The future may be cheaper than thought

Economists have consistently overestimated - and thus overstated - interest payments on 10-year Treasury bonds. The systemic error in their model should be removed

New York

GOVERNMENT economists try to predict the future of lots of indicators, including Gross Domestic Product (GDP), unemployment and inflation. Their record isn't great, whether here or overseas. No less a figure than the queen of England said to scholars at the London School of Economics about the deep recession in 2008: "Why did no one see it coming?"

One variable that our government economists keep missing - and it's an important one - is the interest rate of government bonds. That's a big deal because the bond rate determines how much it will cost the government to service our public debt. Interest payments on the debt are projected to be the fastest-growing part of government spending...

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