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QUESTION: Dear Mr. Miller,

I need your advice on where to find some historical interest rates data:
- Target real interest rates [quarterly data, 1960 - 2012]
- Nominal interest rates [quarterly data, 1960 - 2012]

I am new to economics. I searched some resources and was totally confused [with all the different types of series, and most have only recent data]. What I need are general, commonly used ones that dated back to the 1960s. Could you advise me the most appropriate series [ie. the series names] and where to find their historical data?

Thank you.


Ben Wand

ANSWER: Hi, Ben--

Thank you for your inquiry and for using I can help you.

Let me start with this: as you saw (per your reference to 'all the different types of series'), there is not just one series of interest rates. They come in various flavors--the current total is 734. As you can see here, FRED - Federal Reserve Economic Data, there are various series for borrowing by the federal government: Treasury Bills (up to 2 years' duration), Treasury Notes (2 - 10 yrs.), and Treasury Bonds (> 10 yrs.). BTW, the time frames in parenthesis after each of those three labels is the range of the 'duration' of the bond - the length of time left until the bond is due to be repaid. Also, these are called 'T-bills,' 'T-notes,' and 'T-bonds', respectively.

There are also different series for corporate bonds, depending on the quality of the bond and the duration. Then there are home mortgage rates, also with some choices about duration (how long the repayment term is).

Insofar as I am aware, there are no sets of data for 'real' interest rates. That is because to get to the 'real' rate, one has to subtract the inflation rate. And inflation rates come in more than one flavor: forward-looking (i.e., expected inflation) and historical (but this requires that one define how long the look-back period is). 'Real interest rates' are of no great utility, Ben.

Now, if you can tell me what gave rise to your search interest-rate data, I might--might - no guarantees--be able to steer you to what you're looking for. I'll sure give it a good try.

Take care--


---------- FOLLOW-UP ----------

QUESTION: Dear Mr. Miller,

Thank you so much for your reply and detailed explanations to clarify things to someone like me who is not familiar with the interest rates topic.

I am doing this for my own interest: I read about how the Federal Reserve use interest rates to stabilize the economy, and so try to find out if there's indeed any relationship between interest rates deviation [the difference between the nominal interest rate and the target real interest rate?] and, say, output, over time. Can you see my point?

I believe my approach is too simple or naÔve to experts like you. I just want to test things out for myself, so any suggestion is welcome.

Thank you.


Ben Wand

ANSWER: Well, Ben, it's always nice to hear from another Texan. I lived in Austin for most of a 21-year period. Texas is a grand and wonderful place, and Texans are a grand and wonderful people. In fact, if the state had discernible four seasons, we'd live there now. But it's still a great, great place.

Thank you for your kind and generous comments in your rating of my previous reply. I really appreciate that.

Your "approach" is neither simple nor naive, Ben. As my old Marine Drill Instructor used to say, "There are no dumb questions. There are only dumb mistakes that result from not asking 'dumb' questions." I'm with him.

I'd find it very helpful if I knew something about you: what you do for a living, your education, and how you got interested in economics. Having you provide me some information in those three areas would help me a lot. Would you be kind enough to do that, please, sir?

All the best--


---------- FOLLOW-UP ----------

QUESTION: Hi Mr. Miller,

Itís nice to know that you are originally from Texas. Texas is doing great and I love it here. My background is in geology and I work for an oil company. I became interested in economics after reading all the bad news about the economy. I think the Fed holds the key to recovery, not the government spending taxpayersí money.

Hi, Ben--

Please call me 'Warren,' if you don't mind. My Dad was 'Mr. Miller.' :-)

Well, you're raising a complicated issue now--what the Fed is responsible for vs. what 'the government' is responsible for. I'm not sure how you separate those two since the Fed is, in fact, part of the government.

Moreover, to speak more precisely--and in economics that's really important--it's not 'the government' spending taxpayers' money. It's the Congress spending, first, the taxpayer's money and then, when that runs out, money borrowed from the likes of China. The obvious solution to the Congress-spending problem is to 'throw the bums out,' right? But we don't seem to do a very good job of that.

So, let me ask you: Which path do you want us to go down here, your original question about interest rates, or Federal Reserve policy, or Congressional spending? We cannot go down all three simultaneously because each is very broad. In fact, one of the things I'm going to ask you to do is to get much more precise. For instance--and I'm going to gently fuss at you here, Ben--when you submitted your initial question about interest rates, the subject you specified was Economics . I knew right away, without reading your question, that you either (a) were an undergraduate taking his/her first course in economics, or (b) had never taken an economics course in your life. How'd I know that? Simple: Those who know something about economics would never use a word as vague as 'Economics' as the subject of a query about interest rates. It would be like me sending you a question with the subject 'The Environment' and then asking you to tell me about the different types of rocks in geological formations.

Do you get my drift, my friend?

The good news is that anyone who studies economics seriously learns to think much more precisely that s/he did before. And that's a good thing because most Americans can't think precisely about very much. That shortcoming leads us to make bad choices, and. . .drum roll, please. . .economics is the study of CHOICE. Its basic premise is that we can't have it all. We must make choices. And when we choose one thing, we are, by definition, excluding other possibilities, aren't we? Think about when you decided to become a geologist. Why not a petroleum engineer? Why not a geophysicist with a Ph.D.? Your choice of geology created barriers, at least in the short term, that blocked you from becoming something else that required a different educational curriculum, didn't it?

So, here's what I'd like for you to do, Ben: Decide what you want me to help you with and then start a new thread dedicated to that particular topic. And, if, for instance, you say "interest rates," then you're going to have to be a ton more specific. Just click here, drill down, and decide what you want to ask about if, in fact, it relates to interest rates. If it's about the Fed, well, then click here and start poking around. Above all, make your choice of a subject a lot more precise than just 'interest rates' or 'Federal Reserve' or something equally broad that would require someone to write a set of encyclopedias to truly answer your question. No one with any sense is going to do that, of course, and that's why you have some responsibility here to help us help you by really zeroing in on what you need help understanding. OK?

The narrower your question, the more you will learn before you ask it. And that, too, is a good thing because that's what you're going to have to do for most of the rest of your life: learn on your own. I can provide you with some tools you'll be able to use to help yourself learn.

Be well, and I look forward to hearing from you--


Ben, without seeing what your question is, my explanation of the tools will be entirely abstract and theoretical. And, truth be told, something I say at this point might not apply in the context you provide later. If you don't mind, I'd prefer to wait until I see the direction you're going in, so that I don't have to correct and redo. That wastes time all around, I think.


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Warren D. Miller, CFA, CPA, ASA


My expertise in economics is limited to three sub-disciplines: Austrian economics, industrial organization, and evolutionary economics. Questions dealing with macroeconomics and other sub-disciplines of the subject should be submitted to those who have the appropriate expertise. N.B.: I DO NOT ANSWER QUESTIONS MARKED 'PRIVATE' because I believe that knowledge should not be hoarded. I also believe that such questions are likely to come those trying to cheat. Also, as one who was a full-time academic for half a decade, I can recognize test/homework questions several time zones away. Do not demean yourself by submitting such questions to me. Those who do so are cheating; I WILL call you out publicly. I have a zero-tolerance policy for cheating and dishonesty. In addition, please don't emulate the businessman who posted a request for help in August 2008. He expressly denied that he was seeking "investment advice" and said that his query was for, and I quote, "educational and informational purposes." Later, he allowed as how his questions related to the possible purchase of a $500K piece of equipment. I said I thought he had misrepresented himself. Bottom line: high-end business consulting is how I make my living. I am the sole support for my family. Please respect that fact and don't try to get for free what our clients pay for. If your company is big enough to have a sophisticated problem, it can afford to pay for the expert advice we and others provide. Beckmill Research, LLC, is a 95-octane firm. We're small, but we've been at this for nearly 20 years. We know what we're doing. Segue: Early on, some asked me for career advice; I gave it. I now get many such requests. The demand for a valuable good that is free is unlimited, so I now charge for that advice. Email me: Finally, PLEASE DO NOT ASK FOR INVESTMENT ADVICE. I am not licensed to provide such advice. If you want such counsel, talk to your financial planner or other financial adviser.


I work with Austrian economics (which differs in major respects from the traditional economics), industrial organization (which is about industry structure, conduct, and performance), and evolutionary economics (almost, but not quite, the economic analog of its biological counterpart) every day in my work. I appraise closely-held businesses, provide exit-planning services, and offer high-level strategic analysis, advice, and solutions to CEOs and owners of mid-sized businesses. Understanding, applying, and writing about these disciplines is an essential part of how I have made my living since 1993.

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