This is actually a phenomenal chart that tells the history of rates AND the challenges we’ve created in banking.

💡High rates = functioning economy

🚫Low rates = broken economy

Here’s how Central Banks and Derivatives distorted this.

For about 100yrs rates easily stayed between 6-9% and never really went below 6 (1790 to 1880).

Charts below.

🏦💸Enter Central Banking Era and things drastically changed.

The battle to establish the Central Banking Era created an environment where rates RARELY went above 6% — for the next 100yrs.

This was abnormal relative to the past.

In this low rate period we had more bank failures and wars.

The 1960s/80s brought the Derivatives Era.

As financialization and debt became the norm, rates became bi-polar.

For the next 55 yrs (charts stops 2010). Rates were erratic (too high and too low), creating more tension, more defaults and liquidity issues.

Outside of manipulation and intervention, high rates provide stability and growth (6-9%).

They cause piles of capital to move from unproductive to productive use cases — where the profit is higher than the hurdle *rate*.

Low allow unproductive use case to survive on low rates.