The Bond Market Won’t Let America Be Irresponsible Forever
The national debt is rising, and interest rates will follow — eventually.
Eventually it will affect interest rates.
Photographer: Ting Shen/Bloomberg
It never ceases to amaze me how many people — even people who should know better — believe that the basic laws of economics and finance don’t apply to them. Maybe they think that this time is different, or that they can get something for nothing, or that they are somehow exceptional. But reality always catches up, even if it sometimes takes a while. This applies to nations as well as individuals.
Which brings me to the subject of interest rates. They are still low by historical standards, despite America’s huge debt. Why aren’t bond markets sounding the alarm? It’s a question people have been asking for more than 20 years now. No wonder so many economists and politicians convinced themselves that debt doesn’t matter.