2 ms·
"they can easily drive their loan servicing costs below zero at fairly modest inflation rates" Why will Japanese people buy government bonds that return a nega
by alexmat 15y ago
"they can easily drive their loan servicing costs below zero at fairly modest inflation rates"
Why will Japanese people buy government bonds that return a negative interest? Stuffing cash in a mattress seems like a better option at that point.
- Retric 15y agoPeople where buying billions of dollars of short term treasury bonds with a negative interest rate recently, because they are safer than mattress's. However, I was talking about real costs after inflation ex: Inflation = 2%, government bond's yield 2.5% capital gains = 25%, mattress yield = 0%. (1 + .025 * .75)/1.02 = 99.88% vs (1/1.02) = 98.04% The only number the government does not control is the interest rate they need to pay.