The Long-Term Downward Trend in Interest Rates

This chapter explores the factors contributing to the long-term downward trend in interest rates and discusses the positive impact lower rates have on household finances.

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Interest rates have been sliding for seven centuries. Dive into the historical forces driving this trend and examine whether the recent interest rate spike is just a blip on the radar.

Topics covered include:

How the supply of savings and the demand to borrow impact interest rates
Why have interest rates been falling for over 700 years, and what might have changed recently to propel rates higher
How lower rates have helped households increase their net worth and reduce their financial vulnerability
What are some lower-risk ways to take advantage of higher interest rates

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Show Notes

The Price of Money Is Going Up, and It’s Not Because of the Fed by Jamie Rush, Martin Ademmer, Maeva Cousin, Tom Orlik, and Rich Miller—Bloomberg

Secular stagnation is not over by Olivier Blanchard—Peterson Institute for International Economics

A big problem looming for bond markets by TOMASZ WIELADEK—The Financial Times

Eight centuries of global real interest rates - Paul Schmelzing - Bank of England

Changes in U.S. Family Finances from 2019 to 2022—The Federal Reserve

A Complete Guide to Investing in I Bonds and TIPS

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