5 Things to Know About 707 Years of Interest Rate Data
January 8, 2020 by Allison Bell
The Bank of England has published a breath-taking thriller for people involved with creating and selling safe saving and investment vehicles: a comprehensive look at what happened to inflation-adjusted interest rates from 1311 through 2018.
Paul Schmelzing, a Harvard University economic history grad student who’s a visiting scholar at the bank, wrote the paper in response to other economists’ and economic historians’ pronouncements that today’s ultra-low interest rates are shocking and sure to go away.
In Europe, many of the ”central banks,” or government banks, that control countries’ money supplies are “paying negative rates of return” on borrowed money. That means, in effect, that investors are actually paying the central banks to store their money safely, rather than the European governments paying the investors to rent their money.
A link to Paul Schmelzing’s global real interest rate paper is available here.