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