> Falling real interest rates is probably a good thing!
I would argue that is only true in an environment with negative real savings rates which are in my opinion not a good thing. It used to be that 'savings' accounts actually paid meaningful interest on savings.
High real interest rates means that capital is scarce. Lots of capital around is good for your standard of living: roads, factories, houses, trains, etc.
(Of course, low real interest rates mean that opportunities are scarce relative to capital.)
> High real interest rates means that capital is scarce.
That is an insightful observation, though I would argue that the scarcity of capital in a high-interest environment is an effect rather than a cause.
The root cause of our current low-interest rates is actually the Fed and their unlimited printing press creating an endless supply of US dollars via quantitative easing.
Honest Question: If real interest rates continue to remain low (indicating a scarcity of productive uses for capital) what happens over the medium/long-term?
> The root cause of our current low-interest rates is actually the Fed and their unlimited printing press creating an endless supply of US dollars via quantitative easing.
That is certainly true in the US. I wonder how the effects in the rest of the world come to pass. For example, running the printing presses in Zimbabwe didn't cause inflation in the rest of the world. On the other hand, the USD is the world's reserve currency.
The low interest rates on the USD seem to drive up the prices of productive uses of capital. Be it start ups, other stocks or real estate.
I would argue that is only true in an environment with negative real savings rates which are in my opinion not a good thing. It used to be that 'savings' accounts actually paid meaningful interest on savings.