I’ve been of the opinion for years that the Fed will not raise rates. Not just for years, maybe for decades.
Why? Because to do so would make the Government’s debt unaffordable and would endanger the sustainability of the Entitlement state.
In fact, since entitlements and the debt are only growing, it’s a good bet that interest rates will have to go lower, even negative. At zero interest (ZIRP), the Government could borrow an unlimited amount of $$ without penalty. At negative (or NIRP) rates, the Government would actually make $$ off its debt.
Why would anyone pay to hold Government debt? In periods of extreme uncertainty or volatility, it might be better to sacrifice 1% of your wealth per year for relative stability vs. risk losing a lot more in the markets. In short, to minimize expected losses.
Of course, NIRP and even ZIRP is effectively a wealth tax. And the best part (for the bureaucrats) is that it does not require any legislation to implement.
Another incentive for corruption not just in cronyism but in government cheerleading for itself, which we have in spades.
I have to laugh - grimly - every time government issues so-called statistics ON ITS OWN PERFORMANCE. It's madness. It's also madness when the press a) don't do their own math and b) treat the government's word as absolute fact.
'Hey junior, what were your grades this term?'
'Straight A's, Mom!'
'Great! Check back with you next quarter!'