With interest rates soaring, Warren Buffett’s famous aphorism about the looming exposure of the naked swimmers when the tide goes out is again having its moment. And its quite simple: Massive debts have been accumulated by all sectors of the economy over recent decades, but the tariff appeared manageable for much of that time because the central banks drastically suppressed and falsified interest rates at all points on the maturity spectrum and for all forms of public and private debt.
That is, we have been in a world of systematically increasing leverage and borrowed prosperity owing to the central bankers false predicate that “administered” interest rates, rather than free market prices for money and credit, are the preferred route to growth and rising living standards.