This has been discussed 100 times on this board. The US has no choice but to borrow money from overseas to finance its monstrous account deficit. If the yields don’t compensate for inflation, no one will buy the paper. If China, Japan et al start to take their money elsewhere, the rates MUST go up to bring the buyers back or the US govt goes bankrupt in a couple of days. It is that serious, no fooling. There is no money left in the federal kitty and the foreign money is the only thing left to keep it going. China and Japan demand will determine our interest rates, the federal reserve and US govt are prisoners at this point. Yes inflation is going up and yes rates are going to go up to match. That will drive home prices down as well as the cost of that extreme leverage gets expensive in a hurry as the rates go up. The savers still win as long as they buy short-term instruments (6-month CDs, etc…)
