The US government has been borrowing and spending as if interest rates would be low forever. Now the Piper wants a word.
In hindsight, it was obvious it wouldn’t last. Low interest rates — the result of shifts in the global economy, economic stability, low inflation and monetary policy — couldn’t stay at zero forever. But many people behaved like they would even after inflation returned. And it wasn’t just management at Silicon Valley Bank and bank regulators who were unprepared for rising rates. Perhaps the worst offender was, and still is, the federal government.
The US government has been borrowing and spending as if rates would be low forever, continuing even through 2021 and 2022. And it’s still counting on low rates, if President Joe Biden’s latest $6.9 trillion budget is any indication.
Continue reading the entire piece here at Bloomberg Opinion (paywall)
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Allison Schrager is a senior fellow at the Manhattan Institute and a contributing editor of City Journal.
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