Forget the Near-Term Unrest, We Need Rate Hikes

Interest rate hikes are the most discussed topic in financial markets, but the bigger problem–the elephant in the room no one wants to discuss–is the likelihood that returns on capital in coming decades will be substantially lower than past returns. Since the 1980s normal returns have been enhanced by the long decline in bond yields, fast Baby Boom-generated economic growth after the Reagan revolution and asset-price inflation to adjust to the Carter Administration’s devaluation of the dollar.