[H8crilA]

Well, the economy is deflating fast, which means the riskfree rate is in the toilet. The current 10% is equivalent to closer to 30%-35% in the early 80s.

The fact that the economy is "pretty bad" doesn't necessarily imply that all rates should be low or high. They can be either very high (inflation) or very low (deflation), and both are not good signs.

[adwi]

> The current 10% is equivalent to closer to 30%-35% in the early 80s.

Could you explain this more?

[rndmwlk]

I don't know about the 30%-35% number exactly, but the idea they're getting at is what is the "real" interest rate. Interest rates are all relative. If you can take a loan out at a 15% interest rate is that bad? Well if a bank is offering you a savings rate of 20% - congratulations you just made a lot of money.

https://fred.stlouisfed.org/series/TB3MS

Take a look at the T-bill rates in the 80s. To straight-faced say "I'm not concerned about these rates," and make a comparison to interest rates in the 80s is ignorant at best. There was an intentional effort by the government to raise rates in order to fight inflation. We are so far removed from the interest rate environment of the 80s...

[drumhead]

Real interest rate are ususally defined as Nominal Rate-Inflation, so with inflation at virtually zero, the real rate is 10% for them. To be 35% we would need deflation of roughly that much. Though a 10% real rate is bad enough.