The shock of the new
Almost everything has some kind of historical precedent. Look quickly at where our economies are today and you might think you see nothing new. After all, countries have been in debt before. Empires have destroyed themselves with money printing before. Bond yields have been low for decades before. And currency unions have collapsed before. But look a little closer and you will see that a good deal of what is happening in the global economy really is unprecedented.
Take interest rates. The UK base rate remains at its lowest level since usable records began in 1694. Then bond yields. A report from Deutsche Bank notes that they are at all-time lows all over the place. In Holland, ten-year yields hit their lowest levels in 495 years back in June.
And short-term yields? These days they are often negative: people are prepared to invest in them even in the certain knowledge that they will make a negative return in both nominal and real (inflation-adjusted) terms.
• Read the full editor’s letter here: The shock of the new.