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News Link • Economy - Economics USA

Guest Post: The Long View On Interest Rates

•, by Tyler Durden
 The average long term interest rate in the U.S. has been 5.49% (median is 4.91%) since 1854. However, that average rate would be much lower if the "spike" in interest rates in the 1960's and 70's were removed which would mean that the current long term interest rate is likely more aligned currently with historical norms. This is particularly the case when compared to the much slower rates of economic growth that currently exists. However, the current equivalent "Fed Funds" rate is at a level that is historically out of context and was only seen during the "The Great Depression."
There is some interesting context when discussing Pre- and Post-WWII economies. Prior to WWII the U.S. economy was primarily agricultural and primarily domestic with few exports. This led to much more frequent recessions due to weather, lack of transport and infrastructure, etc. However, after WWII ended, the U.S. became a massive power house of industrial production and manufacturing as domestic demand flourished and the U.S. engaged in rebuilding Western Europe and Japan.

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