Financial Post - low rates are the new normal. Michael Walker is a senior fellow at the Fraser Institute, so you'd expect him to cynically spew fascist right-wing propaganda advocating the enslavement of the working class and the handing over of the country to the kleptocratic elites.
But instead, he writes this:
The false hopes and predictions of economists arise from the application to current circumstances of a model about economic behaviour that was built for a period of history that had a very different structure. All of the models and most of the theory behind them were built for an epoch of history – the first two thirds of the 20th century — in which brisk population growth was a constant. While some model architects knew that constant population growth was necessary for the models to work, none of the current users seem to grasp it.
Why does population growth and its fluctuations matter for interest rates? Because it determines the relative number of (net) savers and borrowers in the population of a country. Young people are generally borrowers. Middle aged and old people are generally savers. The relative number of savers and borrowers and the size of their need for one or the other have a determinative impact on the market for loanable funds.
It is a very intriguing theory, and he supplies a nice table that shows that average interest rates for countries with different age/population makeups. So there's correlation backing him up. Which is weak in itself, except that demographics is an overpowering force in economics.
Then again, I'd like to know how much of the supply of loan capital comes from "old people" as opposed to the capitalist oligarchs, banks and corporations.
Because, after all, ultra-low interest rates and transfixion at the zero bound might all just be the end-point of Piketty's r>g.
Maybe you should run a second analysis to see if there's any correlation between a country's 10Y rates and, say, the percentage of national wealth owned by the 1%?
Let me know when you put your paper out, Mike: I'll be at university then, and will certainly want to read it so I can write an essay on it and/or mock it openly. Hopefully it's a serious paper and the profs will let me take it seriously.