In the venerable TV commercial from the 1970s they trick Mother Nature into thinking that Chiffon Margarine is her “sweet, creamy butter,” and she wrathfully declares that, “It’s not nice to fool Mother Nature!” The Fed and the politicians should take a lesson from the old gal and realize that, not only can they not make margarine taste like butter, they also cannot make a great economy by depressing interest rates and spending insane amounts of borrowed money. In fact, these actions are more likely to backfire and cause negative economic repercussions to be much worse than they would be otherwise.
While short-term rates have been flattened, longer-term rates have been responding to the probability that big-time inflation is headed our way. Note that all yields above the 2-Year Note have been rising since the August lows, and the 30-Year Bond yield has risen about +70%.
