Why did the Natural Rate of Interest Plummet?

One of the more remarkable claims since the financial crisis of 2008 is that the natural rate of interest is now below zero, and it has been below zero since the financial crisis. If you look at the very best estimates of the natural rate of interest over the last 50 years, one broad fact […]

A tale of 2 r’s

The Piketty data problems are the huge talk right now, but I want to point out something entirely different. Brad Delong points out there are 4 different rates and Piketty does not do a great job differentiating them: The four different r’s are: The real interest rate at which metropolitan governments can borrow: call this […]

A Fiat Currency Valuation Model?

JP Koning says: “But there may be another solution to the backwards induction problem. I’m going to show that the market establishes the value of modern fiat money under a CPI standard in the exact same way that it establishes the value of a very familiar instrument; the standard corporate bond. Since corporate bonds are […]

Why are You Freaking Out Over Inflation When We Don’t have Inflation? Part II

Months ago, I (really Steve Waldman of Interfluidity) proposed a possible reason people were freaking out over inflation: The returns to cash after accounting for BOTH short term interest rates and inflation were negative for the first time in 30 years.  We were seeing actual debasement for holders of cash. However, there is another reason […]

Deflation, Overcapacity, and Low Demand Incentivize War

People who live in the U.S. are world-famous for throwing lots of stuff away. When we have too much, we just throw it in the garbage. But what if this too much happens on the level of the entire society? We are living in a world right now where we have too much on a […]