A long post by Bill Ackman explaining why he thinks long-term interest rates will be 5.5% instead of the current 4%.
It is simply a manifesto accusing the Federal Reserve and the US government, and the language is also very beautiful.
This is a summary, please see the original text for the exact meaning.
1. The world is structurally different from before. The peace dividend is gone. The long-term deflationary effect brought about by Made in China no longer exists.
2. The bargaining power of unions and workers continues to increase, leading to strikes, wage increases, and more strikes.
3. Energy prices are rising rapidly, and the United States relies on releasing strategic reserves to stabilize oil prices. However, as OPEC and Russia insist on cutting production, this approach is difficult to sustain.
4. The cost of green energy transformation is difficult to estimate. Rising energy prices will increase inflation expectations.
5. The US debt has exceeded 33 trillion, and neither party has the motivation to exercise fiscal restraint. The debt ceiling is being breached every year, and the country is on the verge of default.
5. The government's "tsunami of new bond issuance" every week, China and other countries are selling, if underwriters, insiders and short sellers all sell at the same time, what will happen if the rating is downgraded to "sell"? There are too many bonds, and the only thing people can do may be to walk away.
So no matter how many times Powell reiterates his 2% inflation target, we are not going back to 2%.
In a very different world, 2% is an arbitrary number.
Long-term inflation plus real interest rates plus the term premium suggest that 5.5% is an appropriate yield on a 30-year Treasury bond.
Today we saw the beginning of it all.
Not long ago, a generation ago, 5% was considered a low rate for long-term fixed-rate debt.
Of course I could be wrong, and artificial intelligence might save us. #美联储是否加息？ $BTC
