Global real interest rates and the ‘suprasecular’ decline, 1311–2018 (2020)
bankofengland.co.uk
Global real interest rates and the ‘suprasecular’ decline, 1311–2018 (2020)
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Re: Global real interest rates and the ‘suprasecular’ decline, 1311–2018 (2020)
#2"since the major monetary upheavals of the late middle ages, a trend decline between 0.6–1.6 basis points per annum has prevailed"
" Against their long‑term context, currently depressed sovereign real rates are in fact converging ‘back to historical trend’ — a trend that makes narratives about a ‘secular stagnation’ environment entirely misleading, and suggests that — irrespective of particular monetary and fiscal responses — real rates could soon enter permanently negative territory. "
"if historical trends are extrapolated, R-G will soon reach permanently negative territory –a first since at least medieval times."
"Whatever the precise dominant driver – simply extrapolating such long-term historical trends suggests that negative real rates will not just soon constitute a “new normal” – they will continue to fall constantly. By the late 2020s, global short-term real rates will have reached permanently negative territory. By the second half of this century, global long-term real rates will have followed."
Re: Global real interest rates and the ‘suprasecular’ decline, 1311–2018 (2020)
#3Monetization of debt means hyperinflation these days. Free, easy money.u
Re: Global real interest rates and the ‘suprasecular’ decline, 1311–2018 (2020)
#4"since the major monetary upheavals of the late middle ages, a trend decline between 0.6–1.6 basis points per annum has prevailed" " Against their long‑term context, currently depressed sovereign real rates are in fact converging ‘back to historical trend’ — a trend that makes narratives about a ‘secular stagnation’ environment entirely misleading, and suggests that — irrespective of particular monetary and fiscal re…
Extrapolating a trend (even a 700 year long one) into the indefinite future is a fraught exercise, as is attempting to read it as benign just because it has perhaps been so in the past.
Remind me, who was it that wrote about the tendency of the rate of the profit to fall over the long term, until the point it provokes a crisis?
Re: Global real interest rates and the ‘suprasecular’ decline, 1311–2018 (2020)
#5It took me a while to get it, but this all works in the opposite direction as well.
The time value of money can be negative: A dollar today can be worth more than a dollar tomorrow.
It's not pretty. When the pie is shrinking the incentives get ugly rapidly.
Let's hope this can be a "good" deleveraging, we fix metrics that don't positively correlate with non-zero-sum productivity growth, and on top of that pull the next rabbit out of the hat where we can keep exponential growth happening for another cycle (spacex, EVs, etc).
Otherwise, we'll be fighting over a shrinking pie, which is nature's way of adjusting the population to the modified carrying capacity.
Re: Global real interest rates and the ‘suprasecular’ decline, 1311–2018 (2020)
#6Debt forgiveness also used to be a thing.
Re: Global real interest rates and the ‘suprasecular’ decline, 1311–2018 (2020)
#7"since the major monetary upheavals of the late middle ages, a trend decline between 0.6–1.6 basis points per annum has prevailed" " Against their long‑term context, currently depressed sovereign real rates are in fact converging ‘back to historical trend’ — a trend that makes narratives about a ‘secular stagnation’ environment entirely misleading, and suggests that — irrespective of particular monetary and fiscal re…
"To (negative) infinity, and beyond!"
Re: Global real interest rates and the ‘suprasecular’ decline, 1311–2018 (2020)
#8It took me a while to get it, but this all works in the opposite direction as well. The time value of money can be negative: A dollar today can be worth more than a dollar tomorrow. It's not pretty. When the pie is shrinking the incentives get ugly rapidly. Let's hope this can be a "good" deleveraging, we fix metrics that don't positively correlate with non-zero-sum productivity growth, and on top of that pull the ne…
I think you meant to say "A dollar tomorrow can be worth more than a dollar today".
Re: Global real interest rates and the ‘suprasecular’ decline, 1311–2018 (2020)
#9It took me a while to get it, but this all works in the opposite direction as well. The time value of money can be negative: A dollar today can be worth more than a dollar tomorrow. It's not pretty. When the pie is shrinking the incentives get ugly rapidly. Let's hope this can be a "good" deleveraging, we fix metrics that don't positively correlate with non-zero-sum productivity growth, and on top of that pull the ne…
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Re: Global real interest rates and the ‘suprasecular’ decline, 1311–2018 (2020)
#10“ suggestions about the ‘virtual stability’ of capital returns, and the policy implications advanced by Piketty (2014) are in consequence equally unsubstantiated by the historical record.”
Them’s fighting words.