Real interest rates are now negative

Greg Mankiw: Real interest rates are now negative

A negative return. A suspicious recurring pattern in too many of the investments I've made over the years. 🙂 Seriously, Mankiw writes:

In standard models of asset pricing, negative real interest rates are most likely to arise if growth expectations are particularly low or if uncertainty is particularly high. Low growth expectations encourage households to save, which drives down equilibrium rates of return. High uncertainty drives up risk premiums, which in turn drives down the return on safe assets, perhaps below zero. Both forces seem to be working now.