[quote=FlyerInHi]What makes you think that today’s rates are artificially low? What is artificial and real?
Money is just a human created means of exchange in commerce. There should be no reason for money to automatically make money on money, such as when rates are high.
Maybe we are just smarter in managing the money supply?[/quote]
I don’t really think your money supply thing explains it. That might explain low inflation, but it doesn’t explain why real rates are negative. (I actually think the whole premise is questionable, but even if we allow it, it doesn’t explain the negative real rates).
Let’s avoid the word “artificial” — that has a lot of implications. What we can say is that rates are very, very low. Lower than inflation, which has never historically lasted, and with good reason.
I suppose it’s possible that rates stay this low, but I think that people who are depending on that (unprecedented) outcome are taking a huge risk. There’s a difference between allowing for it, and depending on it… and many (maybe most) investors seem to be doing the latter as far as I can tell.
