The old model where inflation and nominal interest rates moved closely in tandem was based on a world where the marginal and median dollar saved was from middle class families. That world is dead, replaced by our current world of extreme inequality and elite domination. And while a middle class family may decide to spend more if inflation is high and return on their bank account balances is low, the wealthy just don’t work that way.
Wow that is a bigly complicated explanation. I prefer the much simpler version. Interest rates are low because money is in great supply without as much demand. As long as the FED keeps printing bonars and Congress keeps spending them; as long as foreigners keep accepting them at a premium then interest rates will stay low.
