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The Negative-Interest-Rate Global Society

In: Inequality and Global Supra-Surplus Capitalism

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  • E Ray Canterbery

Abstract

While it is customary to think of interest rates belonging to individual nations, a handful of economists have referred to a global real interest rate. By “real,” they simply mean that the nominal rate has been deflated by a price index. One such economist is Olivier Blanchard. He was chief economist at the International Monetary Fund during 2008–2015, a most interesting period. He is a handsome, mature Frenchman who is now a Senior Fellow at the Peterson Institute and Robert Solow Professor of Economics at MIT. He is arguably the most cited economist in the world today. According to Blanchard, the global real interest rate fell from a peak of about 5 percent in 1986 to about 2 percent before the Global Crisis of 2008, and to about 0 percent in 2012. At low inflation rates, it has gone negative since. This may be the legacy, among others, of the Crisis. He considers this “bad news” for monetary policy but good news for fiscal policy. Given his credentials, we cannot ignore Blanchard, though there are some who disagree with him.

Suggested Citation

  • E Ray Canterbery, 2018. "The Negative-Interest-Rate Global Society," World Scientific Book Chapters, in: Inequality and Global Supra-Surplus Capitalism, chapter 18, pages 283-296, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789813200838_0018
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