Officials: Fed will need to boost rates quickly – Yahoo! Finance.

What have I been saying for months now? For all of those who do not believe your local professionals.. Read the article above. Interest Rates will have to rise very quickly to combat Hyperinflation. This is really a simple fact, look at history. We know that this is the case. There is no way interest rates will be able to remain as low as they are right now through 2010! So what do I think Interest Rates will do in 2010? The Fed is going to be forced to raise them just as fast as they dropped them. Now the untold effect this could and will have on our economy is yet to be determined, however one thing is for sure. Everyone who has been holding out for pricing to get better, and interest rates to drop some more are going to be sorely disappointed. In Salt Lake City, UTAH we have seen a stabilization of home prices. It is agreed throughout the Real Estate community, that affordable housing has seen it’s bottom. It is true your upper priced jumbo homes may drop a little more. However what will that do to your average purchaser? Absolutely nothing! Interest Rates are at an all time low, they are not going to get better. They will just get worse, oh how easy our society forgets the past. Do you not remember your history? In the 80′s people were happy to get a 12 percent interest rate on their mortgage. Right now people are freaking out if interest rates get to 6 percent. Every single day, our clients ask us. What do you all think interest rates are going to do this next year? I always tell them, “you better plan on the worst, and except to see interest rates climb a good point to a point in a half at a minimum.” Now don’t take just my word for it, it is simple economics. If interest rates maintain their all time low, it is cheap to borrow money, and therefore more accessible. What is inflation?  Inflation is an increase in the price of a basket of goods and services that is representative of the economy as a whole.

What is hyperinflation? Ruinously high increase (50 percent or more per month) inprices due to the near total collapse of a country’s monetary system, rendering its currency almost worthless as a medium of exchange. Although hyperinflation is caused mainly by excessive deficit spending (financed by printing more money) by a government, some economists believe that socialbreakdown leads to hyperinflation (not vice versa), and that its roots lie in political rather than economic causes. The longest lasting (15 months) hyperinflation occurred in Germany between August 1922 and November 1923 (in theaftermath of first World War) during which prices rose at anaverage rate of 322 percent per month, and sometimes doubled or even trebled in a single day.

So in conclusion, what do I think interest rates will do in 2010? In my humble opinion, everyone would be insane to think for a second that they will not be going up very quickly in the near future.. Good luck..