There...fixed.
He says this in two different places. First, as long as capital has a return greater than zero, the interest rate will not fall below it. My guess is that he was referring to the "real" rate of interest which takes into account inflation. The only time I can recall negative real interest rates was during the Carter years when the prime rate was 21%. I can't decide if this guy knows anything or is just sloppy in the way he writes it.
For those who haven’t studied the riveting subject of macroeconomics since college – sarcasm, of course
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Yes it has been a while.
To make matters worse, the class met tuesdays & thursdays from 8-9:30 am
Who could ever get up that early to attend class?
“In the long run, we are all dead.”
Bkmkm
These, of course, have higher risk, as in mortgage backed securities and corporate bonds.
Low interest rates more or less force savings to be invested on the stock exchange casinos, which is one of the reasons for which they keep climbing.
"Eventually, the pension fund will run out of older bonds to sell, and the only solution will be to either a) start paying pensions out of its capital, or . . ."
Since when is "selling old bonds" NOT paying pensions out of its capital?!?
Keynes appeared to assess the situation properly relative to the ability to use tax and spend policies to control the economy. But he did not point out that governments, under the influence of people like John Kenneth Galbraith, would always choose to raise taxes and increase spending while pointing to Keynes as their guide.
I actually had a bonehead liberal teacher in high school claim that raising taxes and increasing spending were the ONLY tools available to government using Keynesian principles. I suspect he came to this spurious conclusion by reading too much Galbraith and not enough Keynse.
I got him to belittle me in front of class for claiming that government could achieve similar results by lowering taxes and lowering spending, at the appropriate times. Unknown to him, I had engaged our actual economics teacher to agree to my position during the prior class hour. So when the liberal, who was supposed to be teaching us anthropology instead of economics, made his spurious claim, he was actually disputing what the economics teacher (who was also liberal) had just said. Any of the students who had been paying attention would have seen that my position was backed up by the economics guy.
In high school, I was the leader of a small number of conservatives who referred to John Kenneth Galbraith as “JKG”. I was not happy when JKG was the invited speaker at my graduation ceremony at Oklahoma University several years later.
My high school economics and political science education was worth the time. When I arrived at OU I had to graduate quickly. I was able to take tests for credit in both political science and economics. For the economics test the professor gave me his finals from his micro and macro classes. I not only got a good enough grades to pass both, I was able to tie his best student in his macro class. I had never entered his classroom. I boned up by reading the text. But I had read several books on macro economics as a senior in high school.
Some sadly amusing things: Keynes did not believe many of the things taught in modern Keynesian economics; and most of the last 50 years is not possible under Keynsian economics - yet it survives.