What is Howard marks opinion on this?
Howard Marks has been remarkably consistent and prescient on everything we've been discussing. Here's his full view synthesized from his memos:
His central thesis: "Sea Change"
Marks argues we've gone from a "low-return world" of 2009–2021 to a "full-return world" — and that the investment strategies that worked best over the last 40 years may not be the ones that outperform in the years ahead. This is the sea change he's been warning about. Oaktree Capital
On rates — directly relevant to our conversation
Marks believes the Fed "should be passive most of the time and only come to the rescue if the economy is seriously overheated or not creating jobs." He sees no merit in rates being much lower than they are now. Bloomberg
His reasoning: "The Fed funds rate at 3.5% is below history. These are not high rates — they're only high relative to the last 15 years. But this is a low rate." In other words, people confusing today's rates as "high" are comparing to an abnormal era, not history. Bloomberg
On why ultra-low rates won't return
Marks lists his key reasons: globalization — a powerful disinflationary force — is in decline. Labor bargaining power is rising. Both point to structurally higher inflation ahead, which means rates need to stay higher to keep it in check. His base case: rates average 2–4% for years, not 0–2%. Advisoranalyst
On the 40-year debt-fueled boom ending
Marks makes a striking observation: "Nearly 100% of capital for private equity investing has been put to work since interest rates began their downward move in 1980." The entire era of leveraged investing was written during falling rates. That tailwind is now gone — or reversed. Oaktree Capital
His practical investment conclusion
Marks has been urging increased investment in credit — non-investment grade debt returning 7% publicly and 10% privately — arguing these are now competitive with historical equity returns but more dependable due to their contractual nature. P2P Finance News
On uncertainty and macro predictions
True to his intellectual honesty, Marks doesn't claim to know the future: "I consider 'analyze the future' one of the great oxymorons. The future has not yet been created." But he does believe bargains emerge in distress — and with private credit cracking, he sees opportunity forming. Oaktree Capital
How his view maps to our conversation
Marks essentially validates everything we discussed:
- Higher rates are the new normal, not a temporary anomaly
- The government wanting low rates to service debt is understandable but imprudent
- The 40-year tailwind of declining rates that made debt manageable is structurally over
- The smart money moves from chasing equity and leverage to lending at good rates
His implicit warning for the US debt situation: you can't wish your way back to 1% rates. The macro environment has changed permanently — and any attempt to artificially suppress rates to ease government borrowing will have severe consequences, exactly as we walked through.