Lower for longer is inevitable anyway because it's the only way to prevent US from defaulting
The deeper they dig themselves into the hole, the more impossible it becomes to climb out of it. Though they did have Japan to look at. They could have opted for creative destruction back in 2008 but decided that America couldn't endure the sharp brief pain in order to emerge stronger, so they went down this longer path that can only end with more pain, though it might be a long time until the day of reckoning comes.
Might not be long. One more multi-trillion dollar stimulus package would make the clock hit 12. We long ago sailed past the point where we could have grown our way out of debt. Now the best we can hope for is to hold the status quo (i.e. keep debt servicing costs low by issuing new debt at near 0% rates for as long as buyers will show up). The other choices are hyper-inflation or default. If interest rates rise in the rest of the world the US will be pushed over the edge.
If we stop borrowing, we can grow our way out of debt. It would take the better part of a century, but an increase in interest rates would still be manageable.
The growth will have to outpace the debt by far. Read the interview with Lacy Hunt that I posted above.
The only people who think it's possible to grow our way out are the ones who haven't done the math. A simple calculation to start with is how much would a 1% increase in interest rates increase the annual cost of debt servicing. To get back to "normal" rate levels you'd then have to multiply that by 4.
Forex question:Is a 1.9T stimulus likely weaken the dollar vs. other currencies? I guess since the stimulus is pretty much a given and only a matter of time, maybe it’s already cause the USD to decline...