InvestIdeas

And whenever a recession hits, the all-knowing, all-powerful Federal Reserve attempts to stimulate the economy by cutting interest rates, typically multiple times.

The smallest interest rate cut was 2.03% during the 1990-1991 recession.

The largest interest rate cut during a recession was 9.84% during the 1981-1982 recession.

The average interest rate cut during a recession is 4.03% based on sixty years of Federal Reserve data.

In fact in every single recession in modern US history, interest rates were always MUCH lower at the end of the recession than they were at the beginning.

Now, here’s the problem–

Interest rates right now are at historic lows. The effective Federal Funds Rate as of the first of this month was just 0.29%.

So unless the Fed raises rates by a LOT, and does so VERY quickly, the United States is virtually guaranteed negative interest rates in the next recession.

The Fed is extremely leveraged, with capital of less than 1% of its total balance sheet.

So if asset prices fall by just 1% after the Fed raises interest rates, they will become insolvent.

Nearly seven in 10 Americans (69%) had less than $1,000 in their savings account.

Considering the fact that almost 70 percent of the population has virtually no savings, could our nation handle an extended economic downturn that may be even worse than what we experienced in 2008 and 2009?

Tens of millions of Americans either can’t find or have given up on looking for work.