This is a response to The Great Stagnation. I have not located a similar idea, so perhaps it is somewhat unique.
Cowen makes the case that the flat screen TV is not as valuable an invention as indoor plumbing, refrigeration, penicillin etc. New inventions not being worth so much means the rate of economic growth is lower.
Interest rates, at least in considerable part, in theory and practice reflect a combination of expectations of inflation and growth.
Interest rates ought to be higher if there is a higher expectation of growth.
Now, consider the chance of a technological revolution occurring that will radically improve our wellbeing. A genetics-based medical revolution. AI. Cheap fusion power. Alien contact. VR…
The amortized value of the boost to growth that one of those technologies might provide are conceivably large. And more than one of them might well produce a dramatic revolution in our well-being.
Let’s say there’s a 10% chance the economic growth rate will suddenly become 10% per year for a sustained period. Shouldn’t rates be at least 1%?
Either the market has considered this and decided a dramatic increase in growth is essentially impossible or current rates are too low because the market has been ignoring this possibility.
I guess it could be that the market is discounting this possibility because we are approaching escape velocity, and the singularity is indeed near.