4 ms·

Your graph shows the same as the one from smallnamespace: 2003 was a good year to refinance because rates were at a bottom.

• crdoconnor 10y ago
  Krugman's bet - in his own words and using ISLM - was that interest rates would skyrocket because of deficit spending on the Iraq war in 2003. He paid extra to make this bet. Where on that graph did rates skyrocket exactly?
  • bildung 10y ago
    From the article: "And as that temptation becomes obvious, interest rates will soar. It won't happen right away. With the economy stalling and the stock market plunging, short-term rates are probably headed down, not up, in the next few months, and mortgage rates may not have hit bottom yet. But unless we slide into Japanese-style deflation, there are much higher interest rates in our future." (emphasis mine) That's pretty much what happened: http://www.gridgit.com/postpic/2011/09/us-inflation-rate-historical-chart_259737.png http://www.gridgit.com/postpic/2011/09/us-inflation-rate-his... Inflation doubled from 2002 onwards, then the housing bubble popped, causing inflation to fall. Thankfully not into a long-term deflationary spiral, though.
    • crdoconnor 10y ago
      "unless we slide into Japanese-style deflation" Yeah, that was the best part. "This is going to be awful. It's going to happen. Unless, that is, the exact opposite of what I'm betting on happening actually happens".