Welcome to Money for the Rest of Us. This is a personal financial show on Money.

How it works, how to invest it, and how to live without worrying about it.

I'm your host, David Stein. Today is episode 450. It's titled How Higher Interest Rates, Alter Our Financial Blueprint.

Yesterday, the 10-year Treasury Bond yield hit 4.7%. It's highest level since 2007.

The 30-year Treasury Bond yield was 4.8% the highest since 2010.

The real yield, as reflected in 10-year Treasury inflation protection securities, is 2.3%.

The difference between the 4.7% nominal yield for 10-year Treasuries and the 2.3% real yield

is the bond market's consensus for average annual inflation over the next decade.

The 4.7% nominal yield minus the 2.3% real yield equals expected inflation of 2.4%.

Higher Interest Rates, when driven by higher real yields, rather than by higher expected inflation,

that's good news for us as investors and savers.

It means we can earn positive, nearly risk-free returns greater than inflation.

For borrowers, however, higher interest rates are more of a burden.

In this episode, we're going to consider six impacts of higher interest rates.

We discussed what was driving higher interest rates two weeks ago in episode 448,

and in that episode, we looked at some reasons for higher real yields over the long term.

More innovative ideas, greater productivity, faster economic growth, with plenty of jobs,

that can lead to higher real rates of interest, along with modest levels of inflation

if there aren't capacity constraints. There's enough capacity to meet demand.

If there are fewer new ideas, population shrinkage, lower productivity, slower economic growth,

that would lead to lower real interest rates.

Wouldn't we want to have the former higher real rates because of a robust global economy

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