Negative Interest rates: Impossible, Irrational or Just Unusual

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  • Опубликовано: 29 окт 2024

Комментарии • 50

  • @Economivision
    @Economivision 4 года назад +15

    “You thought you controlled all the levers when, in fact, you control none of them”
    ...You are the most honest teacher I’ve ever had. Thank you.

  • @flamingjob2
    @flamingjob2 7 лет назад +13

    you sir are the best wisdom youtube had ever have

  • @nostradamus5728
    @nostradamus5728 4 года назад +5

    Great job! Thank you! The video is dated 4 years ago, but it is a great shot even today...or moreover :)

  • @LurchLures
    @LurchLures 3 года назад +1

    Loved this video and even more relevant today than when it was made a few years ago. I can't believe it has so few views. Thanks a lot for making this!

  • @bjorntokison5359
    @bjorntokison5359 3 года назад +3

    Thank you professor for this amazing class!

  • @elontusk9123
    @elontusk9123 4 года назад +9

    Damodaran: "even if the central bank is buying 80, 90, 100 billion worth of bonds."
    Jerome Powell: This isn't even my final form

  • @victoriassecretisluv
    @victoriassecretisluv 5 лет назад +4

    Thanks Aswath . My first time listening to you . At the end you said that these negative interest rates open the doors more widely for a digital currency . Well in 2019 Facebook has announced their currency called Libra .

  • @mikestanmore2614
    @mikestanmore2614 5 лет назад +4

    This was an excellent assessment of the topic. Thankyou.

  • @manubhatt3
    @manubhatt3 2 года назад

    Hats off to The Great Madrasi Valuation Anna!

  • @sivat33
    @sivat33 8 лет назад +1

    Very useful series of videos. I came across your blog (Valeant coverage) last week and am glad that I found these videos.

  • @davidpowell3347
    @davidpowell3347 2 года назад

    A phenomenon in the USA is large,commercial banks consolidating into a very few megabanks,those banks tend to pay depositors very low interest rates,but there is a corresponding rise in the popularity of credit unions,which tend to pay higher interest to depositors.
    The credit unions seem to be the new local banks in that consumers tend to do their banking at these credit unions.
    I think some megabanks have lobbied politicians in the hope of getting laws passed that would restrict the ability of the public to bank at the credit unions.

  • @ankits2513
    @ankits2513 4 года назад +1

    Man I can't thank you enough. I wish I studied in NYU!

  • @zeze9062
    @zeze9062 2 года назад

    Finally found what I'm looking for, thank you so much professor

  • @abhisekmishra2817
    @abhisekmishra2817 3 года назад

    Mind-blowing explanation, sir!!!

  • @macfiona4545
    @macfiona4545 3 года назад

    Thank you so much for the invaluable education, Sir

  • @LJ-um4xi
    @LJ-um4xi 8 лет назад +8

    Those who have direct control on the economy (in the USA could be the IRS or the FED) should focus on lowering taxes instead of just lowering rates to promote investments.

  • @abbottmd
    @abbottmd 5 лет назад

    This was a very prescient presentation. Quick questions: why do no current commentators seem to focus on real rates, and only nominal. Aren't negative rates likely forecasting upcoming deflation? What if the expected return on today's negative rate bonds is still priced in around 1-2% real? It seems like the market is rendering a verdict that the central banks won't be able to change this situation in the near to mid term.

  • @bobsmith2886
    @bobsmith2886 5 лет назад +2

    They are great for creating asset bubbles and rewarding the rich but not good for most people

  • @TommyCarstensen
    @TommyCarstensen 7 лет назад +1

    I discovered the brilliant mind which is Aswath Damodaran a few days ago. A small correction though... 15:55 "As the Danish central bank lowers rates, what if the ECB also lower rates?" It's beside the point being made, but Denmark has had a fixed exchange-rate system since the 1980s. The interest rate is very much dictated by Draghi. It's explained in detail here: www.nationalbanken.dk/en/monetarypolicy/fixed_exchange_rate_and_erm2/Pages/default.aspx

  • @stevendohse
    @stevendohse Год назад

    Great video. 6 years later his final remarks were dead on

  • @amitbhatia8593
    @amitbhatia8593 8 лет назад

    Thanks Aswath for enlightening me on the topic. I am an equity investor in the Indian stock market with stagnant earnings growth and worried about the future. I do not see negative interest rates are working for the developed economies. Infact, it is creating lot of divergence and added risks.

  • @mazen82y
    @mazen82y 8 лет назад +3

    although ur not a specialist in monetary policy but this is great stuff. I am struggling to understand many things about the negative interest rates which are:
    - are they an early sign of deflation or the result of deflation ?
    - is a negative interest rate a result of a very high demand on a certain bond ?
    - is this deflation the result of QEs and USA gigantic off balance sheet debt ?

    • @davidpowell3347
      @davidpowell3347 2 года назад

      I believe that "QE" stymied the ability of the market to logically value the involved bonds.

  • @mikestanmore2614
    @mikestanmore2614 5 лет назад

    There is currently a loud political backlash against the Australian Liberal (actually conservative) government for attempting to bring in a law restricting or banning cash transactions because quite a few people are aware of the risk of negative interest rates.

  • @BoardgameBaker
    @BoardgameBaker 4 года назад +1

    Great video!

  • @davidpowell3347
    @davidpowell3347 2 года назад

    Negative interest rates: An abomination. A rip off. Possibly an extreme form of taxation?
    Also fear "de facto negative interest rates" when published interest rates are perhaps small and positive but lower than inflation or perceived inflation,causing some of the same investor and saver behaviors as would be expected during explicit negative interest rate periods.
    People who lend out money deserve some kind of compensation for doing it,borrowed money is worth something to the person who has the use of it for the term of the loan or mortgage.

  • @shirish1812
    @shirish1812 8 лет назад +1

    Well said sir. Thank you.

  • @abhishek1917
    @abhishek1917 3 года назад

    Prof when we switch currencies and try to convert the cash flows do we use a constant exchange rate for all the previous CF or use the actual rates and make assumptions about future exchange rates?

  • @shivkuma100
    @shivkuma100 5 лет назад

    Professor, if central banks decided to print larger denomination currency notes (eg: $1 MM note), would it affect the story about costs of holding "cash under the mattress" ?

    • @anandprahlad699
      @anandprahlad699 5 лет назад

      Larger denomination would make it more attractive to store money under mattress, as it would lower interest rates further, because of its dampening effect on inflation, caused by lowering the velocity of money.
      en.wikipedia.org/wiki/Velocity_of_money

  • @patricknaingwinaung5650
    @patricknaingwinaung5650 4 года назад

    Thank you for sharing.

  • @raid9535
    @raid9535 3 года назад

    from the perspective of lowering interest rates and digital currencies, it seems that the long term view is in favour of digital currencies. this is yet another reason to stash your kids savings in them

  • @billmelater6470
    @billmelater6470 5 лет назад

    For more details, refer to the Austrian School.

  • @inveritategloria
    @inveritategloria 5 лет назад +2

    Not irrational; criminal. Negative rates are a scam.

  • @titusp9488
    @titusp9488 3 года назад

    Funny and very sad moment intellectually ... I remember back in 2007 sitting in a class when a classmate asked this question about negative interest rates and we all laughed at him ... now we are still struggling to understand valuation and implications of this problem...2021

  • @DemocraticSolutions
    @DemocraticSolutions 5 лет назад +1

    The presentation needs to take on a more global if not higher level perspective.
    The presentation needs to take on a perspective from consumers of transactions including global consumers.
    Negative interest rate can become another form of taxation if not a global one.
    If central banks are setting a negative interest rate and the market follows that trend, the consumers are paying for the loss. The cost of holding cash in bank accounts to perform transactions for convenience. Therefore, the loss can be viewed as another form of consumer taxation that is set by the central bank.
    Globally, if the bond market follows the negative interest rate, foreign countries trading with a country with negative interest rate may need to hold the country's negative interest rate bond as reserves to perform trade transactions worth billions in the country's currency. Therefore, holding the bond with negative bond rate and losing money on the bond due to negative cashflow can be viewed as global taxation on those countries losing money in holding the negative rate bond.
    Why would consumers and foreign government hold bank accounts and bonds with negative interest rates? For the convenience of performing all types of transactions including global trading.
    Trump Administration citicized China for weakening its currency. Here they are weakening U.S. currency by heading toward zero central bank rate and the possibility of bond market following that direction.

  • @briancrane7634
    @briancrane7634 4 года назад +1

    That's why Modi changed the Indian currency...people had massive safes full of cash and he wanted to tax it. Stuffing money doesn't work if your govt. just invalidates the paper you're holding...

  • @noahleidinger8489
    @noahleidinger8489 8 лет назад

    Thank you

  • @sjiz
    @sjiz 4 года назад

    24:25 'The greater they offer an opening to a Digital currency that actually meets the requirement for a good currency& issuing authority you trust'.
    Fed: Centrally backed Digital Currency are coming!

  • @vanchendagba5624
    @vanchendagba5624 8 лет назад

    Super informative!

  • @kagisomsiza7277
    @kagisomsiza7277 4 года назад

    sooooooooooo good!!!!!

  • @sommi888
    @sommi888 5 лет назад

    🧡💛💚💙 Do a video on the Stock-To-Flow model for Bitcoin. Aswath you should be holding some Bitcoin it would be fiscally irresponsible not to. 🧡💛💚💙

  • @omkar0lb7
    @omkar0lb7 3 года назад

    Wish i had seen this before fed started unlimited QE + 0 rates in march 2020

  • @KingXKok
    @KingXKok 2 года назад

    Man is BTC gang he just philosophically has something against a non productive asset.
    But cash is a non productive asset 🤔

  • @ChitranjanBaghiofficial
    @ChitranjanBaghiofficial 5 лет назад

    And this opens opportunities for cryptocurrency to take their place.

  • @kunaalsingh510
    @kunaalsingh510 5 лет назад

    We're fucked

    • @davidpowell3347
      @davidpowell3347 2 года назад

      You could say that negative interest rates do that!

  • @zeze9062
    @zeze9062 2 года назад

    Finally found what I'm looking for, thank you so much professor