I think interest rates are going to stay low for much longer than people were expecting a few months ago. Even now, I don’t think people have quite adjusted themselves mentally to how long interest rates are going to stay low. They won’t necessarily be at zero, but we’re not going to see interest rates above 2 percent anywhere in the world in any major economy at least until the second half of this decade. Interest rates are going to have to stay very, very low over the next ten years, because huge cutbacks in government borrowing will be occurring and ultra-stimulative monetary policy will be the only way to prevent economic slumps.
If we are going to have a decent rate of economic growth in the world over the next ten years, it is going to have to be led by business investment. Companies are very nervous about whether there’s going to be another recession, about whether they’ll see another collapse in their markets. And this is quite understandable. But if companies don’t invest that money, you wind up with a classic Keynesian slump. So companies have got to be encouraged to invest. And, really, there are only three things that will make that happen. One is the growth of the market, another is low cost of capital, and the third is significant changes in technology or market structure, which create new opportunities or new requirements for capital. Under those conditions, you could really have a corporate-led expansion in the world economy which will surprise people with its strength.