It’s no wonder we despise America’s education system.
It’s a big, fat lie.
In business school, for example, we were taught that markets are efficient.
The professor – typically a guy who has never worked outside of academia – stands in front of the class and explains how the market knows all, sees all and instantly uses all its vast data to set fair and accurate prices.
Oh sure, there’s a grain of truth in it all.
Most lies are born of the best intent.
But anybody looking to prove that markets are dumber than they look only has to set their gaze toward Wall Street these days.
Somehow the market missed the obvious signs that rates will never return to “normal.”
It’s a topic we’ve covered at length.
But until we’re convinced no more of our readers have an ankle stuck in this trap, we’ll continue to pry open its jaws.
We could list a slew of reasons rates won’t rise (horrific news for traditional income investors).
We could show you the economy’s devastating addiction to cheap money.
We could show you how quickly a strong dollar would destroy our economy if rates were bumped higher.
And we could reveal just why a system that honors fake money with more fake money has always been doomed to fail.
But we fear we’d lose a few folks.
Those are dense topics.
Instead, we’d rather blame Trump… and all the ignorant dopes who came before him.
Electing to Lose
The fact is, the Federal Reserve can’t do much with rates because it knows that sending them higher will break Uncle Sam’s debt-burdened back.
In fact, just last month, Fed Chief Jerome Powell climbed his way atop Capitol Hill and warned lawmakers that they must fix the problem.
Thanks to Washington’s love of spending, our nation’s debt is growing faster than our economy.
It can’t be sustained.
But more and more folks are convinced that what little growth we have would dry up if Congress put away its checkbook.
After all, the share of the nation’s GDP that can be attributed to our borrowing is up to 5.1%… significantly more than the 3.8% figure reported a year ago.
But the news isn’t getting any better.
In fact, it’s getting worse… way worse.
Late last week, we got word of a new record. It’s one of those ugly records that nobody wants to be a part of – like getting into the most car accidents or having the highest number of malpractice suits.
In this case, our nation’s debt has hit the $22 trillion mark for the first time ever.
It’s a horrific new record.
And it comes because Washington continues to spend more and more money while taking (we certainly can’t say it’s earned its money) less and less from its citizens.
In February, for example, the Treasury received just $167 billion (a drop of about 20%)… but it spent $401 billion.
You’ll Pay for That
To make the numbers match, of course, Uncle Sam needs to travel the world with his hat in hand.
He needs to borrow more and more cash each day.
And with more borrowing comes more interest payments.
The costs are starting to add up. In fact, interest on our debt is quickly becoming one of the most painful line items in the federal budget each year.
It’s certainly growing the quickest.
Over the next decade, interest payments will total some $7 trillion, becoming the third-largest government spending “program” each year.
It now competes with the size of the national defense and Medicaid budgets.
And those numbers are based on current “historically low” interest rates. If the Fed suddenly sent rates higher, we’d have quite a mess on our hands.
We can hardly believe we’re the only ones seeing it this way.
We are stunned when markets are surprised that the Fed tells us its hands are tied.
And our jaw drops when somebody tells us all of this is already priced into the market.
Clearly it’s not.
The ticker tape over the last three days tells the tale.
We’ve said it often. But apparently we’re not saying it loud enough.
Rates aren’t going back to normal.
They’ll go negative before they go higher.
We just hope somebody tells the efficient-market crowd.
P.S. We just updated our presentation that details our view on what the government does next. If you own America’s top asset… you must pay attention. That’s because Washington is about to make a bold move that virtually ensures we all pay our “fair” share. Fortunately, there’s a simple five-step survival plan. Click here to learn how to get it.