It’s now at 1.76% and I’m even hearing clever people in the industry starting to believe that it’s still a bargain as they predict it’s going to Japanese levels before the end of the decade.
There seems to be a growing deflation crowd. Governments around the world are going through austerity measures (the US will most likely go through the same right after the election), wages will go nowhere for a long time with the oversupply of labor and saving rates will increase to the historical average, far away from the 1% we were accustomed to during the last 20 years. The Fed can pump all the money it wants in the system but if banks don’t lend and consumers and governments are deleveraging, more printing won’t work.
It seems like another case where you would have made a lot of money going against the crowd. I remember vividly on this site back in late 2007 (when Bernanke first started cutting rates aggressively) people guaranteeing massive inflation (even hyperinflation) within 5 years. Rates have been between 0 and 0.25 for 3 years and a half now and most likely will stay there until late 2014. Do people still believe that inflation will rear its ugly head before the end of the decade?