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View above about Model Issue: 10-year Treasury real yield
Next, we need to guesstimate what interest rates will be relative to inflation. Right now, the markets are discounting 1.0 percent for the next 10 years. That's a relatively low real yield compared to what it has been over the long-term and a modestly high real rate given the recent past. What is your guesstimate? My guesstimate, based on the amount of debt assets and liabilities outstanding, what the debt service costs would be for debtors, and what the real returns would mean for creditors, is for a real interest rate of between zero and one percent because that would be relatively high, but tolerable, for debtors and relatively low, but tolerable, for creditors.