Answer: After a whole lot of taper.
John Hussman has a famous graph of short rates plotted against the ratio of monetary base to GDP. I’ve never seen anyone plot the same for long rates, so I did it:
Recently Base/GDP has been about 0.22, so we are way out on the right end tail. It would take a reduction of the ratio of about 15 percent of GDP to begin to raise long rates, or about $2.6 trillion at current rates of GDP. The St. Louis base is currently at $3.7 trillion, and has been growing at over 20 percent a year since the last recession.
