A new book by Charles Goodhart (London School of Economics) and Manoj Pradhan (Talking Heads Macro) argues that the prolonged period of near-zero interest rates may be coming to an end. This according to a recent article in Bloomberg.

Even though “almost no one predicts a large rebound in either nominal or real interest rates,” the article says the book argues otherwise. Specifically, the authors assert that the era of low rates was fueled by demographics and “the entry of china and Eastern Europe into the global trading system” which led to a more than doubling of the global labor supply between 1991 and 2008. This, in turn, pushed down rates and suppressed both wages and inflation. But the authors contend that this demographic “sweet spot” is reversing, with the ratio of dependents (elderly and young) rising in advanced economies while working-age populations are stagnant or falling across most of the globe.

The article concludes that although the book’s thesis–that the demographic reversal will raise inflation and interest rates—could be overstated, “we should thank Goodhart ad Pradhan for kicking the tires on the view that low rates are here to stay, because conventional wisdom can easily blind us to other scenarios.”