The Eternal Bull Market

Feb 07, 2020 | Sam Rook


Interest rates keep dropping

I saw this chart today by a visiting scholar at the Bank of England, Paul Schmelzing, and it blew my mind. It’s global real interest rates (that’s the interest rate less the inflation rate) since the 1300s. 




For SEVEN HUNDRED YEARS, real interest rates have been slowly declining. Sure, there have been decades-long periods of rising interest rates throughout history, but the slow, inexorable drop over centuries is worth noting.


There are lots of reasons for this, and I would speculate that improving technology to make life/work more efficient is one of the big reasons behind this.


Now that we are essentially at zero real interest rates, where do we go from here? That’s an important question for the next decade. What will this chart look like in another 700 years? Will we even have money by then? I have no answers to these questions but I will contemplate them all for a long time.