Risk-free rate of return

There is nothing in nature called risk-free rate of return. First, a risk-free asset can be formed by holding a portfolio of assets that is perfectly negative correlated with another portfolio of assets. Second, a risk-free asset can be a result of a country's economic policy. While a combination of portfolio resulting in a risk-free position is on solid economic premises, a risk-free asset stemming from a policy is difficult to swallow. Many governments around the globe have issued their versions of risk-free asset with outcomes that are mixed. Yes every government has the monopoly to print money, but not every government can print money without triggering inflation upwards. Therefore, a credible policy for a risk-free asset must meet the premises of perfect correlation in negative and positive movements. Clearly, the government overpays when the economy is on its fall, but underpays when the economy is on its rise. A declining economy kills the risk-free asset. So, the risk-free asset as an a policy is an expression for an economy that is solid on its fundamentals.