| Bank CD rates are moving higher as the Federal | | | | continue to raise Fed Funds rates if it hopes to at |
| Reserve Bank continues it's "measured" effort to | | | | least slow down the increase in the inflation rate, it |
| control inflation by raising the Federal Funds rate. The | | | | means that investors in bank certificates of deposit |
| US economy is still growing at a reported 4%-5% | | | | will be recieving more income from their CD |
| rate and is beginning to show increases in the inflation | | | | investments than over the past few years. |
| rate, especially in the food and energy sectors, which | | | | Alan Greenspan and company held interest rates at |
| the government manages to leave out of the core | | | | artificially low levels for too long, flooded the world |
| CPI calculations. | | | | with dollars, and now the financial imbalances that |
| Government economists seem to believe that if they | | | | these policies created have to be addressed. The |
| just leave out the costs of food and energy prices | | | | market will eventually see to that. |
| increases in those important areas won't effect you | | | | This is good news for long suffering certificate of |
| and the rest of the US population. Obviously that's | | | | deposit investors. Bank CD rates at artificially low |
| strange thinking. However, the US government has | | | | rates have been punishing to the nations CD |
| made sure that their government economists use | | | | investors, especially those who are retired and look |
| creative calculation methods over the years which | | | | to CD interest income to help them to meet daily |
| has tended to show better performance for the US | | | | living expenses. |
| economy than would be the case with previous | | | | Probably CD rates will trend higher for the next few |
| calculation meathods. | | | | years. The unfortunate thing is that while you as a |
| With commodity prices, especially metals like copper, | | | | CD investor will receive more CD interest income you |
| gold, lead, tin, and zinc, and crude oil soaring to all | | | | will also be paying higher prices for just about |
| time highs on increased world demand, especially | | | | everything that you must purchase. But at least with |
| from rapidily developing countries like China and India, | | | | additional certificate of deposit investment income |
| there is the strong probability that interest rates will | | | | being earned there will be more income to offset the |
| at some point react to inflationary pressures and | | | | higher expenses. |
| surprise on the upside as this business cycle | | | | While you as a CD deposit certificate investor will |
| progresses. | | | | benefit as CD rates move higher you should not get |
| It appears that it is already too late to head off a a | | | | lazy and just go along with the ride. What may seem |
| serious dose of inflation no matter what the US | | | | like small differences in CD rates offered by |
| Federal Reserve Bank does from here. The US has | | | | competing banks may actually amount to significant |
| flooded the world with US dollars for too long and | | | | percentage differences in overall certificate of |
| the financial trade and deficit imbalances are too | | | | deposit returns. |
| great. There is a high risk that the US Dollar is in | | | | By switching your CD investment to a FDIC bank |
| danger of a sharp decline at some point, which will | | | | paying higher CD rates (HINT: Internet banks have |
| only increase inflationary pressures in the US. Hold | | | | far lower operating costs than traditional banks and |
| onto your hats, folks, you haven't seen anything yet. | | | | can afford to pay higher CD rates ) you can achieve |
| As bank CD rates are directly tied to the Federal | | | | higher income for a minimum amount of effort. |
| Funds rate, and the Federal Reserve will have to | | | | |