Sellers Market

Interest rates have traditionally been a key tool for controlling inflation. Typically, when rates rise, the market cools down, inflation stabilizes, and things return to normal. However, this time is different. The government has injected substantial amounts of money into the economy, with the private sector benefiting the most from federal programs. The private sector has invested this capital extensively. Now, with high interest rates, people are unable to afford homes. Normally, in such a scenario, the market would eventually decline. However, due to the unique circumstances of the pandemic, lenders have absorbed much of this money. As a result, the companies and their high-earning employees are now reaping substantial benefits from investments. Because these beneficiaries are likely to spend much more than they typically would on investments, this increased spending could theoretically keep interest rates high, with no significant drop in sight.