The 5,000-year view of rates and the economic consequences
An article by Gareth James from Real Investment Advice
The Bank of America wants you to know that, “Interest rates haven’t been this low in 5,000 years. That’s right, 5,000 years. In the next 5,000 years, rates will rise, but no fear on Wall Street this happens anytime soon”, 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 Federal Reserve (FED) balance sheet is now an astonishing $8.5 trillion, and fiscal spending has caused the U.S. debt to balloon to over $28 trillion (for reference, the U.S. GDP is $22 trillion). All of this 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… Read on here.