Meeting Of Minds – July 2019

Published on: July 26th, 2019

With rates already low and the US cycle swinging towards easing, the prospect of negative rates in the US is no longer remote. Seven countries have already adopted the policy. While the idea was initially rejected in the US post-GFC, academics and policymakers have increasingly endorsed solutions to the obstacles of how to deal with cash and bank viability. In many ways, this reflects the lack of viable monetary policy alternatives in the next recession.


  • RM
    R M.
    26 July 2019 @ 16:01
    I am sure Julian is correct in thinking that neg rates may happen here, and I look forward to his next piece on investment considerations. But OMG, do we really want to emulate the "success" in Japan and Europe in the USA? And as a retired investor, who needs to juice 2% "safe" returns to afford retirement, such thoughts only want me to spend less, not more, as I am risking more, and making less. I would encourage every MI sub to watch Shannon McConaghy's piece yesterday in RVTV. If he is right, the financial experiment in Japan is about to end in a large bang. Maybe that will end the negative rate experiment, and we go straight to MMT payments to the middle class. (That might be inflationary!).
  • BK
    Bruce K.
    26 July 2019 @ 16:48
    Chapeux, Julian! This report is the most cogent piece on negative rates I've read (and I've read quite a few).
  • DB
    Daniel B.
    28 July 2019 @ 22:06
    I’m only half satisfied this month. I value the monthly look into Julian and Raoul’s institutional pieces. Where my hit of GMI?? Excellent piece Julian, class act as always ;-) it all just boils down to psychology does it? Central banks know this ends in tears eventually, it’s just a game of pass the parcel to ensure it’s not on the current governors’ watch/shift. They don’t want to be at the helm of the sinking ship without trying conventional measures first (otherwise their blame will be for being too experimental/unconventional)
  • HO
    H2 O.
    30 July 2019 @ 00:59
    If some form of central bank funded fiscal stimulus is inevitable (in either a macro or political sense), why would negative rates be needed, or desirable? ZiRP + better velocity would be much more effective than NIRP, and would create inflation. NIRP remains idiotic IMO.
  • JL
    J L.
    30 July 2019 @ 18:01
    would be nice if Julian is right and 2s10s flattens one final notch on not enogh dovishness then we might really get the chance of some "free money"
  • ag
    anthony g.
    31 July 2019 @ 16:05
    This negative US rate environment has been on its way for a while. Not much new here in my limited view.
  • RM
    R M.
    31 July 2019 @ 17:56
    Its Powell Day. Raoul: When do we put back on the Eurodollar trade? Specifics? Thanks!