FYI: October 18, 2018
Regards,
Ted
Dear WEALTHTRACK Subscriber,
How much do interest rates matter? After a decade of historic lows, in certain years 5000 year lows in interest rates, we are about to find out. They are rising.
A recent front page story in The New York Times warned that within a decade interest payments on U.S. debt may exceed the country’s entire military budget.
The Times reported that the Congressional Budget Office estimates that the cost of interest is on track to hit $390 billion next year, nearly 50% more than in 2017.
After a decade of enticingly low interest rates the world is once again awash in debt, governments, businesses, and in some cases individuals, have loaded up. That load is becoming more burdensome.
35 years ago financial journalist James Grant left Barron’s where he had originated the “Current Yield” column to start his own publication called Grant’s Interest Rate Observer. At the time, 30 year Treasuries yielded 12% and 3 month T-bills 9%.
Its stated editorial mission was to “…keep its readers abreast of the things that cause rates to rise and fall and of the forces that tilt the world toward inflation or deflation.”
It went on to say “…it intends to keep watch over the bond market, of course, but also over gold, preferred stock, bank shares, foreign exchange, commodities and other interest-sensitive investments.” Grant’s has done all that and more, and in the process has become a widely read and influential journal for professional investors.
Grant himself has written several financial histories including The Forgotten Depression, 1921: The Crash That Cured Itself, which won the Hayek Prize, and several biographies including John Adams:Party Of One.
On this week’s WEALTHTRACK our conversation begins with why interest rates still matter after nearly a decade of central bank induced distortion.
As always, if you miss the show on Public Television, you can watch it on our website. You’ll also find an EXTRA web exclusive interview with Grant online.
Plus a reminder that if you would like to take WEALTHTRACK with you on your commute or travels, you can now find the WEALTHTRACK podcast on TuneIn, Stitcher, and SoundCloud, as well as iTunes. Find out more on the WEALTHTRACK Podcast page.
Thank you for watching. Have a great weekend and make the week ahead a profitable and productive one.
Best regards,
Consuelo
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