Tuesday, July 12

The Treasury Bond real interest rate

An interesting look at the current bond market interest rate conundrum throught the lens of Austrian Economic theory, via Mises.com.

The problem is that the current real interest rate is roughly zero, the exact number being dependent upon how you arrive at the true rate of inflation, and therefore, what you think it is; government supplied numbers are never quite what they seem.

If the current nominal market rates are the result of an artificial stimulation by the central bank, then the coordination between the time-preferences of savers, and the time-preferences of borrowers will be all screwed up, leading to further boom/bust cycles in the economy and a genuine loss of wealth.

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