The CPI-U figures I look at
here are updated for December. Consumer prices rise 2.5% annually but borrowing costs are less than 1%. Notice that TIPs Treasury yields already told us this story.
To get negative real interest rates in perspective, let us look at the chart above, courtesy of the Fed.
What do negative real interest rates mean? They mean that retail inventories are being drained, and the economy prepares for another deflation; in other words, unsustainability.
No comments:
Post a Comment