TIP565: Why Buffett is Doubling Down on Japan w/ Dan Rasmussen
We Study Billionaires - The Investor’s Podcast Network
The Relationship Between Interest Rates and Real GDP
The Taylor Rule suggests that the real interest rate should roughly equal nominal GDP, which is the sum of real GDP and the inflation rate. In times of economic growth or high inflation, interest rates should rise, while in times of recession or low inflation, interest rates should come down. Contrary to popular belief, rising interest rates are not inherently bad and falling interest rates are not inherently good. This understanding helps to shape the mental framework that in good times, rates go up, and in bad times, rates go down.
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