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What are the Politics of a Fed Pivot? | Nick Timiraos
Hidden Forces
Is the Equilibrium Real Interest Rate Negative?
In 1989, it peaked at 5%, then 4.6, then to repeat 3.1, and then in 2019, we barely managed to get past 0.5. But if we follow the trend line and we assume that the trend line is a function of the ever increasing indebtedness, it would make sense that the equilibrium real interest rate is negative at this point. We're also seeing that in Europe and other countries that are further along this debt curve that their real interest rates are severely negative, but they're already in a recession or close to it. So I'm not sure how front and center it is for setting policy right now because they know what they want, which is to
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