Over the past thirty years, rates of return on super-safe public U.S. Treasury debt have been falling. Meanwhile, the rate of return on private sector investment, has either increased or at least remained stable, as can be seen in the high level of corporate profits and stock market returns. Harvard’s Emmanuel Farhi and François Gourio of the Federal Reserve Bank of Chicago look at what’s causing the rising wedge between these public and private rates of return.
![A pedestrian walks in front of the BankUnited headquarters in Coral Gables, Florida May 21, 2009. U.S. bank regulators on Thursday closed troubled lender BankUnited Financial Corp, Florida's largest bank, and sold its banking operations to a private equity consortium that includes WL Ross & Co. BankUnited, which had $12.8 billion in assets and $8.6 billion in retail deposits, is the biggest of 34 U.S. banks to fail so far this year. The Federal Deposit Insurance Corp said it estimates BankUnited's failure will cost its insurance fund $4.9 billion. REUTERS/Carlos Barria (UNITED STATES BUSINESS POLITICS) - GM1E55M0MI401](https://www.brookings.edu/wp-content/uploads/2018/09/ES_20180911_PanicFactors.jpg?quality=75&w=1000)