>Having broken the zero interest barrier, there appears to be no bottom to interest rates anymore. The lack of a bottom opens up some very bizarre scenarios. T

>Having broken the zero interest barrier, there appears to be no bottom to interest rates anymore. The lack of a bottom opens up some very bizarre scenarios. The flaw in that argument is that it seems to assume individual bonds are perpetuities (actual perpetual bonds are extremely rare). At some point, the bonds you have purchased will actually mature, and you will be paid face value. If it is less than the price at which you purchased the bond, this means you take a capital loss at that point. This decrements your overall rate of return. Therefore, you cannot just drive the price of bonds up forever by ignoring the yield becoming increasingly negative and just focusing on market price appreciation.