{"id":56165,"date":"2020-12-25T18:21:28","date_gmt":"2020-12-25T23:21:28","guid":{"rendered":"https:\/\/olduvai.ca\/?p=56165"},"modified":"2020-12-27T15:12:28","modified_gmt":"2020-12-27T20:12:28","slug":"todays-negative-rates-are-the-path-to-poverty","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=56165","title":{"rendered":"Today’s Negative Rates Are the Path to Poverty"},"content":{"rendered":"

Today’s Negative Rates Are the Path to Poverty<\/a><\/h3>\n
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\"risky<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n

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Almost Daily Grant\u2019s<\/em>\u00a0(ADG<\/em>) made the pronouncement on December 14th that a \u201cnew benchmark in financial repression\u201d had been set:\u00a0\u201da record $18.4 trillion in global debt is priced to yield less than zero, up from less than $8 trillion in March and a five-year average of $10.3 trillion.\u201d<\/p>\n

ADG<\/em>\u00a0consulted interest rate historians Sidney Homer and Richard Sylla, who opined, \u201cnominal negative yielding debt had never been seen in material size in the 4,000 years of interest rate history prior to the current cycle.\u201d<\/p>\n

Economist Ludwig von Mises never imagined such a thing, writing in\u00a0Human Action<\/em>,<\/p>\n

There cannot be any question of abolishing interest by any institutions, laws, or devices of bank manipulation. He who wants to \u201cabolish\u201d interest will have to induce people to value an apple available in a hundred years no less than a present apple. What can be abolished by laws and decrees is merely the right of the capitalist to receive interest. But such decrees would bring about capital consumption and would very soon throw mankind back into the original state of natural poverty.<\/p>\n

We can\u2019t be sure what Mises meant by \u201cvery soon.\u201d But, to read\u00a0ADG<\/em>, the march toward \u201cthe original state of poverty\u201d will continue.\u00a0ADG<\/em>\u00a0cites\u00a0Financial Times<\/em>\u2019s John Dizard, who believes (paraphrased by\u00a0Grant\u2019s<\/em>) that\u00a0\u201dThe potential catalyst [is]: A swath of T-bills [that] is set to mature in the first half of next year without fresh corresponding issuance on account of the Treasury Department\u2019s \u2018historically high\u2019\u00a0$1.5 trillion cash cache at the Fed, potentially exacerbating a supply vs. demand imbalance.\u201d<\/p>\n

Dizard is not alone. Bank of America\u2019s Mark Cabana says, \u201cthere is going to be a train wreck at the front of the [Treasury] curve next year. There is way too much cash chasing too little paper.\u201d<\/p>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Today’s Negative Rates Are the Path to Poverty Almost Daily Grant\u2019s\u00a0(ADG) made the pronouncement on December 14th that a \u201cnew benchmark in financial repression\u201d had been set:\u00a0\u201da record $18.4 trillion in global debt is priced to yield less than zero, up from less than $8 trillion in March and a five-year average of $10.3 trillion.\u201d […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[124,16451,1154,966,558,1389,25781],"class_list":["post-56165","post","type-post","status-publish","format-standard","hentry","category-economics","tag-central-banks","tag-doug-french","tag-interest-rate-policy","tag-ludwig-von-mises","tag-negative-interest-rates","tag-nirp","tag-the-mises-institute"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/56165","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=56165"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/56165\/revisions"}],"predecessor-version":[{"id":56166,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/56165\/revisions\/56166"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=56165"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=56165"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=56165"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}