Well, for me it’s a continuation of the insane interest rate chart trend, shown below.
Really, if someone would have told me that in 2011 the U.S. will have racked up $15 trillion in sovereign debt (plus another hundred trillion in “off the books” obligations), AND total U.S. debt will have skyrocketed to nearly $60 trillion BUT interest rates on Uncle Thug’s IOUs (and credit over all) will have COLLAPSED to historic lows, I would have told them they are insane.
But here we are: that exact scenario having played out.
So, going forward, what is the most outrageous, seemingly-impossible, economic scenario imaginable?
Yep, you guessed it: the debt keeps piling up, but interest rates continue to fall to near-zero on Uncle Thug’s debt.
(Spock Conclusion): So, going against every fiber of my body–which is screaming “This can’t go on!!!”–I am again considering buying one of Uncle’s 10-year Treasuries at the upcoming September 13th auction.
Insane, you say?
Perhaps. But where were YOU in 1981, when interest rates on Uncle’s 3-Month T-Bills were in the double digits? Did YOU predict this thirty-year run of collapsing rates–while the debt piled to the sky?
Yeah, I didn’t think so.
Therefore, since neither one of us could have ever imagined today’s scenario, ipso-facto we cannot imagine it continuing on for another decade, right?
But what if it does?
And what if buying a 10-year Treasury yielding in the low-2-percent range turns out to be a brilliant financial decision?
Hey, stranger things have happened, haven’t they?