It seems the world is headed toward negative real interest rates on a global scale.Not a chance in the US. We are at the early stage of a multi-year climb in rates,
-RW
UPDATE: Commenter Luke correctly points out that Bury said "negative REAL rates, "which is a different story than negative rates, So I will remove Bury from that camp. We do currently have negative real rates and while I expect rates to climb for the foreseeable future I expect the REAL rate to stay negative for the foreseeable future.
Yay! Continued capital consumption. See https://mises.org/library/human-action-0/html/pp/806
ReplyDeleteWhat's he talking about? We've been in negative real interest rates for quite a while.
ReplyDeleteRates above 1%-2% will rupture multiple huge asset bubbles. Mere lack of continued money printing will see bubbles start to deflate. The Fed will not stand by and take the pain of either of these scenarios.
ReplyDeleteBy contrast, negative rates, i.e. tax on cash, coupled with more money printing keeps all the bubbles inflating. That is most attractive path for the Fed, just as it was for the ECB.