USA Interest Rates – Long Term Chart
What does history tell us about the possible velocity of interest rates in the USA? I wondered about this after reading this scary prophecy at Matterhorn Asset Management, The Dark Years are Here. Hat tip to PazzoMundo, who provide an excellent summary of the article.
“With the escalation of money printing markets will be flooded with government paper which nobody wants, leaving governments to buy its own junk. The two countries with the worst problems are the UK and the US and their precarious situation will emerge first. Within the next few months rating agencies are likely to downgrade both countries’ debt. This will lead to the value of the treasury bonds and gilts collapsing and interest rates quickly moving up into the teens.”
So how fast can interest rate move up?
- In 1972 interest rates bottomed at 3.5% in January and finally breached 10% 18 months later in July 1973.
- In January 1977 rates bottomed again, this time at 4.61%, they then took almost two years to breach 10% in December 2008.
- Interest rates then stayed high for six years, until finally falling below 10% for the last time in October 1984.
It seems clear the most probable direction in interest rates is up, so they only question becomes how fast will they move up.
While Matterhorn are clearly pushing their gold agenda, investors should consider the ramifications of increasing interest rates and issues faced by the UK and USA. My ongoing first step is to exchange our USD and GBP for AUD.
Here are a couple other articles of interest on fiat money. Thanks to MDC.
Reforming Money – Fixed Fiat Currency
Five minutes to midnight
Speaking of five minutes to midnight this series of videos of Professor Al Bartlett is essential viewing. Arithmetic, Population and Energy: Sustainability Jeremy Grantham recommended this series in his latest quarterly.
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