This year, there has been a considerable amount of discussion regarding interest rates. The presumption among many is that interest rates were surprisingly low for much of twenty fifteen, but that that could change in twenty sixteen.
Indeed, interest rates have been low for quite some time and there is a conventional wisdom suggesting that they will eventually return to normal levels. Perhaps -- but as pointed out by writer Neil Irwin, it may take a long time for interest rates to snap back to their pre two thousand and eight levels. Very low rates have often persisted for decade after decade during earlier periods of American economic history.
For instance, the interest rate of a ten-year Treasury note was below four percent every year from eighteen seventy six to nineteen nineteen. Such a state of affairs prevailed yet again from nineteen twenty four to nineteen fifty eight. Great Britain represents an even better example. Long term rates in Britain were below four percent for nearly a century from eighteen twenty to the onset of World War one.
The real aberration appears to be the high interest rate period that lasted from nineteen seventy to two thousand and seven, a period during which the yield on the U.S. Treasury averaged more than seven percent.
