Re:Global real interest rates and the ‘suprasecular’ decline...
by smabie on Thursday January 28, 2021 @10:39PM
(#25953544)
interest rates are not low, we just measure them wrong. The dollar is being devalued at an astounding pace, and yet some people will split hairs and say "well, technically.." look at stocks, housing, land, education, health care and food.
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Re:Global real interest rates and the ‘suprasecular’ decline...
by tomjakubowski on Thursday January 28, 2021 @11:27PM
(#25953905)
> interest rates are not low, we just measure them wrong. The dollar is being devalued
I don't follow. Could you explain? If the dollar is losing value, then wouldn't interest rates "really" be lower than they'd appear to be without accounting for the devaluation? Here's my reasoning:
Imagine the dollar loses 50% of its value in the next year. You park $100 in a 1% APY 12 month CD today. After a year, you've earned $1 in interest. But your CD has actually lost value in that time, even accounting for the interest money the bank gave you. In real terms, the interest rate was less than 1%; in fact, it was negative! So the 1% interest rate appeared higher than it "really" was.