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Gold/Mining/Energy : Strictly: Drilling and oil-field services
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To: A. Geiche who wrote (37408)2/11/1999 11:34:00 PM
From: Dwight E. Karlsen  Read Replies (1) of 95453
 
You're right about the Fed being very willing to increase interest rates to keep a lid on inflation. But that's because inflation is a very bad genie that is important to keep in the bottle. Another thing: Nobody is forced to take out a new mortgage. That's why so many people buy new homes when rates are low, and why so many people refinance when rates are low: They can lock in the rate for 30 years. After 30 years your house will be paid off, and then if rates are higher, they won't affect you.

Whereas OTOH oil is the engine of our economy: most people drive to work, and most employers consume oil in one form or another. And nobody can buy 30 years supply worth of oil.

It's true that nobody like high interest rates, but they are only "necessary" to stamp out inflation-it's heavy medicine, but the most effective medicine. And the Fed has been using the tool carefully and wisely, otherwise we wouldn't have the "Goldilocks economy" that we have today-low inflation and low interest rates.
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