High Rates and Debt Levels Signal New Economic Cycle With Booms, Busts Ahead
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Interest rates are at their highest level since before the 2008 financial crisis, driven by high and sticky inflation. This marks a major departure from the low rate environment of the past 15 years.
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History shows capitalism goes through boom-bust cycles. We may be at the start of a new cycle, with potential for strong gains like 1995-1999 followed by a crash.
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Today's environment also echoes 2001-2007, with high debt levels that could eventually cause issues. Consumers are taking on more debt now despite rising rates.
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Cryptocurrencies like Bitcoin may be starting a new bull cycle, similar to the dot-com boom of the 1990s. This could eventually go "bang" like the dot-com bubble.
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The economy is doing well for now, but high consumer debt levels will likely catch up eventually. The Fed and Treasury may rewrite rules to protect banks when things wobble.