Lower Forever or Set for a Regime Break? Lessons from Real Interest Rates Since the 14th Century

Paul Schmelzing will discuss his groundbreaking research on real interest rate dynamics since the beginning of secondary debt markets, the topic of one of his PhD chapters. On the basis of visiting US and European archives over multiple years, he reconstructed global real interest rate series that cover 82% of advanced economy GDP over 700 years, and he argues that our current negative rate environment has actually been in the making for centuries. Mr. Schmelzing will explain why investors during the Italian Renaissance could already have predicted that the global economy would hit the “zero lower bound” in our time, why there is no such thing as a “normal” or “steady state” interest rate – and what the chances are that the major recent fiscal and monetary stimuli will now trigger a structural break from the low inflation, low rate era. Following Mr. Schmelzing’s presentation, James Grant and Richard Sylla will lead a discussion on the history of interest rates and will take questions from the audience.