AN R-STAR is a luminous sphere of plasma held together by its own gravity, a red star with a surface temperature of 2,500K, nearly nine times that of earth — but that’s is all I know about it, and this ain’t is no scientific journal. Central bankers over the world manage monetary policy around a fragile base equilibrium — seeking to find the interest rate that keeps inflation steady, but the economy firing on all cylinders; an. An interest rate that holds things steady, in a preferred but given state, rather than seeking to influence one way or another. This "neutral" rate of no influence, known as r-star — provides neither stimulus nor restraint. When the economy is over-heating, central banks want an interest rate above neutral, to cool things down, and vice versa. Of course, r-star is a theoretical rate, seemingly hard to pin down nowadays, as central banks in most developed countries keep lowering their reference rate in an attempt to stimulate their economies, with little appar...
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