Why are real interest rates rising?

From Greg Mankiw's Blog (Why are real interest rates rising?), Oct 3, 2008


One might have thought that widespread fear in financial markets would cause a flight to quality, driving the price of safe assets up and their yields down. That certainly has been happening with short-term Treasury bills. But look above to see what's been happening to the yield on 5-year inflation-adjusted government bonds. (Click on the graph to enlarge.) If one wants to flee risky assets and invest safely, for many investors these securities are a pretty good place to be. But their yields, rather than falling, have been rising sharply of late. It's a puzzle.

Related Posts :

1. Now CALIFORNIA Needs An Emergency Bailout
2. ECB Shifts To Easing Bias
3. Federal Reserve Bank Credit Balance Swells
4. The Dollar Rally and Deflationary Imbalances in the US Dollar Holdings of Overseas Banks

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