Why interest rates will stay low until there are major societal changes. Plus, a new way to bet against the Canadian housing market and our banks [Video]

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It’s been a long while since a paper caused as much stir in financial circles as Matthew Klein’s Inequality, Interest Rates, Aging, and the Role of Central Banks. Mr. Klein is a former columnist at The Economist and the Financial Times and is also co-author of the recently published Trade Wars are Class Wars.

Tuesday’s paper spread quickly among macro-focused hedge fund managers, bond traders and economists because of its implications for longer-term interest rates. Mr. Klein argued persuasively that aging population demographics, wealth inequality and low interest rates are all part of the same phenomenon, and no sustainably higher interest rates will occur without massive government policy initiatives to redistribute wealth.

Slowing population growth and a steadily rising average age has been a feature of developed world countries and China since the 1960s. At the current pace, the combined population of high income countries and China is set to decline beginning in the …