FED Increasing Interest Rates

“The FED has decided to keep increasing the prime interest rate in an effort to drive down inflation.” Anderson clicked some buttons on an invisible keyboard, pulling up some additional data and overlaying it on the screen.

“What’s this, Mitch?”

“Look Josef,” Anderson was focusing hard on the numbers. “See what happens when I add the expected interest rates to our expense column?”

Ranell watched the steep red line grow steeper. “Everything’s going to cost us more,” he said glumly.

“That’s not bad news,” Anderson shook his head. “That’s the good news.”

“How is that not bad news?”

“Check this out,” Anderson said, “It's not just our expenses that cost more. It's everything. Including all the rare earth metals coming out of Strange Lake.” With a flourish, Anderson entered the data and the green line representing revenue grew at a much steeper rate. It intersected the red line at around the six-month mark.

“So, what are you saying, Mitch?” Ranell leaned forward to stare more intently at the holographic projection. “Do you think we’re going to make it through this?”

“Not exactly,” Anderson confessed.

Larbonne took over the explanation. “Mitch’s analysis is correct. We're forecasting that a higher inflation rate will make it relatively easier for us to pay down the existing airship loan that we took out when interest rates were much lower. If this were the only variable, then yes, we would likely begin to see a return on investment in that time period.”

“As I was saying,” Anderson wrested the conversation back from Larbonne, “the bad news is that enormous public pressure is building on the FED to rachet back their aggressive rate hikes.”

“They’ve kept interest rates so high there’s a danger of cooling the overall economy too much.” Larbonne observed.

“I’m not worried about the overall economy. I’m worried about how GML will pay this loan back!” Anderson retorted.

“C’mon guys,” Ranell had no time for this foolishness. “Just drop it. What’s our bottom line?”

“With additional rate hikes, we could be clear in six months,” Anderson came to the point. “But if they buckle to political pressure,” he entered a command in his keyboard and the intersecting red and green lines no longer intersected, “we never make it.”