This article will help you realize what loan interest rates are based on.
Surely, up to now, many people still think that the loan interest rate is the number the bank decides to announce according to the mass media. WRONG
For example, bank interest rate is 12%, you can never borrow 12%, always more, why.
- Actual Loan Interest Rate is "Credit"
- If your credit is high and reputable, your loan interest rate will be low, and vice versa.
- Bank interest rates are just reference numbers, in reality there are always risks that arise depending on each individual, that's why banks always consider the interest rate % when giving you a loan, and even have to buy additional insurance. to ensure loan risk.
- The US government is currently the most reputable, so it has the ability to borrow at extremely low interest rates from the FED, but if the government closes down or declares bankruptcy, the US government's loan interest rate will immediately increase. , can no longer be rated at AAA standard.
- When the US government can no longer borrow at low interest rates, but must borrow at high interest rates, it means interest rates around the world automatically increase extremely high, because it cannot pay higher interest rates than the US government's interest rate, so how can it attract capital and mobilize capital? dc, who is more reputable than the US government???
- That's why the Fed never wants the Government to close down, leaving them with a low credit rating. That's a very dangerous butterfly effect in the economy, spreading to the currencies of other countries. influence accordingly.
- The US government loses credit, which means the US dollar loses credit. At that time, if you want to mobilize USD, you have to use high interest rates, because
"Low credit means high interest rates"
And now the problem has spread to the dollars that the richest G7 group on the planet is saving, no longer the US Government.
⚡️ 4 parts about the FED, you should read through
