Fears that global capitalism has entered a phase of “secular stagnation” — a long period of little or no economic growth — were high even before the Covid-19 pandemic. But a Bank of England research paper published in January argues that the situation could be even worse.
Paul Schmelzing, a visiting economic historian from Harvard University, has produced a comprehensive survey of long-term interest rates going back to the 14th century. He concludes that yields on government debt — the figure that traditionally puts a “floor” under all private sector profits — will go permanently negative by the middle of the century, and go on falling.
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