Listen Up

[Narcotized]

THE MAN has spoken. Peter Schiff testified in front of congress giving a basic Economics 101 lesson. It's a thing of beauty. Watching sound economics is like watching a beautiful symphony working together. Watching our government controlled economy is like watching a bunch of fat grandmothers wrestling in thongs. It's repulsive.

Read the following. It's beautiful.

http://www.forbes.com/sites/greatsp.../peter-schiffs-prescription-for-job-creation/

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Members don't see this ad.

 

[GoodmanBrown]

Peter Schiff correctly identified the severe recession that happened in 2008-2009. Good for him. Others did as well, but not nearly as many as should have. However he's not a god, and I don't understand why people treat him as such, other than he speaks to people's own inherent paranoia and worry.

Quotes that make me question Mr. Schiff's article include:

In a free market jobs are created by profit seeking businesses with access to capital.

This is obviously untrue. Corporate profits have been very healthy for over a year now. These companies have the capital; where are the jobs?

Contrary to the beliefs held by many professional economists spending does not make an economy grow. Savings and investment are far more determinative. Any program that diverts capital into consumption and away from savings and investment will diminish future economic growth and job creation.

If banks are increasing their capital (i.e. not lending deposits), then putting money in savings removes it from the money supply. This cannot by definition make the economy grow. The Japanese did this for a decade and did not see growth.

Unfortunately our economy is so weak and indebted that we simply cannot currently afford many of these [infrastructure] projects. The labor and other resources that would be diverted to finance them are badly needed elsewhere.

Really? At 9.1% unemployment, we really can't spare a few workers to build bridges?

Resources, including labor, must be reallocated away from certain sectors, such as government, services, finance, health care, and educations, and be allowed to into manufacturing, mining, oil and gas, agriculture, and other goods producing fields.

It's kind of ironic that Mr. Schiff has this in his article extolling the virtues of the free market. Was it the government that out-sourced manufacturing jobs to China and IT jobs to India? F*** no. It was the free market.

b. Repeal all Federal workplace anti-discrimination Laws

I don't know where to begin with this one. I wasn't alive then, but yeah, I've heard Jim Crow laws were real great for African-Americans...

c. Repeal all laws mandating employment terms such as work place conditions, over-time, benefits, leave, medical benefits, etc.

Same as above. I hear the meat-packing industry circa 1900 was a real pleasure to work in, and the workers had to be treated extremely fairly or they quit...

No doubt an environment of higher rates will cause short-term pain. ... In the short-term GNP will need to contract. There will be a pickup in transitory unemployment. Real estate and stock prices will fall. Many banks will fail. There will be more foreclosures. Government spending will have to be slashed. Entitlements will have to be cut.

I guess my question for certain members on this board is, what's the end-game? Many folks here glibly talk about returning to the gold standard, cutting government spending, raising interest rates, etc. as if it will produce short-lived, mildly unpleasant economic consequences. It won't. It will lead to severe depression.

What about your livelihoods? If unemployment jumps to 20% and the government slashes Medicare rates (even further, I know they already suck), who's going to pay your anesthesiology bills? You really think you'll be living on 350K+ if 50% of your patient population can't actually pay you?

 

[Surfer]

Same as above. I hear the meat-packing industry circa 1900 was a real pleasure to work in, and the workers had to be treated extremely fairly or they quit...

see, you sound like a capitalist already! the market fixes itself. it isn't rocket science. the govt only makes it more expensive, less efficient, and ultimately hurts everybody.

 

[Ketafol20]

To create conditions that foster growth, the government should balance the budget with major cuts in government spending, severely reform and simplify the tax code. It would be preferable if all corporate and personal taxes could be replaces by a national sales tax. Our current tax system discourages the activities that we need most: hard work, production, savings, investment, and risk taking. Instead it incentivizes consumption and debt. We should tax people when they spend their wealth, not when they create it. High marginal income tax rates inflict major damage to job creation, as the tax is generally paid out of money that otherwise would have been used to finance capital investment and job creation.

If you like this, you will like what you hear from Gary Johnson Presidencial candidate and ex-governor of New Mexico

 

[urge]

[YOUTUBE]_BHLguFEN3M[/YOUTUBE]

 

[pgg]

If banks are increasing their capital (i.e. not lending deposits), then putting money in savings removes it from the money supply. This cannot by definition make the economy grow. The Japanese did this for a decade and did not see growth.

I believe what Schiff is referring to by increased savings is at an individual level, not the bank level. When individuals save, their money is invested and that puts capital to work for businesses.

If every American family bought one less consumer electronic device manufactured on the other side of the Pacific, and simply put that money in a savings account (which could then be lent by the bank), the economy would be better off.

Really? At 9.1% unemployment, we really can't spare a few workers to build bridges?

Every $ the government spends to build bridges is a $ that came from taxes, borrowing, or printing. I think Schiff is simply arguing that a $ could be put to better use than infrastructure projects. I think reasonable people can disagree here.


I don't know where he gets the idea that repealing discrimination and workplace safety laws is a good idea. Maybe he thinks a nation of factories staffed by children is preferable to a destitute nation without any factories at all - and I'd have to agree, except it seems obvious to me that it's not an either-or proposition.

I guess my question for certain members on this board is, what's the end-game? Many folks here glibly talk about returning to the gold standard, cutting government spending, raising interest rates, etc. as if it will produce short-lived, mildly unpleasant economic consequences. It won't. It will lead to severe depression.

You're absolutely right, though I think you may be putting too many marks in the 'will cause a depression' column next to each of those items.


It's like driving a truck toward a brick wall at 100 mph with your hand over your left eye, then uncovering your eye 50 feet from the wall.

Then people say you hit the wall because you uncovered your eye, or they say things were better when you had no depth perception, when obviously the crash vs no-crash point was passed long ago, and for reasons that had little to do with what your left hand was doing. You're still going to hit the wall.


I think the depression is coming whether we do the glib things you mention or not; that event horizon is past. We have $14+ trillion in federal debt. The more relevant question is:
- GIVEN that we will either default or inflate away the debt
- GIVEN that our nation can not sustainably keep living the way it is
What can we do to minimize the pain of the coming recalibration and lay a foundation for a more solid, sustainable economy AFTER the depression?

Thus far, it seems most would rather pretend that the last 30 years of unprecedented "growth" and prosperity is anything other than a historic anomaly, a bubble of debt and credit hidden behind one shell after another.

What about your livelihoods? If unemployment jumps to 20% and the government slashes Medicare rates (even further, I know they already suck), who's going to pay your anesthesiology bills? You really think you'll be living on 350K+ if 50% of your patient population can't actually pay you?

No. I think we're ALL going to be hurt, and hurt badly.

Doctors in America aren't rich. We're a working class, though one in the upper edges of the middle class. Whether it's a crash, depression, or multi-decade grind, we're going to get caught in the gears too.


I think in 10 or 20 years we're going to look back on the SDN anesthesia forum threads about $250K vs $450K and collectively say, "holy ****, we totally missed the forest for the trees, the REAL threat to our prosperity had nothing to do with militant CRNAs" ...

 

[urge]

[YOUTUBE]_BHLguFEN3M[/YOUTUBE]

I wonder what he wrote the Dr on that piece of paper at 10:07 mark. Is he trying to hook up with her later on?

 

[Narcotized]

.

 

[Narcotized]

Thus far, it seems most would rather pretend that the last 30 years of unprecedented "growth" and prosperity is anything other than a historic anomaly, a bubble of debt and credit hidden behind one shell after another.
...

Ohhhhhhhhh, KILL SHOT!!!!!

KNOCKED HIM OUT!!!!!!!!!!!!!

 

[Narcotized]

.

 

[baller71457]

Most of what you say is grossly incorrect. We are heading to a depression anyway. Do you really think endlessly borrowing money to give to people so it doesn't feel like a depression is sustainable? Seriously? Do you really think banks are operating under free market conditions with the FED lending them printed funny money at artificially low rates? Do you think if a black man brings a valuable skill to a business they will slash their own throats and not hire him so they can hire lesser skilled whitey? Oh, that must be why there are so many white running backs and white rappers. Thank God for affirmative action or else the NBA would be all white as well. Go ahead and throw out the race card as your reply, and ignore that I used those extreme highly visible examples to overwhelmingly smash your idea that skill black men won't be hired in racist America without government protection.

Do you think the labor to build bridges is free? Where do you think that money comes from? You are stealing it from somewhere, other industries now, or other industries later. It ain't free. The government has no money to pay them. It can only transfer it from somewhere else. There is also nothing wrong with outsourcing cheap labor to India. We all benefit from that and our resources can be put to better use. Our problems come from propped up life styles living off of unsustainable debt. Take away all of the debt and freebies, and trade would have to be balanced with labor in this country competing with the rest of the world. The only reason we can buy more than export is because we borrow the difference. I could care less who predicted what. Peter Schiff understands basic economics. No not everything he says is accurate (expanding jobs at his brokerage firm does little to help the economy, as brokerage firms produce basically nothing and mostly just transfer money around. Those jobs are similar to ditch digging jobs he refers to. But it's his firm so of course he's a little biased). But overall he has a Hell of a lot more sense about economics than some of the political agenda fools like Krugman that say we can borrow and spend out of a borrow and spending hole. That's really brilliance there.

WTF? Are you serious? Even when racism was way more prominent than it is now blacks still found success in sports. Why? Because out of fields sports is the one you can clearly quantify pretty much every aspect of performance. You can easily tell who's the fastest, strongest, best and that's who you want. Most jobs it's a subjective assessment of who's the "best" candidate for a job. Think about the "worst" person you've ever encountered in medicine. Is that person so bad that they're killing or endangering patients on a daily basis? So your perception of who is "good" and "bad" is mostly subjective. That's where racism and stereotypes can affect hiring. Even in your example of sports look at the "subjective" fields of it. You can't measure how good a coach is and by that token what's the percentage of professional head coaches and GMs present in a field that's clearly dominated by black performers? Don't even bother looking at the college coaches. So yes even with a "black" president racism can and still does affect employment.

 

[GoodmanBrown]

A couple points here, then I'll probably withdraw myself from the converstaion. I suspect we'll just continue talking at each other with no one convincing the other of anything.

see, you sound like a capitalist already! the market fixes itself. it isn't rocket science. the govt only makes it more expensive, less efficient, and ultimately hurts everybody.

That sentence was meant ironically (which I'm sure you know) because people don't quit when they're desparate for work. If we (as a nation) cut all sorts of entitlements, cut government spending, and return to the gold standard, we're going to see massive unemployment. Combine that with revoking all labor laws, and you'll see the US equivalent of Chinese sweatshops. People won't be able to quit because they need to feed their kids.

Doctors in America aren't rich. We're a working class, though one in the upper edges of the middle class. Whether it's a crash, depression, or multi-decade grind, we're going to get caught in the gears too.

A lot of what you said is pretty reasonable, and I agree with. But your analogy of the truck driver is too dire. We're not that close to the wall yet. In the medium-term, spending needs to be lowered, but we're not at a point where all hell has to break loose. I read an interesting article that posited that all Congress has to do is nothing to cut the deficit to nothing in 8 years. The 3 simple changes that would work this miracle are: 1) Let the Bush tax cuts expire, 2) Allow the AMT to affect more Americans, and 3) Let the SGR take effect and pay doctors and hospitals less. I'm not advocating this is how we should balance our budget, but if it can happen without even touching defense and social security, it's not an impossible task.

Second, if you truly believe that the US is going to loss 30 years of "bubble" gains, you really should be honing those fighting skills for the Thunderdome. The Great Depression saw the stock market fall by about 50% from peak to trough. If the current US economy declines to a 1970s level, we'll see the GDP fall from $14.5 trillion to $1.0 trillion, a 93% decline (or $5.8 trillion in IAD, leading to a 60% drop). The Dow Jones will fall from 11,500 to around 900 (a 92% drop).

Finally, doctors are only working class in that do work in exchange for money. But so do hedge fund managers, and I think we can all share a hearty round of laughter at considering them "working class." Even at 190K (the recent average FM doc's salary), that puts an entire family in the 95th percentile for US incomes. Recent threads regarding $100K cars and saving $10 million for retirement should pretty firmly establish that the concerns of doctors are not the concerns of the masses.

Do you think the labor to build bridges is free? Where do you think that money comes from?

Narc, you raise a lot of points in a very short paragraph. I've already spent much too much time writing instead of studying, so I'll respond to a select few.

Re: racism. I just don't think your examples are informative for the general population. As baller said, sports are a highly standardized, highly measured, highly scrutinized arena. Using current day examples of integration (when we live in a country with a Civil Rights act) doesn't really hold weight regarding what would happen to society as a whole if all the civil rights legislation was repealed. I'm skeptical that the market would punish people that severely for discrimination. It didn't for a couple hundred years, so without legal penalties, why will it be so different now?

Re: bridges. Are you advocating eliminating all public goods? I mean, should we have an interstate highway system since it was built with stolen money? Should we have public schools? A police force? A fire department? All these things are paid for with money forcibly taken from people. I suspect most people would be loath to live in a country without any of those things.

 

[cfdavid]

It has to be obvious that we need an industrial policy. We absolutely must get back to making high quality THINGS. Preferably, high ticket, and high value-added "things".

This is the only sustainable way to create wealth in a country our size.

 

[Narcotized]

Are you advocating eliminating all public goods? I mean, should we have an interstate highway system since it was built with stolen money? Should we have public schools? A police force? A fire department? All these things are paid for with money forcibly taken from people. I suspect most people would be loath to live in a country without any of those things.

Agree with you on all counts. I have no problem with public goods (though it would be more efficient if it were bidded out to private business). What will never work is this idea that, hey, we're in a recession; let's "create jobs" through government work. That will always remain ineffective and destructive.

 

[cleansocks]

Schiff makes an extremely understandable case here for anyone who has studied economics as he is simply applying classic macroeconomic principles to the current economic crisis. He does a reasonable job explaining it from my standpoint but it's all a bit complex for people that haven't read an intermediate macroeconomic text (it's a semester long course he's summing up in one small article).

 

[Narcotized]

Think about the "worst" person you've ever encountered in medicine. Is that person so bad that they're killing or endangering patients on a daily basis?

Probably.

 

[Narcotized]

Schiff makes an extremely understandable case here for anyone who has studied economics as he is simply applying classic macroeconomic principles to the current economic crisis. He does a reasonable job explaining it from my standpoint but it's all a bit complex for people that haven't read an intermediate macroeconomic text (it's a semester long course he's summing up in one small article).

Exactly. That's true economics, not this agenda political economics often found in academics and our media. It can't be summarized in a message board text, but there are plenty of sources out there for those interested.

 

[countingdays]

Exactly. That's true economics, not this agenda political economics often found in academics and our media. It can't be summarized in a message board text, but there are plenty of sources out there for those interested.

Here's true politics. If you can take from 40 percent and give to 60 percent you can get yourself elected unless you've made that 60 percent so lazy that they won't show up and vote.
If you give them money directly from your bank account for their votes it's a crime. If you take my money and launder it through the government then give it to them it's a policy.

 

[dhb]

Here's true politics. If you can take from 40 percent and give to 60 percent you can get yourself elected unless you've made that 60 percent so lazy that they won't show up and vote.
If you give them money directly from your bank account for their votes it's a crime. If you take my money and launder it through the government then give it to them it's a policy.

sad but true

 

[pgg]

A lot of what you said is pretty reasonable, and I agree with. But your analogy of the truck driver is too dire. We're not that close to the wall yet. In the medium-term, spending needs to be lowered, but we're not at a point where all hell has to break loose. I read an interesting article that posited that all Congress has to do is nothing to cut the deficit to nothing in 8 years. The 3 simple changes that would work this miracle are: 1) Let the Bush tax cuts expire, 2) Allow the AMT to affect more Americans, and 3) Let the SGR take effect and pay doctors and hospitals less. I'm not advocating this is how we should balance our budget, but if it can happen without even touching defense and social security, it's not an impossible task.

The problem is that cutting the deficit to zero in eight years ignores the fact that we have crippling debt NOW, and will continue to add to that debt in those eight years.

I just keep coming back to $14 trillion in current, existing federal debt. There's no credible plan to eliminate the annual budget deficits in the short term, much less start reducing that debt.

I don't believe any ONE of the three budget-balancing steps you mention above will be implemented. All three are political suicide, today. So is breathing wrong on social security or defense spending.

Whether it happens in 2 years or 5, when interest rates rise even a few percentage points, we're looking hundreds of billions per year in interest alone. (I realize that not all federal debt is short term, and that there will be a lag before higher rates really inflict their full damage.)

Our trade deficit has approached $1 trillion per year, mostly oil.

None of this even takes into account the fact that there aren't enough buyers for our debt today, and we've needed the Fed to step in to keep things going.

None of this is sustainable, and I'm skeptical that it's even voluntarily reversible. Eventually, whether voluntary or not, that unsustainability will come to a head, and there must be a very real recalibration in our standard of living.

Our financial problems are not secrets. Yet we're still digging the hole deeper. Indeed, Obama wants to pick up another $447 billion shovel, and it's not like he's alone in creating or desiring the latest plan. I'm not a conspiracy theorist, I don't believe he's a sinister villian deliberately engineering the destruction of the middle class. It disturbs me even more that there are smart people who really think the best thing we can do is dig deeper and buy time, hoping for some kind of global hail-mary miracle solution to appear.

I don't share your macro optimism partly because I can't make the math work, and partly because our elected leaders aren't even trying to make the math work.

Second, if you truly believe that the US is going to loss 30 years of "bubble" gains, you really should be honing those fighting skills for the Thunderdome. The Great Depression saw the stock market fall by about 50% from peak to trough. If the current US economy declines to a 1970s level, we'll see the GDP fall from $14.5 trillion to $1.0 trillion, a 93% decline (or $5.8 trillion in IAD, leading to a 60% drop). The Dow Jones will fall from 11,500 to around 900 (a 92% drop).

There is some hyperbole in what I've written, I'll admit that.

Of course there has been real growth since 1980. It's not all illusory. Even debt fueled growth can create real things of value that don't evaporate when the financial scheme collapses.

Of course, real growth can be also be lost as bubbles collapse and overcorrect.

Finally, doctors are only working class in that do work in exchange for money.

It's a matter of semantics. We're all rich from the perspective of Chinese peasants. My definition of rich is "doesn't have to wake up in the morning and work" and my definition of working class is "has to wake up in the morning and work."

If I quit going to work (setting aside the court martial and keel-hauling thing) I'd quit getting paid, and in sometime less than a year, after going through savings and cashing out retirement accounts, I'd be broke and homeless.

I certainly have a larger cushion than the guy who works the register at at the Wal-Mart down the road, but we both have to work to survive.

 

[epidural man]

GoodmanBrown, please don't leave just yet. I want you to explain again why you think people shouldn't save money, and let us know once again how this is bad for the economy - how people getting out of personal debt and spending money responsibly is not good.

I anxiously await the response. I'm on the edge of my seat. I've got my credit cards ready.

 

[GoodmanBrown]

PGG, a couple thoughts.

The problem is that cutting the deficit to zero in eight years ignores the fact that we have crippling debt NOW, and will continue to add to that debt in those eight years.

I think this will be a point of disagreement between us. Currently (from Wikipedia), the amount we spend on servicing our debt stands at 6%. This does not seem crippling at all to me. If Europe continues to have financial difficulties (an understatment...), I don't foresee interest rates increasing in the near term. I could be wrong, as I'm sure Greece, Italy, Ireland, etc. thought the exact same thing. Time will tell.

I don't believe any ONE of the three budget-balancing steps you mention above will be implemented. All three are political suicide, today. So is breathing wrong on social security or defense spending.

I agree and disagree simultaneously on this one. Yes, it would be a heaven-sent miracle if our politicians pulled their heads out of the asses long enough to enact real long-term financial reforms. However, this bipartisan "supercommittee" may in fact be able to pull it off. It at least leaves me with a shred of hope because the sacred cows of both parties will get some chopping if the committee stalemates and doesn't do anything.

None of this even takes into account the fact that there aren't enough buyers for our debt today, and we've needed the Fed to step in to keep things going.

Certainly a concern. It's something I won't say too much on because it's an area in which I'm fairly ignorant. I don't track interest rates religiously, but didn't QE2 end in June? Have rates risen much since then? It's too late for me to bother looking it up...

It's a matter of semantics. We're all rich from the perspective of Chinese peasants. My definition of rich is "doesn't have to wake up in the morning and work" and my definition of working class is "has to wake up in the morning and work."

We're all rich compared to Chinese peasants and poor compared to Carlos Slim. I guess I'll just take your advice and try to spend less than I make and be happy with that.

 

[GoodmanBrown]

GoodmanBrown, please don't leave just yet. I want you to explain again why you think people shouldn't save money, and let us know once again how this is bad for the economy - how people getting out of personal debt and spending money responsibly is not good.

I anxiously await the response. I'm on the edge of my seat. I've got my credit cards ready.

You get my last post, epidural man. My wife's back tomorrow evening, so there'll be less late-night Internets.

Okay, so I wouldn't say I'm arguing that people shouldn't save money. They should, and I certainly do. On a microeconomic level, it's a great idea. Saving money gives a individual/family stability in harder economic times and allows for better rates on bigger purchases. You save money overall by paying 50% of the cost of your new car instead of financing the entire thing via loan. So, I do think it's important to save money individually.

My point in the above post was that if banks aren't lending money freely, saving money hurts the economy overall. In Japan in the 90s, banks were overleveraged with bad debt, so when people saved money (by giving it to the bank), the bank just kept that money on their balance sheet to offset bad debt. So, when individuals saved money, their money effectively left the money supply. Banks wouldn't loan it back out. So, that was bad for the economy as a whole because money was, in essence, disappearing.

I wouldn't even go so far as to say that I'm asserting that's happening now in the US. Some of that is probably happening now, but we're not Japan or anything. The major banks probably know they've got a decent amount of bad home debt still on the books. So, lending is slower and more cautious than it was in 2008. This is not a bad thing because lending was too profligate in 2008. But it does make me wonder. If I give my bank an additional $100 (by putting it in my savings account), how much is being lent back out and how much is just sitting in my bank's vault?

My whole point with this is that I take issue with Peter Schiff saying saving more money will fix all our economic problems when I think it will actually slow economic growth for some amount of time.

 

[Narcotized]

I think saving will actually slow economic growth for some amount of time.

This is because I believe the politicians have you believing borrowing money to consume is actually growing the economy. It isn't growing anything but a deeper hole. You look at saving the same way a kid looks at having his credit card taken away. He feels this is hurting his financial situation, when it is actually helping to turn the corner. You don't get out of massive debt pain free. You are equating this pain with slower economic growth, which isn't the case at all.

 

[Narcotized]

Currently the amount we spend on servicing our debt stands at 6%. This does not seem crippling at all to me.

On 9/10/01 I heard people say "currently" we have no reason to fear terrorism. Somebody in 1999 said "currently" you should invest your entire fortune in internet stocks. Somebody else in 2006 said "currently" I'm keeping my entire savings in real estate.

I'm not being sarcastic in a jerk way, just pointing out that currently we have record low interest rates and it's highly likely incorrect to think they will stay there indefinitely without massive money printing or other drastic measures that have severely negative consequences. Numbers could care less about speeches and agendas. The mathematical box is closing in.

 

[Narcotized]

WTF? Are you serious?... Most jobs it's a subjective assessment of who's the "best" candidate for a job.... You can't measure how good a coach is.

WTF I am serious! Clearly racism exists. The point is if your subjective assessment is incorrect and you hire the wrong coach based on race (whether it be racism or affirmative action), you have just put your team at a competitive disadvantage. You have just given an advantage to teams/companies/doctors that don't hire based on race. The idea that "anybody can fill a position and do just as well so therefore racism doesn't hurt productivity" is completely incorrect.

If you are racist you will lose in the long run. Bear Bryant learned this in the 70's when USC kicked his ass, and he discontinued Alabama's racist recruitment and began immediately signing black athletes.

 

[pgg]

I think this will be a point of disagreement between us. Currently (from Wikipedia), the amount we spend on servicing our debt stands at 6%. This does not seem crippling at all to me.

It wouldn't be, if that was the whole truth.

The pie chart on that page shows that interest payments of $197 billion were 6% of the federal budget. But the quiet lie in plain sight on that chart is that it lists federal budget as $3.456 trillion.

Federal receipts in 2010 were $2.16 trillion!

So with rates at unprecedented historic lows, already interest payments in 2010 were 9% of actual revenues. Still - that's managable debt. For now. (Which is why things haven't imploded already.)

But when rates get back up to 5% (to pick a nice round plausible number) then we're looking at a minimum of $700 billion based on our current $14 trillion in debt. (Again, I know that it won't be an overnight jump; some of the debt is not short term debt.)

$700 billion is 35% of $2 trillion in revenue. Even that might be bearable, with massively painful cuts to spending. But it won't be, for two simple reasons:
1) $14 trillion is our current debt, and it's going much higher
2) When things start to spin out of control, 5% won't be where interest rates stop

What happens if (when) interest rates reach 10%?

If Europe continues to have financial difficulties (an understatment...), I don't foresee interest rates increasing in the near term. I could be wrong, as I'm sure Greece, Italy, Ireland, etc. thought the exact same thing. Time will tell.

It doesn't matter if it happens in 2 or 5 or 10 years, interest rates have nowhere to go but up.

The national debt is patient. It's not going anywhere but up. When the rates go up, it will crush us.