The Living Yield Curve at SmartMoney

In this document I am going to be looking at five of the above mentioned factors. These include; economic recession in

Janet Yellen states, “the possibility that low long-term interest rates are a signal that the economy's long-run growth prospects are dim….depressed long-term growth prospects put sustained downward pressure on interest rates. To the extent that low long-term interest rates tell us that the outlook for economic growth is poor, all of us should be very concerned, for--as we all know--economic growth lies at the heart of our nation's, and the world's, future prosperity.” A high interest rate is usually set when an economy is already well off. An example of an economy that's well off is with the result of inflation. But if inflation is left unchecked it will lead to a loss of purchasing power meaning that your dollar is worth less than what it was before. This is where high interest rates become a great convenience to the economy. Though this may sound proficient, ultimately a high interest rate that lasts lead to struggles within the economy. Borrowing will become more difficult due to rates being to high which will also cause less productivity to

(Source: Read Up on the History of US Recessions." About.com News & Issues. N.p., n.d. Web)

As Wolfers acknowledges in his article, if the economy of the United States enters into a recession, the Federal Reserve System cannot use their usual solution of decreasing interest rates to energize the economy. It is because they already have interest rates set nearly as low as they will go, thus not giving policy makers much room to

According to easynomics.com, from Q3 2012-Q2 2015, there was a confirmed upward trend with real GDP rising which translates to approximately 2.26 percent annual growth rate. Although the increase rate is too slow that people may not feel the recovery, but it does suggest the increase.

The 1990’s were known for a time of great prosperity due to the advancement of technology and economic

Simply put, the level of interest rates affect economic decisions at every level, whether by the individual consumer, or a major corporation, or entire countries. First, we must look at the residential and commercial real estate market. Homeowners had a golden opportunity to purchase or refinance their homes between 2008 and 2015, when 30-year rates were at unusual lows. (CITE) This was of particular help when many homeowners suffered through “underwater mortgages” on homes worth less than the mortgages owed. Refinancing at a lower interest rate ensured millions of afflicted homeowners would be able to reduce their interest payments during such a troubling economic period. (CITE) But given the Federal Reserve’s likely decision to raise rates, homeowners will be at a disadvantage. The most recent (as of 12/9/2016) average 30-year fixed

Most people do not invest because of their lack of knowledge. In chapter three I learned over a dozen financial myths and statistics. Some of the truths to the myths are no brainers but millions of people fall into the ensnared traps leading them down the path of financial misery. President Gordon B. Hinckley tells us that being in debt is like becoming a slave working to pay it off.

The Great Recession and the Great Depression are the fallout of the exact same economic phenomenon and are only different in a few (minor) respects. Each period is marked by a massive run up in asset prices followed by a tremendous deflationary pressure that has sent both debt and equity markets into turmoil (down). Although the Great Depression affected more than just the United State, the 2007 recession is very similar to the Great Depression because of the way that unemployment rates were the highest that was seen each time, the economic market got extremely bad, and consumer spending went down drastically. The 2007 Recession and the Great Depression both had unemployment rates that went through the roof.

The 1990 to 2000 population increase was the largest in American history. The population growth of 32.7 million people between 1990 and 2000 represents the largest census-to-census increase in American history.2 The previous record increase was 28.0 million people between 1950 and 1960, a gain fueled primarily by the post-World War II baby boom (1946 to 1964). Total decennial population growth declined steadily in the three decades following the 1950s’ peak before rising again in the 1990s. The 1990s economic boom in the United States was an extended period of economic prosperity, during which GDP increased continuously for almost ten years (the longest recorded expansion in the history of the United States). It commenced after the end of the

In spite of the fact that a few individuals are hesitant to touch their reserve funds, there is some rationale to trading in for spendable dough bank accounts with low rates of return so as to pay off obligation gathering high rates of interest. By and large, the rate of interest being accumulated on loans far out paces the rate at which the bank account develops notwithstanding when considering new deposits being added to the investment account. Borrowers may have the capacity to determine their troubles with the loan specialist and pay off obligation before installment histories begin to have a genuine negative impact on their credit

| In general, a downward-sloping term structure implies that investors expect future short-term interest rates to:Answer

In the chart, you can see that 2010 was more of a steady year in the economy and GDP percentage. It almost stayed the same throughout the year with a slight increase from the first to second quarter, then a slight decrease and increase coming into the third and last quarters of the year.

over at least the last six years. The recent acceleration in the projected growth rate for

This time is formally called deflationary periods, a time where homeowners and businesses tend to keep their money instead of spending it. This is done as an incentive to avoid experiencing what many individuals and businesses had to deal with during the Great Depression. The result of this is a collapse in the aggregate demand, causing prices to fall even more due to low real production. Prices decrease while unemployment increases, further hurting the economy. Even though there are policies reinforced to help stabilize these moments of economic stagnation (Expansionary Monetary Policy), if the forces of the deflation are in large numbers, the only way out may ultimately be abandoning the policies usually followed. The actions of the central banks are to keep inflation under control and to support economic growth and employment. This is where negative interest rates come into play.