In this week’s Off The Cuff podcast, Chris and Wolf Richter discuss:
- How Negative Interest Rates Work
- Their (Many) Nefarious Unintended Consequences
- Too Much Capital Is Getting Pushed Into Higher Risk
- The High Cost Of Our Relentless Pursuit Of “Growth”
It’s been a surprisingly busy summer developments-wise in the world. We’ve had so much fresh content covering it all that’s it’s been a challenge to publish everything in a timely manner. Some releases get delayed in order to rush breaking news out to you.
Here’s a podcast we recorded with Wolf Richter a few weeks back that tackles the important topic of negative interest rates. They are exploding around the world — over $19 trillion in debt is now trading at a negative rate (!).
The US is one of the only sovereign bond markets left trading in positive territory. And the Fed has resumed an easing cycle, so that, too, may not last for much longer.
What are the implications of a bizarro world below the 0%-bound? They are unnatural and fraught with toxic unintended consequences, as Wolf explains here.
There’s another issue involved here, and it’s a little bit more insidious. And that’s the forced buying of particular funds, such as pension funds in Europe. I’ve seen where somebody referred to this—one of the fund managers—and he was trying to stay away from these low yielding or negative yielding bonds as a pension fund manager.
by geedard