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Interest rate insanity

August 9, 2011

Look at this link!:

Seriously f’ed up stuff is going on. I don’t even expect inflation to be below 3.56% for the 30 year average. Combine that with Scott Sumner’s assertion that “That means the tax rate on capital now exceeds 100% in real terms over the next thirty years“, you’ve got to think that the market expects:
1. Extremely low inflation.
2. Extremely poor non-government investment returns.
3. Poor NGDP growth for a long long time.
4. Maybe the European nonsense is causing a flight to safety on a big scale.

I am in the market to buy a house. I am very tempted to just put in an offer in the next week just to take advantage of the low rates. I was offered 4.25% last week, but 10, 20 and 30 year Treasuries have dropped more than 50 basis points since then. If you own a home – look into refinancing this week. Don’t wait!

Update: Just got a house at 3.875% for a 30 year fixed.

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