Hello everyone...
As you may already know, the FED has raised interest rates by 0.25%, an increase scheduled a few weeks ago to combat the growing inflation in the U.S. and around the world due to the reach of the U.S. dollar.
Now, will this bring negative consequences? Well, yes, and everywhere you look this interest rate hike after two years of zero rates will affect many people individually and entire countries that are mired in debt or countries with weak economies and dependent on the dollar. But for those who are reading about this for the first time, I will briefly discuss what interest rates are:
Interest rates are what money costs, the central banks in charge of creating and distributing money raise it when they want to control the exorbitant flow and lower it when there are problems in the economy and they want to push people to spend and invest.
When an economy is stable, with many jobs and prosperity in the different economic sectors, there is a lot of money circulating, which if not properly controlled can generate inflation which would cause the economy to fall into crisis, to control this inflation and therefore the crisis that follows, interest rates are raised so that people or investors do not borrow money and in this way, the circulating supply of money is controlled.
When the economy is very bad due to crises such as the COVID 19 pandemic or war, the central bank lowers interest rates so that there is more investment and movement of money in the economy which makes the economy active faster.
Now, How does it affect everyone when the FED raises interest rates by 0.25%??
Exchange rates: When rates rise it means that those who buy government bonds will have a better return, which makes investors with billions buy dollars, which disadvantages other currencies and their economies such as those of Latin America or Africa.
Increases the rates of other countries: As the increase in FED rates is attractive to investors, the countries that are affected also raise interest rates (in some cases more than the FED) to avoid investment flight. What affects people directly as interest rates rise on mortgage loans, loans for entrepreneurs, car loans, and credit cards.
The external debt: For those countries that borrow all the time since they spend more than they produce, the rises in rates mean the rise in debt, which causes the country to continue indebted since the money they borrow becomes more expensive, which negatively affects the economy.
Because the rises in interest rates mean bad news for all countries with weak economies or that have been hit by crises (which is all), what can they do, if traditional investments may become more and more expensive as the FED gradually increases the rise in interest rates?
Well, buy cryptocurrencies!
Cryptocurrencies are the best way to avoid this world crisis due to the rise in interest rates, since asking for money from the local bank to start a business will not be profitable at all, but investing in cryptocurrencies is since it does the opposite of what fiat money does.
If you borrow $10K from the bank every month you will have to pay the interest rates, and if you become delinquent then there is interest on interest which can destroy your investment or business. On the other hand, if you invest $10k in cryptocurrencies, a projection of 10% per month can be foreseen, which will bring you profits of $1K or more each month depending on whether you do Hold, trading or farming.
In conclusion, the perfect and effective solution to have good investment results in the face of interest rate increases is cryptocurrencies, since they offer better returns and do the opposite of debt. and with more than 18 thousand options it is possible to choose the one you like best to invest.
This is not financial advice