Negative on negative rates

This FAQ on negative rates is useful. Joseph Stiglitz has an article in ‘Project Syndicate’ on negative rates and their limitations. The article falls short. The real problem with negative rates is their unintended consequences on confidence, on borrowing to invest, on inflation expectations and on asset prices. Firms do not bring their hurdle rate down when rates go down. But, they go up when interest rates rise. That is why negative rates do not boost investment but something else.

I will add more after I had read Larry Fink’s annual letter to shareholders.


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