Current:Home > MarketsThe life and possible death of low interest rates-LoTradeCoin
The life and possible death of low interest rates
View Date:2025-01-13 03:57:45
Right now, the economy is running hot. Inflation is high, and central banks are pushing up interest rates to fight it. But before the pandemic, economies around the world were stuck in a different rut: low inflation, low interest rates, low growth.
In 2013, Larry Summers unearthed an old term from the Great Depression to explain why the economy was in this rut: secular stagnation. The theory resonated with Olivier Blanchard, another leading scholar, because he had made similar observations himself. Larry and Olivier would go on to build a case for why secular stagnation was a defining theory of the economy and why government policies needed to respond to it. They helped reshape many people's understanding of the economy, and suggested that this period of slow growth and low interest rates was here to stay for a long time.
But today, Larry and Olivier are no longer the duo they used to be. As inflation has spiked worldwide, interest rates have followed suit. Earlier this year, Larry announced that he was no longer on the secular stagnation train. Olivier, meanwhile, believes we're just going through a minor blip and will return to a period of low interest rates within the near future. He doesn't see the deep forces that led to a long-run decline in interest rates as just vanishing. Who's right? The future of the global economy could depend on the answer.
This show was produced by Willa Rubin with help from Emma Peaslee, engineered by Maggie Luthar, fact-checked by Sierra Juarez and edited by Jess Jiang.
Music: "West Green Road 2," "Meet Me In The Lobby" and "The Sky Was Orange."
Help support Planet Money by subscribing to Planet Money+ in Apple Podcasts or at plus.npr.org/planetmoney.
Always free at these links: Apple Podcasts, Spotify, Google Podcasts, NPR One or anywhere you get podcasts.
Find more Planet Money: Twitter / Facebook / Instagram / TikTok our weekly Newsletter.
veryGood! (8668)
Related
- When is 'The Golden Bachelorette' finale? Date, time, where to watch Joan Vassos' big decision
- Wisconsin house explosion kills 1 and authorities say reported gunfire was likely ignited ammunition
- What brought Stewart-Haas Racing to end of the line, 10 years after NASCAR championship?
- Texas power outage map: Over 500,000 outages reported after series of severe storms
- Mike Tyson concedes the role of villain to young foe in 58-year-old’s fight with Jake Paul
- Off the Grid: Sally breaks down USA TODAY's daily crossword puzzle, Steak Tips
- This Under-the-Radar, Affordable Fashion Brand Will Make You Look like an Influencer
- New Jersey police union calls for ‘real consequences’ for drunk, rowdy teens after boardwalk unrest
- Unexpected pairing: New documentary tells a heartwarming story between Vietnam enemies
- Lego unveils 2,500-piece 'Legend of Zelda' set: 2-in-1 box available to preorder for $299
Ranking
- Colts' Kenny Moore II ridicules team's effort in loss to Bills
- Passenger accused of running naked through Virgin Australia airliner mid-flight, knocking down crew member
- Jurors in Trump’s hush money trial zero in on testimony of key witnesses as deliberations resume
- Best MLB stadium food: Ranking the eight top ballparks for eats in 2024
- The Fate of Hoda Kotb and Jenna Bush Hager's Today Fourth Hour Revealed
- At Sen. Bob Menendez’s bribery trial, prosecutors highlight his wife’s desperate finances
- Lawsuit alleges racial harassment at a Maine company that makes COVID-19 swabs
- Reports: Texans, WR Nico Collins agree to three-year, $72.75 million extension
Recommendation
-
Man gets a life sentence in the shotgun death of a New Mexico police officer
-
Reports: Texans, WR Nico Collins agree to three-year, $72.75 million extension
-
A violent, polarized Mexico goes to the polls to choose between 2 women presidential candidates
-
Wildfire threatens structures, prompts evacuations in small Arizona community of Kearny
-
Mike Tyson-Jake Paul: How to watch the fight, time, odds
-
'Came out of nowhere': Storm-weary Texas bashed again; 400,000 without power
-
At 100, this vet says the ‘greatest generation’ moniker fits ‘because we saved the world.’
-
The Best Transfer-Proof Body Shimmers for Glowy, Radiant Skin