Department of "Huh?!"

Greg Mankiw thinks that Google is likely making a mistake by borrowing long now because long-term U.S. interest rates are probably coming down--and it will be cheaper to borrow later:

Greg Mankiw's Blog: Google Plays the Yield Curve: Google is sitting on $37 billion in cash, but nonetheless decided to sell $3 billion worth of bonds.  Why?  To take advantage of low interest rates.... Does this make sense for Google?... [T]here is reason to be skeptical.... The yield spread is now high by historical standards.  The empirical literature on the expectations theory of the term structure (in which I have sometimes played) suggests that this is a good time to borrow short and lend long--the opposite of what Google is doing...

It is certainly true that most of the time when the yield spread is high the way to bet is that long-term bond rates are coming down and long-term bond prices are going up.

But somehow I can't see U.S. nominal interest rates falling much lower than they are now...