He demonstrates that three factors--bottom-up versus top-down approach, equal nominal versus equal real rates of return
across assets, and 28 versus 14 reproducible assets--account for more than 90 per cent of the difference in growth in capital service inputs.
While quantitative easing has fuelled rising stock markets as investors seek out positive real rates of return
, a lack of real confidence means that they are quick to correct in the face of perceived negativity.
If the real cost of borrowing is negative the government could borrow in order to finance real capital projects, yielding positive real rates of return
Our extension seeks to include monetary considerations to extend Mulligan's analysis and assess the inter-linkages between monetary factors, real rates of return
over the long run, and short-run real consumption preferences.
Suppose we also assume that (i) money and capital pay either the same real rate of return or closely related real rates of return
(1) and (ii) the real return on money is the negative of the net inflation rate [pi].
Similarly, cash remains vulnerable to negative real rates of return
given that current levels of inflation exceed short-term deposit rates in much of the developed and developing world.
For others, like the US, future sacrifices are already required, most likely through a combination of higher inflation, austerity, and "financial repression," as governments seek to impose on savers negative real rates of return
4) The nominal and net real rates of return
for the 1952-2000 period for assets in consideration are displayed in Appendix Figures B1 through B8.
Inequality will increase between financial market booms on one side and, on the other, real wages reduced by commodity price booms together with real returns to savings reduced by a secular downward trend in real rates of return
, real interest rates, and--delusion of delusions--risk premiums.
However, where expectations are that interest rates will remain subdued for sometime to come, the real rates of return
are still compelling.
Over these periods, the median fund achieved real rates of return
against the Retail Prices Index in only the five year period with a real return of 1.
The prices of Chinese and other emerging country labor and inputs we have come to depend on have been rising; business margins are being squeezed; consumers are suffering from declining real incomes; savers and investors are confronted with negative real rates of return