Even as prospects for the American economy brighten, consumers are about to face a new financial burden: a sustained period of rising interest rates.
That, economists say, is the inevitable outcome of the nation’s ballooning debt and the renewed prospect of inflation as the economy recovers from the depths of the recent recession.
The shift is sure to come as a shock to consumers whose spending habits were shaped by a historic 30-year decline in the cost of borrowing.
“Americans have assumed the roller coaster goes one way,” said Bill Gross, whose investment firm, Pimco, has taken part in a broad sell-off of government debt, which has pushed up interest rates. “It’s been a great thrill as rates descended, but now we face an extended climb.”
[blockquote]Even as prospects for the American economy brighten, consumers are about to face a new financial burden: a sustained period of rising interest rates.[/blockquote]
The very first sentence of the part quoted discredits the entire story. If anyone seriously thinks that things are brightening, they’re either a shill for the administration or have some kind of neurosis.
Actually, a period of inflation would be of great value to many people.
Those with fixed rate debts would pay them off with inflated dollars.
CDs would start paying reasonable returns again.
Inflation would encourage spending because savings lose value and increased spending would mean more production of goods and use of services…stimulating the economy.
Of course, we have about 80% less manufacturing now that we did in the 70s, so maybe we should cancel NAFTA and GATT first and rebuild our manufacturing base.
C’est la vie.