[CNBC contributor Larry Kudlow urges that the U.S. start issuing much longer maturities of government bonds, possibly experimenting with 50-year debt issuance, and maybe go out as long as 100 years. Kudlow’s a smart guy with a wealth of experience and his article is well worth reading.]
If President-elect Donald Trump’s economic growth plan — slashing business and personal marginal tax rates and rolling back costly business regulations — is achieved next year, the economy could break out with 4 to 5 percent growth. And that means much higher interest rates.
This rate rise will be growth-induced, a good thing. Higher real capital returns will drive up real interest rates. And inflation will likely remain minimal, around 2 percent, with more money chasing even more goods alongside a reliably stable dollar-exchange rate.
We’re already seeing some of this with the big post-election Trump stock rally occurring alongside a largely real-interest-rate increase in bonds.
And what that says is the time to act is now.