How much longer can global central banks depress the true cost of money?
Surrender: Eventually the true cost of money will surface, for if the world is a riskier place, the cost of borrowing should rise. If governments are competing with each other to borrow large amounts of money, its price should rise. Sooner or later interest rates will rise, and the violence of the upheaval will be proportionate to the suppression.
Welcome to a world of inverted economics courtesy of quantitative easing and public debt issuance. (Source.)
Update: Interest on ten-year Treasuries jumped 10% last week to yield 3.45%. By September the Treasury has to sell $900 billion in new bonds. Despite Mr. Bernanke’s belief in his ability to hold borrowing rates down, there’s a lot of suspicion that the free lunch isn’t going to be free. “There isn’t enough capital in the world to buy the new sovereign issuance required to finance the giant fiscal deficits that countries are so intent on running.”