The President’s Council of Economic Advisers (C.E.A.) recently published a study, “Long-Term Interest Rates: A Survey,” which examined the extended decline in long-term U.S. interest rates. We thought it of importance to review its conclusions, particularly in light of the changing global economic forces. Those forces could begin to reverse the extended trend of declining long-term U.S. interest rates.
The next graph from the C.E.A. survey gives perspective of short and long-term interest rates since 1871. Clearly, our current period shows the historic lows of interest rates – both short and long. This provides important perspective for investors when determining their current asset allocations. Interestingly, the stability of long rates in the early years of this graph reflects the influence of the classical gold standard era.
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