EDV: Fiscal Stimulus Is A Short-Term Negative, Long-Term Positive (NYSEARCA:EDV)

Seeking Alpha | Sep 28, 2020 at 7:11 PM
  • As the idea of economic “lockdowns” transitioned from a conversation to reality, both short-term and long-term interest rates collapsed as a major recession was triggered.
  • Declining rates of economic growth will drive the real interest rate lower and create excess capacity in various parts of the economy, weighing on the inflation rate.
  • In other words, if real GDP growth per capita has fallen to 1.0%, investors can make an investment in the real economy and gain an average 1.0% rate of return, invest in more risky securities like stocks, or take the risk-free rate of return which comes down as economic prospects deteriorate.