The New CS Board

[jumanji0881]

Debt vs rates -

My comment: I fully expect rates to increase in the next recession as investors demand compensation for risky sovereign debt. Just look at what investors are getting from EU sovereign debt which is basically junk debt.

Richard Sylla: Human Civilization at Momentous Turning Point With Record Debt Levels and Ultra-Low Interest Rates : https://www.financialsense.com/fs-staff/u-shaped-interest-rate-pattern-leads-civilization-decline
Excerpt:
Credit Patterns and Peak Civilizations

In A History of Interest Rates, Sylla identified an interesting pattern corresponding to the rise and fall of major empires.

When we look at interest rate trends, “it seems like there is a U-shaped cycle for each civilization,” he told listeners.

At some point they reach a peak and then slowly trend down overtime. Then, after getting as low as they can possibly get, they start to trend higher again, but usually with much, much higher debt levels. This was a pattern seen with Babylon, Greece, and even Rome.

Applying this analysis to the present, we see that we had a run up of very high interest rates peaking in 1981, with a dramatic fall to near-zero or even negative, Sylla stated. But now, we’re beginning to see rates creep up, and this could be the beginning of the final stage of the cycle, Sylla said.

“We might say that our current low interest rates indicate that we’re at one of the high points of our civilization,” he said. “Maybe things will get worse from now on.”