Back in May 2012, commentators in the economics community and in the financial press were talking about the Federal Reserve beginning to move toward rate hikes — soon. That month in Sovereign Investor, I wrote that the commentators were dead wrong — that the Federal Reserve’s low-rate policy “would last much longer … to 2015 — or even 2016.”

We’ve now reached the point where my analysis has come to pass.

We are approaching the final weeks of 2015 and still no interest-rate hike. We could still get one in December, but as Federal Reserve Bank of Chicago President Charles Evans said last week, it’s now much more likely the Fed puts off its first rate increase until next year.

So far, I’ve been right. And now I’ll tell you what I think is next in what will prove to be one of the greatest and most-painful sagas in American financial history: We will not see normalized interest rates for at least a generation.

That has implications on the (temporarily) strong U.S. dollar. It has implications across the economy. It has implications in the stock market. And it ultimately has implications on where you put your money to work hardest for you (hint: leave growth stocks behind and focus entirely on high-quality dividend payers).

Here’s what Mr. Evans told some business leaders in Milwaukee:

Before raising rates, I would like to have more confidence than I do today that inflation is indeed beginning to head higher. I believe that it could well be the middle of next year before the headwinds from lower energy prices and the stronger dollar dissipate enough so that we begin to see some sustained upward movement in core inflation. After liftoff, I think it would be appropriate to raise the target interest rate very gradually.

The emphasis is mine. It underscores all that I have been writing about for several years now.

The U.S. economy, while generally healthier than it was in the depths of the Great Recession, is not spry and nimble. It is increasingly debilitated because of excessive regulation and excessive debt.

Therein lies the core reason why we face anemic interest rates for years and years to come. The Fed hasn’t the capacity to raise rates anytime soon because of the disastrous impacts higher rates ultimately have on the dollar. Higher rates create a widening gap between U.S. rates and those available around the world … and a widening gap increases demand for the dollar, which means the dollar gets even stronger, which then crushes sales and profits across corporate America.

U.S. multinationals lose sales overseas because their products are more expensive relative to the local competition. And domestic companies lose sales at home because competing imported goods are cheaper in our own aisles. American jobs go bye-bye. Factories and plants close down.

And the Fed is stuck in the middle, since one of its mandates is full employment.

In Washington, meanwhile, rising interest rates mean America would have to shell out larger and larger interest payments on the more than $18 trillion in debt Congress has accumulated for me and you. Given that America runs a large budget deficit, increasing interest payments mean the Treasury Department would have to issue more and more debt just to pay the interest in existing debt — running the great risk that America collapses into a debt spiral that crushes the economy and the dollar, yet also causes inflation because investors would demand higher and higher interest rates to accept the risk associated with America’s ballooning debt problem.

Thus, for those two reasons (and there are actually other reasons I’ll skip today) U.S. interest rates will not rise meaningfully for at least a generation. They simply can’t without causing the gates of Hell to spring open and unleash a torrent of violently destructive demons.

Inflation the Fed Is Overlooking

But here’s the immediate problem: The inflation that Mr. Evans and the Fed wants to see is already here. Domestic goods and services — meaning those for which there are no currency impacts and no competitors — are up between 3% and 10%. Think: haircuts, insurance, event tickets, health care, education, accounting services, utilities … a lot of the stuff that makes up our daily lives.

The only meaningful area you see any price decline is oil and commodities, and imported goods like shoes and clothes. All of those have been impacted by the strong dollar, since a strong dollar makes imports and commodities cheaper.

Now think about this: What happens in a world where investors finally come to grips with the idea that U.S. interest rates are not heading higher anytime soon? The dollar weakens.

And when that happens, imports and commodity/oil prices rise. We end up in a situation at that point where just about everything in the consumer shopping basket is rising in price, but the Fed is incapable of raising interest rates to combat inflation because of the impact those rates have elsewhere, namely on burdensome debt.

We drift into 1970s-style stagflation.

The growth stocks everyone loves today — including technology, bio-tech and various consumer sectors — get crushed, just as the Nifty Fifty growth stocks of the late ‘60s got crushed in the ‘70s.

The only winners: dividend stocks, which were the only source of positive returns during the 1970s.

This is the world we’re headed toward. America is in an untenable position. We might be big and bad in terms of our size and our ability to throw our weight around. But we have an Achilles’ heel: the impact rising interest rates would have on the dollar and, ultimately, our economy.

The die has been cast. At this point, there is no way to change our reality. We can only prepare for what’s to come.

Jeff D. Opdyke