Monday, September 26, 2016

Interest Rates

September 22, 2016
Purdue University: We've Got Really Low Interest Rates

Interest rates are low.

This breaking news intended for those who have been living in a cave for the past 8+ years.

As a side note, if you are just now emerging from a cave then you might want to take rising interest rate theories with a grain of salt.

New York Times: Interest Rates Have Nowhere to Go but Up

Even as prospects for the American economy brighten, consumers are about to face a new financial burden: a sustained period of rising interest rates.

There's just one major problem with the warning in the New York Times. It was published on April 10, 2010. The 30-year treasury yielded 4.74% then. Nearly 6 1/2 years later, it now yields just 2.32%. Oops.

A saver who assumes that interest rates can only go up may be like a person dying of thirst in the desert who assumes that the water level in his empty canteen can only go up. Might just be wishful thinking.

Hope for the best; plan for the worst.


mab said...

Interest rate theories continue to get poned, despite their flawless "logic"! What gives?

Clearly, rising interest rate theories are special. They are seemingly immune to debunking.

Most theories only need to be disproved once to be forever discarded. Not so with rising interest rate "theories". Special indeed!

mab said...

BTW, I've been on a roll proving I'm not a robot. No fails in recent memory.

Am I losing my skepticism? My cynicism? I'm really starting to worry. Have hackers started using cynical algorithms?

Stagflationary Mark said...


I was in the rising nominal interest rates are a distinct possibility theory camp from 2004 to 2007. At that time, it started to feel like the 1970s all over again.

I was never in the rising real interest rates are a distinct possibility camp though, thank goodness. There's just way too much easy money out there trying to make easy money.

I mean really, you have to have Jeremy Siegel level optimism about our future long-term prosperity to think risk-free 3.5% real yields are ever headed back our way. That camp is has been seeping toxic sludge, burning, and flooding all at the same time! Since 2000! People need to evacuate while there is still time!! ;)

P.S. Sorry about the comment moderation lately. A few spammers latched onto my blog and I had to resort to extreme measures. One was so persistent that he/she tried to post multiple times, even with moderation turned on. Good luck on that! Hahaha!!

mab said...

Jeremy Siegel level optimism

Dow 20,000 theories keep getting poned too. Likewise with Fed "printing" money theories. I'm still trying to get my hands on some "excess reserves".

Stagflationary Mark said...


Well, don't ask me.

I'm still trying to figure out how to get my "cash on the sidelines" back into the stock market.

If I buy stocks with the cash under my mattress, then somebody else will have my cash. Where will that cash be then? Under their mattress? Say it isn't so!!

Hey, I'm not looking to move my mattress cash to someone else's mattress! I want it to go in the stock market and stay there, as the financial experts imply! ;)