Home / Economic Conditions / Bernanke Hails Higher Interest Rates as a Good Sign. Problem: Bond Rates Have Fallen.
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Bernanke Hails Higher Interest Rates as a Good Sign. Problem: Bond Rates Have Fallen.

Written by Gary North on March 1, 2013

On Wednesday, February 27, Bernanke testified to the House Financial Services Committee. He said this under questioning. “The fact that interest rates have gone up a bit is actually indicative of a stronger economy.” Rising rates indicate that the Federal Reserve’s stimulus policy is working.

Short-term interest rates on U.S. Treasury debt are up a little. On February 1, 90-day T-bill rates were at six one-hundredths of a percent. On February 27, they were at eleven one-hundredths. In short, the rate was a little over zero on both dates.

Short-term rates are generally irrelevant for the economy. What matters far more are longer-term rates. These are Treasury bond rates. For all Treasury debt from two years to 30 years, interest rates were lower across the board on February 27 than on February 1.

The 30-year T-bond rate was 3.21% on February 1. It was 3.11 on February 27. It was 3.10 on February 28.

You can check rates for the month on the Treasury’s website.

So, if we are to take his words seriously — a bad idea, generally — the economy was doing worse on the day he testified than at the beginning of the month.

This man is Bernie Madoff with a beard and a Ph.D. Congress is as gullible as Madoff’s victims were. So are the voters. “It must be true. He said it.”

Continue Reading on www.bloomberg.com

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