3 ms·
> The central banks normally determine only the short term interest rates (up to 3-6 months). But if the short-term rates are manually set by central banks to
by scottmsul 7y ago
> The central banks normally determine only the short term interest rates (up to 3-6 months).
But if the short-term rates are manually set by central banks to be artificially low, wouldn't that be the primary driver behind negative long-term interest rates even if the exact number is determined by supply and demand? The article is talking about natural drivers like "negative time preference" which just sounds wrong.
- H8crilA 7y agoWell 10yr or 20yr should still be above zero even if short term rates are kept around zero for an extended period of time. This is due to the cost of locking money in for a long period of time. What the article is trying to say by "negative time preference" is that this sound logic: "I'm giving you money for 20 years instead of lending money 80 times for 3 months each time; pay me more for that privilege" is disappearing in the market.