3 ms·
What does "historic normals" mean? Obviously rates need to be going up right now, but if you look at the very long (i.e. centuries) trend of natural interest ra
by Analemma_ 4y ago
What does "historic normals" mean? Obviously rates need to be going up right now, but if you look at the very long (i.e. centuries) trend of natural interest rates, there's a clear monotonic downward trend. Who's to say the natural rate of interest isn't zero?
- Victerius 4y ago8-15%. I'm looking forward to it. It'll force more people to be more financially responsible. No one should finance furniture, ATVs, or electronics. If you can't pay cash for these things, save, or don't buy. Edit: @Analemma That's just the extreme end of the scale. 30yr fixed mortgage rates were above 10% during all the 1980s[♤]. I'd like to see a return to that. [♤] https://fred.stlouisfed.org/series/MORTGAGE30US https://fred.stlouisfed.org/series/MORTGAGE30US
- Analemma_ 4y agoThis definitely needs a citation. Why would the natural rate be 8%, never mind 15%? Apart from the Volcker Shock it's been less than that for literally all of American history [1]. Are you sure you're not just assuming that whatever the rate was in your formative years is "natural"? [1]: https://advisor.visualcapitalist.com/wp-content/uploads/2020/10/MM17_U.S._Interest_Rate-3.jpg https://advisor.visualcapitalist.com/wp-content/uploads/2020...
- bryanlarsen 4y agoThe historical interest rate for savers is negative. Before the invention of fractional rate banking, if you had money you had to pay guards to protect it for you.
- pfortuny 4y agoEither you can create value (which seems reasonable as long as we receive free energy from the sun) in time or not. If you can, the natural interest rate cannot be zero. We are at the moment in time when we can make the most out of “thin air”. It makes no sense that the rate is effectively zero.