It might help to take the long view — and it doesn’t get much longer than this study of real interest rates from the Bank of England. The author of the paper, Paul Schmelzing, doesn’t just present years or decades of data — but centuries of the stuff. Just feast your eyes on the following graph that summarises over seven hundred years of ups-and-downs:

Two things immediately stand out. Firstly, the shorter term variations; but secondly, and more significantly, the long-term trend towards ever lower interest rates.

In medieval times conditions were, well, medieval. You could lend money to a king, but he and half his subjects might die of the Black Death. Or any number of other horrible things might happen at any moment — so quite a lot of risk there to price in. Less so these days… let us hope.

Banking has also become more sophisticated over the last millennium. For instance, you don’t need your own castle to keep money safe anymore. Indeed, the bankers of the past would be surprised that most of our money doesn’t even take physical form.

Still, it’s interesting to see the downward trend continue through modern times. If it continues, then the extremely low rates of the last decade might not be a blip or a governmental fix, but just part of a broader historical pattern. The assumption that current rates have only one place to go (up) might therefore be mistaken. Indeed, Schmelzing suggests that “real rates could soon enter permanently negative territory.”

That’s a mind-boggling thought, but it doesn’t mean that Chancellors should lose all sense of fiscal discipline. As we saw in the case of Greece a few years ago, the money markets are still willing to pull the plug on governments that lose the plot.

After all, there’s one thing that hasn’t changed in 700 years — which is that lenders can always sniff out a bad risk and price it accordingly.