Re: poly: Why interest rates may stay low

Perry Metzger writes:

> Hal Finney writes:
> > It appears that Robin suggests two reasons why economic growth rates may
> > remain near 2-3% as they have historically.
>
> Historic growth rates have NOT been around 2-3% -- indeed, growth
> rates have often been far higher, sometimes in the double digits.

Perhaps I misunderstood that part. I haven't been able to find statistics
on historical growth rates.

> The claim is that the historical "rate of return on investment" has
> been in that range (whatever it may mean...)

As I understand it, the risk-free ROI is generally calculated by taking
the interest rate on short term U.S. government bonds and subtracting
the inflation rate. Today, inflation is something like 2.1% and
short term bonds are about 5.2%, for a real risk-free return on investment
of 3.1%. The claim is that this value has been generally stable over
long periods.

Hal
Received on Wed Mar 4 00:50:27 1998