Roger Thornhill: Nothing.
--North by Northwest
Yesterday 10 yr Treasury yields closed decisively above 2%. Today we are seeing from follow thru. Long bond yields are up almost 50% in 6 months.
Currently markets are drinking this pretty. Rates are rising because the economy is strengthening...
At some point the reality of higher interest rates in a leveraged economy is likely to set in. Particularly because it is occurring in the face of a massive QE program by the Fed to buy rates down.
At that point pretty morphs into pretty ugly.
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The policy of artificially lowering the rate of interest below its potential market height seduces the entrepreneurs to embark upon certain projects of which the public does not approve. In the market economy, each member of society has his share in determining the amount of additional investment. There is no means of fooling the public all of the time by tampering with the rate of interest. Sooner or later, the public’s disapproval of a policy of over-expansion takes effect. Then the airy structure of the artificial prosperity collapses.
~Ludwig von Mises
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