High Real Interest Rates Because of Incipient Rapid Growth?

That’s former CEA Chair Miran’s argument in the FT. Is this assertion empirically validated? A graph from Hamilton, Harris, Hatzius and West (2016) suggests, maybe not:
Source: Hamilton et al. (2016) exhibit 3.3, as edited by Chinn.
If you see a clear positive association between growth and the real interest rate, then you have better eyes than I do.
The real rate-growth rate link is clear in a very simple, stylized New Keynesian model, as Hamilton et al. show:
As I recall, research regarding the relative importance of inflation, the cost of funds and demand for credit in determining interest rates finds demand for credit is the smallest element. Demand for credit shows up in term premium, the catch-all for everything other than expected inflation and the expected cost of funds. Here are the 10-year yield and 10-year term premium:
https://fred.stlouisfed.org/graph/?g=1Yl4Y
Nope, term premium does not explain the rise in interest rates, so economic growth cannot explain the rise. And let’s keep in mind that even if “growth” were responsible, the causal link is mostly through demand for credit. Is corporate debt the fastest growing component?:
https://fred.stlouisfed.org/graph/?g=1Yl6e
Nope. Despite the rise in demand for AI funding, federal debt is growing faster. And if “growth”, which is to say, credit demand, were responsible for rising borrowing costs, we might expect corporate yields to lead Treasury yields higher. Here are BBB and junk spreads:
https://fred.stlouisfed.org/graph/?g=1Yl6V
Spreads have been narrowing, not widening. Corporate yields aren’t pulling Treasury yields higher; Treasury yields are pushing corporate yields high.
The felon-in-chief’s lackeys tell lies that reflect their resumes, but they are still telling lies. If a simple fellow like me knows that demand for credit isn’t a credible explanation rising interest rates – based upon easily gathered evidence – then hucksters with PhDs either know it, too, or don’t give a hoot. Liars, either way.
The fact that they choose to lie about this issue means it’s got them worried. Good.

Facts Only

Hamilton et al. (2016) exhibit 3.3.
Demand for credit shows up in the term premium.
The term premium does not explain the rise in interest rates.
Federal debt growth is faster than the growth in demand for AI funding.
Spreads between BBB and junk bonds have been narrowing, not widening.
Treasury yields are pushing corporate yields higher.

Executive Summary

Research examining the link between economic growth and real interest rates is complex, as suggested by data from Hamilton et al. (2016). A stylized New Keynesian model indicates a clear relationship between growth and the real rate of return. However, analysis of specific factors like demand for credit and corporate debt does not singularly explain recent interest rate movements. While term premium does not account for the rise in rates, and the observed changes in corporate spreads do not align with an expectation that credit demand drives Treasury yields, the overall relationship remains subject to interpretation. The evidence presented suggests that while growth is a factor, other variables like demand for credit play a role, though establishing a singular causal link remains contested by the provided data points.

Full Take

The narrative pivots on shifting causality: whether economic growth or credit demand drives interest rates, and how this plays out across different debt instruments. The skepticism directed toward explanations relies on demonstrating that the identified variables—growth, term premium, and corporate debt—are insufficient to account for the observed rate increases. A critical pattern is the use of simple, easily observable data visualizations (like the FRED graphs) as immediate refutations against complex theoretical assertions, establishing an appeal to intuitive evidence over specialized modeling. This functions as a tactic to build cognitive sovereignty by foregrounding tangible discrepancies, suggesting that expert claims lacking immediate empirical support are less credible. The deeper implication is that in high-stakes financial discourse, accessible visual data often serves as a powerful tool for resistance against narrative coherence. What questions remain unanswered about the mechanism linking credit demand and real rates when growth fails to provide a clear explanation? What are the long-term structural assumptions embedded in dismissing complexity in favor of simple, yet seemingly contradictory, observed correlations?

Sentinel — Likely Human

Confidence

The text presents an argument grounded in economic data but heavily layered with subjective, rhetorical commentary, suggesting a human author synthesizing academic findings into a polemical stance.

Signals Detected

Sentence length variance is erratic; mixture of highly academic framing and blunt, colloquial statements.

Shows a clear argumentative thread, moving from academic citation to personal skepticism, but the transition between sections is abrupt.

Use of specific data links and references to FRED graphs suggests grounding in real analysis, contradicting generic LLM phrasing.

The final paragraph shifts into highly opinionated, metaphorical language ('felon-in-chief’s lackeys') which feels strongly idiosyncratic and less like synthesized prose.

Human Indicators

The voice mixes formal academic citation (Hamilton et al., New Keynesian model) with highly personalized, rhetorical commentary ('If you see a clear positive association between growth and the real interest rate, then you have better eyes than I do').

The concluding statement is emotionally charged and avoids neutral summary in favor of moralizing judgment.