From Krugman today is the below chart. What do we notice about the chart? K uses it to bash the likes of Simpson and Bowles. To Vitus, this is a chart which shows us the Future.
We know that ZH, Rick Santelli, and many many others' ranting about imminent hyper-inflation is completely bogus.
Fine, but note the nature of the curve. It shows almost a symmetric behavior of interest rates before and after 1980. If it continues to be somewhat symmetric, it bodes ill for the economy. No significant recovery for 10 or 20 years.
Interest rates more than anything else tell us the state of the economy. They don't vary dramatically over time. That is a fact. Thusly, the economy's basic nature varies slowly also. This is not a statement about the stock market; it's about what the society, and so the economy, does over long time periods.
James Carville's comment about wanting to be re-incarnated as the Bond Market is a favorite quote in the finance community. Said community, end of the day, does not have a lot of wisdom embedded in its makeup. A few formulas and such - that's it. Useful day-to-day, but not profound. Eg, technical stock analysis is one of those things that makes great sense until it does not - which is quite frequently. However, the finance community does know that whatever drives interest rates is the fundamental life-force of economics.
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