{"id":59828,"date":"2021-10-11T15:34:13","date_gmt":"2021-10-11T20:34:13","guid":{"rendered":"https:\/\/olduvai.ca\/?p=59828"},"modified":"2021-10-11T15:34:13","modified_gmt":"2021-10-11T20:34:13","slug":"the-5000-year-view-of-rates-the-economic-consequences","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=59828","title":{"rendered":"The 5000-Year View Of Rates & The Economic Consequences"},"content":{"rendered":"

The 5000-Year View Of Rates & The Economic Consequences<\/a><\/h3>\n
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The fact we have the lowest interest rates in 5000-years is indicative of the economic challenges we face. Such was a note brought to my attention by my colleague Jeffrey Marcus of TPA Analytics:<\/p>\n

\u201cBofA wants you to know that \u2018Interest rates haven\u2019t been this low in 5,000-years.<\/strong>\u2018 That\u2019s right, 5000 years. \u2018In the next 5,000 years, rates will rise, but no fear on Wall Street this happens anytime soon,\u2019 said David Jones, director of global investment strategy at Bank of America. This should not come as a shock to anyone who has been watching, given that the FED\u2019s balance sheet is now an astonishing $8.5 trillion and that fiscal spending has caused the U.S. debt to balloon to over $28 trillion (For reference, the U.S. GDP is $22 trillion).<\/em><\/p>\n

All of this really means that the FED and the U.S are in a tough spot. They need a lot of growth to dig out from mountains of debt, but they cannot afford for rates to move too high or debt service will become an issue.<\/strong>\u201c<\/em><\/p><\/blockquote>\n

\"Rates<\/a><\/figure>\n

Yes, rates will probably rise at some point in the next 5000-years. However, currently,\u00a0the<\/strong>\u00a0primary argument is that rates must increase because they are so low.<\/strong><\/p>\n

That argument fails in understanding that low rates are emblematic of weak economic growth rates, deflationary pressures, and demographic trends.\u00a0<\/strong><\/p>\n

Short-Term Rate Rise Can\u2019t Last<\/strong><\/p>\n

In recent weeks, interest rates rose sharply over concerns of a debt-ceiling default and inflationary fears. But, asMish Shedlock noted<\/a>, five factors are spooking the bond market.<\/p>\n

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  1. Debt Ceiling Battle: Short Term, Low Impact<\/em><\/li>\n
  2. Supply Chain Disruptions: Medium Term, Medium Impact<\/em><\/li>\n
  3. Trade Deficit: Long Term, Low-to-Medium Impact<\/em><\/li>\n
  4. Biden\u2019s Build Back Better Spending Plans: Long Term, High Impact<\/em><\/li>\n
  5. Wage Spiral: Long Term, High Impact<\/em><\/li>\n<\/ol>\n

    \u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/article>\n","protected":false},"excerpt":{"rendered":"

    The 5000-Year View Of Rates & The Economic Consequences The fact we have the lowest interest rates in 5000-years is indicative of the economic challenges we face. Such was a note brought to my attention by my colleague Jeffrey Marcus of TPA Analytics: \u201cBofA wants you to know that \u2018Interest rates haven\u2019t been this low […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[431,8511,15470],"class_list":["post-59828","post","type-post","status-publish","format-standard","hentry","category-economics","tag-interest-rates","tag-lance-roberts","tag-real-investment-advice"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/59828","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=59828"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/59828\/revisions"}],"predecessor-version":[{"id":59829,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/59828\/revisions\/59829"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=59828"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=59828"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=59828"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}