patrick.net

I have been saying this to friends for years. Good article. It doesn't take a genius to see what is going to happen WHEN interest rates rise. Just take a look at home prices when Volker increased rates to 13% in the 80's. It's coming.

I think the one caveat to this is that interest rates usually rise during times of economic boom in order to cool off the economy. It's what should have happened during the bubble. Generally then the relationship between rising rates and lowering prices wouldn't be 1 to 1, because if the economy is booming, people would be spending more. But with interest rates artificially low now, I think the rates are going to rise eventually without the usual corresponding economic boom.

swilliamscc says

Volker increased rates to 13% in the 80's. It's coming.

It can't happen. They can bump it up a little bit just so that it's not zero, but it can't go high. They'll probably do that just so that they can say we're not in the ZIRP liquidity trap.

There is a complex relationship between the Treasury Yields and the Federal Funds rate. But basically Federal Funds influence treasury yields. We can't afford much higher treasury yields.