What Really Fuels Interest Rates?

Fuel prices are going down – well that is what the experts are using as an excuse to explain the rise in rates yesterday. Does anyone really know? I guess they probably do – I’m not an economist and who knows what the real logic is. I’ve worked with complex theories to know that what seems intuitively true may not in fact be true. I always thought that a rise in fuel prices would cause inflation to rise and then cause interest rates to rise thereafter.

Apparently any change in fuel prices can cause interest rates to rise. Yesterday, fuel prices fell – I would have thought this meant inflation was not going to be affected and at the base minimum interest rates would go unchanged or maybe even fall a bit. However, the market behaved in exactly the opposite way. So, that went completely against my understanding of the dynamics of the market. I guess I just have to fall back on chaos theory – the idea that a butterfly flapping its wings in Tokyo can change the weather in New York!

Anything is possible and sometimes I just think the market is basically just a bunch of mindless herds who do things on a whim – but I’m an educated fool so I should no better… he he..

Well, hey have a great weekend. It’s heating up here in Phoenix, 94 yesterday and it’s just April. I’m wondering what the summer is going to feel like. I’m thinking of spending Saturday afternoon by my swimming pool after getting some housework done in the morning!

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