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Paul Schmelzing — Global real interest rates since 1311: Renaissance roots and rapid reversals

Summary:
I take long-term historical studies like this is a large grain of salt, for lack of homogeneity and the difficulty in obtaining reliable data, for example, but it is interesting to look at anyway with caveats.What is probably most interesting about it now is that the Bank of England is apparently looking at this. Conclusion On aggregate, then, the past 30-odd years more than hold their own in the ranks of historically significant rate depressions. But the trend fall seen over this period is a but a part of a much longer ”millennial trend”. It is thus unlikely that current dynamics can be fully rationalized in a “secular stagnation framework”. Meanwhile, looking at past cyclical patterns, the evidence suggests that when rate cycles turn, real rates can relatively swiftly accelerate.

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I take long-term historical studies like this is a large grain of salt, for lack of homogeneity and the difficulty in obtaining reliable data, for example, but it is interesting to look at anyway with caveats.

What is probably most interesting about it now is that the Bank of England is apparently looking at this.

Conclusion
On aggregate, then, the past 30-odd years more than hold their own in the ranks of historically significant rate depressions. But the trend fall seen over this period is a but a part of a much longer ”millennial trend”. It is thus unlikely that current dynamics can be fully rationalized in a “secular stagnation framework”. Meanwhile, looking at past cyclical patterns, the evidence suggests that when rate cycles turn, real rates can relatively swiftly accelerate.
Bank Underground
Global real interest rates since 1311: Renaissance roots and rapid reversals
Paul Schmelzing, visiting scholar at the Bank of England from Harvard University, where he concentrates on 20th century financial history
Mike Norman
Mike Norman is an economist and veteran trader whose career has spanned over 30 years on Wall Street. He is a former member and trader on the CME, NYMEX, COMEX and NYFE and he managed money for one of the largest hedge funds and ran a prop trading desk for Credit Suisse.

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