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> raises the cost of borrowing Long-term interest rates are lower now than in recorded history. > flight of capital to safety, particularly domestically Is t

> raises the cost of borrowing Long-term interest rates are lower now than in recorded history. > flight of capital to safety, particularly domestically Is there any evidence that domestic demand is stronger than foreign demand? > over concerns of the same recession Europe is much closer to recession than the US. Maybe they're the marginal buyers of US bonds and driving down rates? German manufacturing just fell off a cliff. European banks are in crisis. European bonds have negative rates from 3 months to 30 years, while US bonds still have a positive yield. The dollar is strengthening. > A worst-case scenario for the US is higher interest rates This is a bizarre conclusion given dramatic and relentless reductions in US rates, and negative rates in Europe and Japan. I'd say the worst-case scenario is if rates go negative in the US and policymakers lose the ability to stimulate in response to recession. Zero and negative rates push the pension crisis into catastrophe. Then US and global economies turn deflationary at the same time. Very difficult problem to fix.

adventured 7y ago
> This is a bizarre conclusion given dramatic and relentless reductions in US rates It's based on past scenarios that have little to do with the current scenario. A common mistake even among economists. X thing happened in the 1960s or 1970s, therefore it will happen now. Their dogma is the same reason they are nearly all baffled by the lack of wage growth, productivity increases, dynamism, etc. in the economy. There is no scenario where the US experiences rampant inflation (traditional consumer inflation) and soaring interest rates. The only guaranteed bet in fact, is on low interest rates 'forever' (or until default). $35 trillion in debt * 3% = hahaha, very funny, stop kidding around! Take the Japan scenario to the bank. The Fed is going to do everything in its power to pursue that route, as it's the only one left (short of the miracle of spending cuts with tax increases and spending locked to ~1% annual growth).
navigatesol 7y ago
>Europe is much closer to recession than the US. Maybe they're the marginal buyers of US bonds and driving down rates? Makes sense, since the majority of their debt now has negative yields.

adventured 7y ago

> This is a bizarre conclusion given dramatic and relentless reductions in US rates It's based on past scenarios that have little to do with the current scenario. A common mistake even among economists. X thing happened in the 1960s or 1970s, therefore it will happen now. Their dogma is the same reason they are nearly all baffled by the lack of wage growth, productivity increases, dynamism, etc. in the economy. There is no scenario where the US experiences rampant inflation (traditional consumer inflation) and soaring interest rates. The only guaranteed bet in fact, is on low interest rates 'forever' (or until default). $35 trillion in debt * 3% = hahaha, very funny, stop kidding around! Take the Japan scenario to the bank. The Fed is going to do everything in its power to pursue that route, as it's the only one left (short of the miracle of spending cuts with tax increases and spending locked to ~1% annual growth).

navigatesol 7y ago

>Europe is much closer to recession than the US. Maybe they're the marginal buyers of US bonds and driving down rates? Makes sense, since the majority of their debt now has negative yields.