Understanding interest rates in the age of paper money

Why supply of money will be at least as important as the demand for it in determining interest rates.

Three months ago, the yield on 10 year US treasury bonds was 4.9% and market participants were nearly unanimous in expecting it to go considerably higher. They were spectacularly mistaken. The yield fell below 4% in late September.

The world's central banks are creating too much paper money to allow interest rates to rise. In this new age of fiat money, the rules have changed. From now on, the supply of money will be at least...

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