Tuesday, 9 June 2009

US long rates - still rising

Here is another look at US long term treasury bond yields. Its the same story; yields are rising.

This is classic fiscal crowding out. The government borrows heavily, and pushes up interest rates. Private sector investment falls, leaving the economy with a big government and a larger public sector debt stock.


Anonymous said...

so we are quickly moving from "if" there will be a bond-market dislocation in the US to "when" does the BMD takes place?

Anonymous said...

" This is classic fiscal crowding out."

This is classic selective presentation of data. Show a long term chart.

Also, what private investment, exactly, is the government borrowing crowding out? Note that there is a glut of houses, condos, hotels, shopping malls, office space, registered vehicles, car dealers, and auto manufacturing in the US. Business equipment investment has been falling since 2006 - and interest rates have been low over that time period - so US businesses don't seem to see much growth potential.

AntiCitizenOne said...

> so US businesses don't seem to see much growth potential.

So why does the government?

boiling frog said...

Higher interest rates in the long bond are reflected in higher mortgage rates which is DDT to the green shoots.