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Rate chart trend line

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#1 gm_general



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Posted 25 October 2018 - 04:23 PM

There was this article I saw that showed a Fed rate chart with notes:




In looking at the chart I noticed an obvious downtrend line, which I have added here. This line starts just after the abnormal spike in 1980. I have seen similar trend lines forming after a spike in the VIX chart and other cases. So every time the rates get up to the line since the 80s, you get something awful happening in the economy. The last 2 times were Jan 2000 and June 2007. I would say this is because the debt service costs exceeded the ability to pay. The debt is going up in parabolic fashion, so the rate that could be taken should drop in such a manner over time. So now we have an interesting situation, as we have gone a bit over the line (current rate marked in red), which is around 2%. I note that from what I found, the interest costs on the total US debt bottomed about $2.5T, and has probably risen now to about $3T, though the data I have is a year behind. If what I observe is correct, we should be in trouble within a matter of months. Also, with the slope of this line, the max rate we can take will reach 0% by 2024 or so. What to do then? Negative rates forever?