Historically Low Interest Rates
If you lent money to a country with the most debt in recorded history ($23 trillion), would you charge historically low interest rates?
Interest rates on US government bonds are at historic lows.
Loaning money to the USA for 5 years yields .535% interest as of 9AM Central Time.[1]
Loaning money to the USA for 10 years yields .695% interest as of 9AM Central Time.[2]
Loaning money to the USA for 30 years yields 1.254% interest as of 9AM Central Time.[3]
Who would loan a bankrupt country money at historically low rates while the currency is inflated into worthlessness?
Interest rates are this low because the Fed prints money. Federal Reserve Chairman Jerome Powell even almost admits that raising interest rates will crash the economy in a classic pump and dump.
“I think we are actually at a point of encouraging risk-taking, and that should give us pause. Investors really do understand now that we will be there to prevent serious losses. It is not that it is easy for them to make money but that they have every incentive to take more risk, and they are doing so. Meanwhile, we look like we are blowing a fixed-income duration bubble right across the credit spectrum that will result in big losses when rates come up down the road. You can almost say that that is our strategy.” -Jerome Powell, Chairman of the Federal Reserve, then member of the Board of Governors, Oct 2012 Federal Open Market Committee Meeting.
How will this all end?
“The wavelike movement affecting the economic system, the recurrence of periods of boom which are followed by periods of depression, is the unavoidable outcome of the attempts, repeated again and again, to lower the gross market rate of interest by means of credit expansion. There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.” -Ludwig von Mises, Human Action, pg. 570.
[1] https://www.cnbc.com/quotes/?symbol=US5Y
