Quote (ofthevoid @ Jan 9 2019 11:57pm)
I agree that slowing growth is a concern, but I disagree with your conclusion about interest rates. Yeah, higher interests rate can significantly slow growth down but I think that's kind of the point. Ultimately when central banks raise the IR it's because they are confident in the stability & strength of the economies. You wouldn't be raising rates in a recession, in fact, you'd do the opposite so the global economies aren't in that bad of a shape if LIBOR is going up.
I can't speak for the global environment but economic indicators in the US are not pointing to a recession. The unemployment rate, job growth, wage growth, etc all look good. It's hard to say we're close to a recession when such indicators are trending positive.
I think a strong case against the dollar is the fact that so much of the world's debt is denominated in dollars so it's a benefit to have some inflation and devalue that debt. Whether you're the US gov't 20 trillion in debt or you're a corporation that has a lot of debt or you're a country like Turkey it's a net positive for the dollar to be lower. This fact kind of scares me because i'm almost entirely in cash right now :unsure:
I don't think the slowdown in GDP growth is caused by rising interest rates though. Interest rates are rising because the Fed wants some capability to lower them to boost output if there is a slump around the corner. I agree that the economy is performing well enough to warrant the increase in interest rates and that it's the prudent thing to do, however this doesn't change the underlying reason why Western countries are targeting rate rises - they know the global skies are darkening.