As I previously pointed out, Powerline has a long history of being 100% wrong on the economy. From the "Fed is printing money so inflation will spike" garbage, to "the CRA caused the housing crisis" to the latest "Dodd Frank is crushing small business lending" meme, these guys have not been able to get one thing right.
Steven Hayward continues that trend. On October 8th, he argued that interest rates would spike because China was selling treasuries. He concluded:
The Fed may have to raise interest rates whether it wants to or not in order to get more suckers buyers for our bonds.
As usual, he was dead wrong.
The buying has been crucial in keeping a lid on America’s financing
costs as China -- the largest foreign creditor with about $1.4 trillion
of U.S. government debt -- pares its stake for the first time since at
least 2001. Yields on benchmark Treasuries have surprised almost
everyone by falling this year, dipping below 2 percent last week.
It’s not the scenario that doomsayers predicted would leave the U.S. vulnerable
to China’s whims. But the fact that Americans are pouring into
Treasuries may point to a deeper concern: the world’s largest economy,
plagued by lackluster wage growth and almost no inflation, just isn’t strong enough for the Federal Reserve to raise interest rates.
“As you develop a more pessimistic view on global growth, inflation, and rates, asset managers are going to buy Treasuries in that environment,” said Brandon Swensen, the co-head of U.S. fixed-income at RBC Global Asset Management, which oversees $35 billion.
If anything, Powerline continues their long and solid history of being a great contrarian indicator. Do the opposite of what they project and you'll make out like a bandit.
PS: I'm sure that Hayward will print a clarification any day now ...
