Question 1053 bond pricing, monetary policy, supply and demand
In his 31 August 2021 article 'The rich get richer and rates get lower', Robert Armstrong states that: "Savings chase returns, so when there are more savings and the same number of places to put them, rates of return must fall" (Armstrong, 2021).
![supply and demand graphs](deals/1053_MarketForBondContractsAndLoanableFunds_Question.png)
Another way of saying that "rates of return must fall" when there are more savings (loanable funds) invested into fixed coupon government and corporate bonds, is that increased: