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Lacy Hunt: The End Of The Yield Famine Is Far Away

Sunday, November 4, 2012 - 7:26 AM
How long can this low interest rate siege last?

"Borrowers will love his answer to the last question. Savers will be troubled. Flipping through one of his chart collections, Dr. Hunt comes to a chart that overlays the history of interest rate declines after major financial panics. If the future replays such past events, it takes about 14 years for interest rates to hit bottom. Since our last financial debacle was in 2008, that suggests interest rates may continue falling until 2022. Yes, savers, you read that right: 2022."
ShorebreakShorebreak2,670 posts since
Apr 6, 2010
Rep Points: 14,474
1. Sunday, November 4, 2012 - 9:11 AM
It's definitely looking like Japan.

I found this interesting BBC article on the lessons of Japan:
Japanese interest rates have been close to zero since the mid-90s, but it has not offered a miracle cure.

Ken TuminKen Tumin5,471 posts since
Nov 29, 2009
Rep Points: 125,600
2. Sunday, November 4, 2012 - 12:40 PM
"Since the financial crisis hit, however, central banks around the world have been lowering interest rates to boost their economies. Though if the Japanese experience is anything to go by, they might be running the risk that low rates may end up doing more damage than good."

You couldn't convince Ben Bernanke of that in a 100 years. Besides we are at the point now where a massive credit crisis would result, and our government would cease to function, if interest rates were allowed to increase to pre-2008 financial crisis levels.
ShorebreakShorebreak2,670 posts since
Apr 6, 2010
Rep Points: 14,474