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Comment by jjoonathan | Hacker News Reader

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jjoonathan·

If they keep rates low, inflation will explode, and buying a house now will be an excellent investment.

If they spike rates to fight inflation, like in the late 70s, buying a house now will be a terrible investment.

That's why it's a lever of power: it can go both ways.

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What's US gov debt servicing look like as rates go up? Not so good. Interest rates should rise substantially (to stop inflating assets and allowing zombie companies to continue to operate suboptimally), but there is no appetite. The US government owes ~$280B/year for each percent increase in interest rates. Dollar-weighed maturity of current US debt is 69.1 months. When rates rise, within one year roughly 1/3 debt would be financed at the higher rates. Within three year, >50% would be issued at higher rates.

https://www.cbo.gov/publication/56910

https://home.treasury.gov/system/files/221/TreasuryPresentat...

(this is not investing advice, for educational purposes only)

I think everyone knows about paying higher taxes after gov spending, but maybe the rich can pay their fair share like the 70s.

You assume low interest rate has no negative effect in long run. In 30 years the house may be worth $100M on paper, but is unsalable and in neighbourhood that look like Detroit .

If the house can’t be sold, that’s not the value on paper. Valuations are made based on real sales of comparable properties in the area.

Offcourse, it'll be something in the middle which makes sense for the US and global economy.

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