Scott Sumner on Interest Rates

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4.7 • 4.4K Ratings

🗓️ 20 April 2015

⏱️ 65 minutes

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Summary

Scott Sumner, of Bentley University talks with EconTalk host Russ Roberts about interest rates. Sumner suggests that professional economists sometimes confuse cause and effect with respect to prices and quantities. Low interest rates need not encourage investment for example, if interest rates are low because of a decrease in demand. Sumner also talk about possible explanations for the historically low real rates of interest in today's economy along with other aspects of monetary policy, interest rates, and investment.

Transcript

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0:00.0	Welcome to Econ Talk, part of the Library of Economics and Liberty.
0:06.4	I'm your host, Russ Roberts of Stanford University's Hoover Institution.
0:11.0	Our website is econtalk.org where you can subscribe, comment on this podcast, and find links
0:16.3	and other information related to today's conversation.
0:19.0	You'll also find our archives where you can listen to every episode we've ever done going
0:23.2	back to 2006.
0:25.4	Our email address is mailadycontalk.org.
0:27.4	We'd love to hear from you.
0:29.4	Today is April 14, 2015, and my guest is Scott Sumner of Bentley University.
0:37.7	And he is also the director of the Center for Monetary Policy at George Mason University's
0:41.6	Burkata Center.
0:43.2	He blogs at Money Illusion and at Econ Log, which, like Econ Talk, is part of the Library
0:48.2	of Economics and Liberty.
0:49.8	Scott, welcome back to Econ Talk.
0:51.8	Thanks for inviting me, Russ.
0:54.2	So we have a few topics I hope to get to today, but I want to start with one of your favorite
0:58.3	themes, which I'll introduce with an observation of Nobel laureate Robert Schiller's.
1:03.5	In a recent interview, he referred to what he called a puzzle.
1:08.1	Puzzle of our time.
1:10.0	And that puzzle is, why is there so little investment, either public or private, but he mentioned
1:15.6	private in particular, given how low interest rates are, because we think low interest rates
1:21.4	should stimulate investment, and yet, investment seems to be very stagnant and very low.
	...

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