Numerous pundits are now arguing that low and negative interest rates are the new normal. Wishful thinking.
Why wishful? Because low interest rates on sovereign debt are hiding the most serious sovereign debt problem in world history. Once rates start moving higher, sovereign debt levels everywhere in the western world as well as in Japan will explode, far beyond current historically high levels.
Without question, this debt will be monetized, as it increasingly is in the United States and Europe. This means inflation and higher rates.
So, the real problem ahead is not low rates. Those will end in a flurry not far down the road. The real problem will be the return of inflation and higher rates, much higher rates.
We are at a crucial turning point in interest rates and inflation. Watch out!