Economic Gravity: Why Rates are the Enemy of Valuation
Inflation erodes purchasing power, while interest rates are the 'brakes' the Fed uses to hold it back. Understanding this interplay is key to preserving your wealth.
Inflation (CPI)
Rise in price of goods and services. High inflation forces the Fed to act aggressively (Hike).
Fed Funds Rate
The cost of borrowing money. High rates make loans expensive for firms, reducing profitability.
Core Question: 'Is the cost of capital (rates) lower than economic growth?'