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Negative Interest Rates Are Coming, but There Is No Chance That They Will Work


Yves here. We’ve sometimes addressed why negative interest rates are a bad idea. A corroborating data point: Sweden ditched its negative interest rate experiment in 2019, and said in mumbled economese that it didn’t do what it was supposed to do.
It been remarkable to witness the casual way in which central banks have plunged into negative interest rate terrain, based on questionable models. Now that this experiment isn’t working out so well, the response comes troubling close to, “Well, they work in theory, so we just need to do more or wait longer to see them succeed.” ....

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