Lawrence Lindsey on how Bernanke's Fed has boxed itself in with no choice but to keep interest rates low and no clear exit strategy

01/04/2010

Economist Lindsey says Fed chairman Bernanke has to keep interest rates low for the U.S. government to be able to cope with the increase in borrowing costs that normal interest rates would bring. The normalized interest rate - the rate at which the U.S. government was able to borrow for the last three decades- is about 5.7%. At that rate the U.S. government would add $800 billion to borrowing costs for 2021, says Lindsey. The U.S. now borrows at about 2.5%

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