> I do wonder what will happen if mortgage rates return to even their pre-Volcker level, much less the 1980s levels It's a scenario that can't occur as far as

> I do wonder what will happen if mortgage rates return to even their pre-Volcker level, much less the 1980s levels It's a scenario that can't occur as far as the Federal Government's solvency is concerned. Just 5% on $50 trillion in public debt, 20 years out = fiscally say goodbye to the US military and Social Security (or say hello to the highest taxes on earth). Even 3.x% on $35 trillion in ~10 years starts to become a figure impossible to manage as it explodes the budget. You can plainly see the limits on where the Fed can allow rates to rise to. Instead, the Fed and government's only option is to do everything possible to hold rates down forever. The Japan model reveals some of what the US is going to face, most likely. It's also why US growth keeps persistently sliding lower as we keep taking on more public debt, the debt is putting our productive capital into perma cold storage, robbing the economy of dynamism until we hit zero expansion. That debt will gradually yield less and less, we'll have $40+ trillion yielding 1.x% eventually. Effectively a massive pool of permanently dead wealth stripped out of the economy that will never be put to productive use; and that process of removing money from the economy simultaneously is what helps prevent traditional inflation from soaring despite the low rates. Picture reversing that and rapidly injecting that $40 trillion of dead capital back into the economy and see what would happen in terms of inflation for example.