Countless financial soothsayers and Wall Street wizards were once members of a curious cult. Their doctrine? The unshakable belief that interest rates had managed to find something resembling the fabled Fountain of Youth, leaving their numbers eternally low and never rising. The "Forever Low" brigade dismissed those of us who argued that high government debt was unsustainable and, partly because low repayment rates would not last forever, we should control spending.
Now, let's be clear. Predicting the economic future isn't like reading the morning weather forecast. Nevertheless, the certainty of the Forever Low cult felt a bit like confidently asserting that winter would never come to Alaska because June was particularly warm. Interest rates have historically fluctuated due to various economic factors. Somehow, many believed that the unprecedented period of declining and low rates over the past few decades had become the new normal, never to change much.
