The basis for his conclusion was that the rate of interest was less than the rate of economic growth. The views of Piketty and Blanchard can indeed be reconciled, because they are talking about different interest rates. Why the risk premium is so large is a bit of a mystery. Still, the existence of this risk premium explains how Piketty and Blanchard can both reach their respective conclusions. And monetary policymakers, for their part, seem unable to push inflation above 1-2% in order to drive down real interest rates.

Source: Mint May 14, 2019 18:56 UTC