China’s Devaluation Reduce the Odds of the Fed Raising Rates?

Martin Armstrong

Martin Arthur Armstrong is the former chairman of Princeton Economics International Ltd. He is best known for his economic predictions based on the Economic Confidence Model, which he developed.


Does China’s devaluation reduce the odds of the Fed raising rates? Some people assume that is the case. However, the Fed is in a box and unless they raise rates, the next crisis in pensions will wipe out far more than most people anticipate. True, everyone from the IMF to most other countries are begging the Fed not to raise rates for there are some $9 trillion dollar shorts out there. It is also true that cash is rushing into the short-term government paper (flight to quality) and raising rates will escalate the federal budget which also comes due right on the ECM turning point as the debt ceiling expires October 1.

This entire problem illustrates that this is not merely a dollar and Sovereign Debt Crisis; this is also a RESERVE CURRENCY crisis. The IMF and other nations are pressuring the Fed not to raise rates because of external economic conditions. The Fed is caught in a real crisis where domestic policy objectives are being influenced by international policy of other nations — the INTERCONNECTIVITY. This is starting to peel back the layers of the global economy that are like an onion with everything connected. This is further illustrating that domesti

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August 17th, 2015

Posted In: Armstrong Economics

One Comment

  • Avatar Pola says:

    Hi Mr Armstrong

    Can you predict what is going to happen to housing Australia?
    I have been renting and saving for 12 years to buy a home outright to retire within the next 2-3 years. As a contractor I have no job security and rising house prices constantly outstrip my savings.
    I read a lot about housing being in a bubble, possible bail ins of savings, deflation in the value of currency etc. I find it all really confusing and stressful.
    I don’t want to gamble in the stock market, just want to be debt free when I retire into a home and rural community that works well together.
    Should I wait a couple of months or just go for it and borrow the money to buy what I want and gamble I can work to pay back the loan that represents about 30% of the cost?
    I’m a follower of Steve Keen but am older and feel I need this part of my life sorted so I can get on with what I want to do for my last couple of decades. Just cannot stand any insecurity around housing for my family.
    I am generally patient, though feel worried about many economic things happening without much sign of leadership or understanding by politicians.
    Any feedback is greatly appreciated. There is likely a long queu of questions..

    Regards Pola

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