Mount Falling Knife

The following chart shows the 10-year moving average of the 10-year treasury yield.


Click to enlarge.

Feeling lucky? Looking to catch the surgical steel? Got financial gauze and first-aid tape?

“The average American in 1940 had an 8th grade education. The post-war prosperity of this country was built by 8th graders." - Mark Steyn

And yet, our best and brightest ivory tower thinkers of the modern financial age offer us a seemingly neverending stream of rising interest rate theories. Do they think our heavily overleveraged society can actually handle higher interest rates? What other explanation could there be?

For what it is worth, the 10-year treasury yield is 2.33% as I type this. Can it go higher? Of course it can. As any 8th grader might point out, there are always two directions it can go.

November 11, 2014
Fed's Plosser: Low rates 'should make us nervous'

"There are many indicators that tell us interest rates are too low," Plosser told CNBC from the UBS European Conference in London.

"There is no precedented history to have rates at zero. I think we are really behaving in a way which is outside of historical norms and that should make us nervous," he added.

Plosser conceded that "wage growth has been very modest" and that falling oil prices were pressuring short-term inflation lower—but said that rates were too low nonetheless.

Perhaps Plosser should ask a Japanese 8th grader for precedence guidance?

Hey, that gives me an idea. Could we outsource the Federal Reserve work to Chinese 8th graders? Think of the money we'd save! Prosperity, baby. That's what I'm talking about. Look, all I'm saying is that if the Fed can't figure out why interest rates are where they are then what do we have to lose by outsourcing the interest rate setting work? Seems like a no-brainer!

And lastly, I'm growing increasingly concerned about a potential sarcasm bubble. I'm having a difficult time telling reality and sarcasm apart. I had to read the Plosser article twice just to make sure it wasn't written by America's Finest News Source.

Source Data:
St. Louis Fed: 10-Year Treasury Constant Maturity Rate