I have been reading many articles on different sites, including CNN, National Post and others and feel that there is something that Banks are seeing but we can’t. Is there a Wall Street crash in coming months or quarters? Is Interest Rate going to be kept low for a long time?
Billionaires Dumping Stocks, Economist Knows Why
I will post more links.
Re: Are we near another Wall Street crash?
Re: Are we near another Wall Street crash?
(0) Billionaire like myself also believes that a crash is in the making, what will actually be the tipping over rock is unknown. Student loan has been long touted as reason for next crash, but for some reason it don't doesn't click to me.
Re: Are we near another Wall Street crash?
The interest rates can only be kept artificially low for so long. When the lenders stop lending then all the fed can do is expand the currency supply which is inflation. We will have massive inflation or default. It is bad either way but natural deflation is what corrects the economy.
Re: Are we near another Wall Street crash?
Pashtun, please explain in Lehman's terminology for general audience.
Re: Are we near another Wall Street crash?
Lehman’s terminology? 
Re: Are we near another Wall Street crash?
Lehman is the new layman 
Re: Are we near another Wall Street crash?
There are core structural problems in the U.S. economy. Interest rates are based off the supply of savings in the economy not currency expanded out of thin air by the fed. When the savings are high the interest rate is low. When savings are low the interest rates are high. The higher rates attract more savings. Interest rates act as signals in the market. What businesses do when interest rates are low is that they borrow more and when high they borrow less. The currency tends to be used for longer term projects. When savings are high then people will have the currency to spend in the future.
What the fed is doing is artificially setting the price of interest. This can be seen in the housing crash of 2008. Businesses thought that there was a higher supply of savings because of the low interest rates. The people did not have the savings. When interest rates started to go up, everything crashed as the people could not afford the higher rates. This is the Austrian school of economics theory of the business cycle. The federal reserve causes the boom and bust in the market by artificially increasing the currency supply, decreasing the interest rate and the value of the currency.
There are many unforeseen and unintended consequences of the feds monetary policy. People spend more than save. It is savings that leads to capital that leads to production that leads to wealth. All the people who hold dollars lose as there are more of them in circulation. This hurts the poor and the elderly the most as they have most of their wealth in dollars and have fixed income. The low interest rates prop up the government, consumer debt and housing market. Everyone borrows more and more and the debt gets out of control. Another thing that is currently keeping a lid on inflation is that we are exporting our currency and getting products in return. There will come a time when they will not want to give us products for pieces of paper as the dollar will not be worth much. This will bring all dollars outside the U.S. (40%) back to the U.S. putting heavy upward pressure on prices. The world's reserve currency status of the dollar is also helping keep a lid of inflation. The dollar will also not be the reserve currency anymore in this situation.
The cheap interest rates can only be sustained for so long by the fed. Currently there are countries that are willing to lend to the U.S. There are some private lenders also. There will be a time you increase taxes and get less money, no one is willing to lend you money and all you can do is expand the currency supply which is inflation. Everyone thinks that the U.S. will be able to payback the money because it has a printing press. The reality is that every country has a printing press, this means nothing. Wealth comes from production and the U.S. is lacking in that.
See if interest rates rise to normal rates like 5-7% the U.S will default. The interest payments will be in the trillions. The U.S. cannot afford this. The debt is rising by nearly a trillion every year. What is going to happen is that interest rates will start to rise. The fed will have no choice but to expand the currency supply even more. People will realize that it is pointless to lend to the U.S. The inflation is higher than the interest. There will come a point that countries would rather keep their money than give it to the U.S. They will keep their products than give to the U.S. We do not have the factories to produce what we once did. The U.S will not be able to pay the money back. At this point the fed can continue to expand the currency supply or raise interest rates to natural levels. If it continues to expand the currency supply there will be very high inflation or hyperinflation. The dollar will be trash and the bond market will crash. If it lets the market charge the natural rate of interest everything built off of the cheap interest rates will collapse. It will be very painful but the market will correct the malinvestment.
One needs to ask oneself why does this debt ceiling needs to be raised again and again? It needs to be raised again because the spending problem has not been solved. I believe that nothing will happen until everything crashes. These corrupt politicians will continue to do what they are doing until they cannot anymore. The solution to the bad economy is letting the market correct everything. It is to have the natural supply of currency and natural interest rates. This is will be very painful in the beginning but there is light ahead. It is like someone that has a drug problem and needs to go to rehab. The rehab is painful but the person will be healthy after. This economy is on life support by the fed and the government's policies. What it needs is to get off of it but it cannot without going through some pain. It is the pain that tells you that you are doing something good. There is no easy way out. This is why the fed is not tapering because it knows it cannot.