Dennis Dachtler of Dachtler Wealth is a respected businessman and financial manager with more than three decades of experience in the business world. Over the years, he’s seen numerous changes in the industry, but none have been quite as dramatic as in recent years. Below, Dennis Dachtler answers some frequently asked questions about the current economy.
Q: Have interest rates ever been this low?
Dennis Dachtler: The last time interest rates saw this level was in the early 1950s. There were interest rate caps at that time, which kept the rates at the levels we see today. For example, at the end of second quarter 2012, the U.S. Treasury was yielding about 1.6%.
Q: Will interest rates rise in the near future?
Dennis Dachtler: The Federal Reserve has indicated their intentions to keep interest rates low. However, as most economists will tell you, interest rates are driven by supply and demand, so if there are dramatic changes in those areas, the Federal Reserve will have very little bearing on the rate.
Q: But if interest rates remain low, won’t that deter people from investing?
Dennis Dachtler: Many people believe that is one danger with low interest rates. If investors decide rates are too low, they may hold off on putting their money into the market that could, in essence, drive prices down.
Q: Is it true that many investors believe the era of low interest rates is nearing an end?
Dennis Dachtler: Yes, a number of investors do. Basic economics tells us that when bond yields rise, bonds that already exist on the market drop in price.
Q: I have heard that many investors are concerned about inflation. Why is this a bad thing?
Dennis Dachtler: The danger is that higher interest rates usually come along with inflation. The problem there is that bonds fall when interest rates increase, so inflation could drive the price of bonds down.
Q: The deficit is a huge issue, especially during an election year. What do these numbers mean?
Dennis Dachtler: As an article in USA Today recently put it, if you combine the national deficit with the amount owed to retirees, each household would have to pay $561,254 to wipe it out. The current deficit, when combined with benefits to retirees, is $5 trillion.
Q: That’s a number that’s almost too difficult to grasp.
Dennis Dachtler: I think it hits home a little more when it’s written with all the zeroes: $5,000,000,000,000.
Dennis Dachtler graduated from the University of Oregon in 1981 and founded Dachtler Wealth Management soon after. Today, Dennis Dachtler manages the successful financial management firm with his daughter, who recently joined his staff. When he isn’t working, he likes to play golf and spend time with his family.
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