Meditations On The 100 Year View

Meanwhile, interest rates typically act more like the Hindu-Buddhist tradition of a circular path. Sure, rates change a little bit over time, but they always tend to loop back upon themselves. Unlike stocks, interest rates resemble a wheel. A cycle of birth, death, rebirth and reincarnation. We don’t ascend or decline too much over a century. We don’t depart from the wheel. Except this month, we did.

Holy Cow! 1

Anyway, rates recently have been anything but normal. We’ve never in US history seen interest rates this low. 

As Covid-19 panic set in mid-March, thirty-year US government bonds hit 1% mid-day, while 10-year government bonds hit 0.5%, albeit briefly. We’ve seen 0% overnight Fed Funds rates before, but even in the 2008 Great Recession, long-term US bonds didn’t hit these low rates. This all indicates panic in the financial system. For what it’s worth, the Fed’s move to carpet bomb financial institutions with liquidity following unprecedented interest-rate lows seems appropriate to me. We do not want the wheel to break.

Finally, the vernal equinox again. Few of us alive today will live to see another March 21 vernal equinox, which will not happen until the year 2101. What else will be never-before-seen between now and then? 

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