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Episode Info:

What are negative interest rates, why they could come to the U.S. and what investors can do about it.

In this episode you will learn:

  • How negative interest rates are even possible.
  • How longer life spans, central bank actions, changing time preferences and the FIRE movement are contributing to negative interest rates.
  • What is the paradox of thrift.
  • How investors can earn a positive return on bonds even if interest rates are negative.
  • What are some indicators to watch for that could signal imminent negative interest rates in the U.S.
  • How individuals need to adjust their lifestyles in an era of negative interest rates.

Thanks to Peloton and The Great Courses Plus for sponsoring the episode.

For show notes and more information on this episode click here.

  • [0:20] Germany government bonds go negative for the first time.
  • [2:38] Understanding savings: the paradox of thrift. 
  • [6:35] The concept of the individual choice and the perceived expense of saving. 
  • [11:05] The savings glut could lead to negative interest rates in the U.S.
  • [14:40] Three reasons one would invest in negative-yielding bonds. 
  • [18:38] Central banks are influencing the spread of negative-yielding bonds.
  • [20:29] What could happen to the U.S. economy if interest rates fell.
  • [22:11] Three factors David is looking at for an indication of falling interest rates.
  • [25:49] What we can do if U.S. interest rates go negative. 

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