[parmenidean]

Yeah, there are a lot of interesting theories regarding this (which were far more common in the halcyon days of 2021, when it seemed like ZIRP was the new normal).

I actually think an underrated piece of this is that investments have become far less capital intensive. Business in previous economic cycles required a huge amount of capital to begin and maintain: railroads, oil, manufacturing all require enormous sums of capital to continue. Conversely, the dominant businesses in this economic cycle are all Internet based. Google, Meta, etc could run for 1,000 years without substantial cash need, it's a far less capital intensive model. You can see this reflected statistically: the FCF yield of the S&P 500 is 2x what it was in 1990.

If businesses need far less cash than before yet remain highly productive, it stands to reason real interest rates would drop: the demand for capital by economic drivers has gone down, while the supply of capital has increased through FCF gains.

[ericmay]

I wonder if something like space colonization/resource extraction would reverse or change the trend toward lower interest rates? I imagine (perhaps excluding some sort of sci-fi esque replicator robots) such endeavors would be very capital intensive.