than the interest rate paid on the debt. Such low rates, outpaced by the inflation rate, occur when the market believes that there are no alternatives with sufficiently low risk, or when popular institutional investments such as insurance companies, pensions, or bond, money market, and balanced mutual funds are required or choose to invest sufficiently large sums in Treasury securities to hedge against risk. Lawrence Summers stated that at such low rates, government debt borrowing saves taxpayer money, and improves creditworthiness. In the late 1940s through the early 1970s, the US and UK both reduced their debt burden by about to of GDP per decade by taking advantage of negative real interest rates, but there is no guarantee that government debt rates will continue to stay so low. Between 1946 and 1974, the US debt-to-GDP ratio fell from to even though there were surpluses in only eight of those years which were much smaller than the deficits. See also Real versus nominal value (economics) Shadow Rate (a variation on the real interest rate) Inflation Deflation IS–LM model Macroeconomics Financial repression Natural rate of interest References External links "Equilibrium Real Interest Rate," by Roger Ferguson, 2004. On the distinction between real return and nominal bonds, by Peter Spiro, 2004. Real interest rates by country via Quandl Inflation Interest rates nl:Rente#Reële rente