Bill over at Calculated Risk is the one that “tipped” me off to the piece cited below.   Northern Trust put out their economic and interest rate outlook.   It’s 7 pages long, but I think the first part bears the most reading……

No, our title does not refer to our 43^{rd president. Rather, it refers to the shape of an economic scenario that is beginning to look to us as the most probable going forward. The current economic environment is indeed bleak and there are precious few signs of a recovery. But we believe that if the massive fiscal stimulus package being worked up in Congress is financed largely by the banking system and the Federal Reserve, there is a good chance the economy will begin to grow by the fourth quarter of this year and continue to do so throughout 2010. And if we are correct on this, we also believe there is a good chance that the consumer price index will be advancing at a fast enough pace by the second half of 2010 to induce the Federal Reserve to become more aggressive in draining credit from the financial system. This could set the stage for another recession commencing in 2012, or perhaps some time in 2011. So, the shape of the path of economic activity we see over the next few years is not a “V”, a “U”, or an “L”, but a “W” – down, up, down, up, all within four or five years.}

^{Tom here…..}

^{Read that sentence carefully:}

^{we believe there is a good chance that the consumer price index will be advancing at a fast enough pace by the second half of 2010 to induce the Federal Reserve to become more aggressive in draining credit from the financial system.}

^{Tom again – how do you drain credit from the system?   By raising rates and doing so quite rapidly.}

^{So, if the guys from Northern Trust are right, and I have reasons to believe they are, we’ve got about 12 to 18 months of good rates and then rates are going to go up quite dramatically.}

^{What do you think?}

^{Tom Vanderwell}