How serious are “negative interest rates” and what does this mean to investors?
Would you like to receive a free copy of The Aftershock Investor?
If you are a Monex customer or a prospective customer, or if you know someone who you would like to refer to Monex who would like a free copy of The Aftershock Investor, please get in touch with a Monex Account Representative to mail you a copy along with a DVD of the complete Robert Wiedemer interview free of charge, compliments of Monex Deposit Company. Please call 1-800-444-8317 for details.
Announcer: How serious are "negative interest rates" and what does this mean to investors?
Robert Wiedemer: When "bubbles" pop, you can see the signs actually long before they pop. It's just that most people don't want to see the signs. So in 2005, housing prices leveled off. Well, to most people that wasn't a problem. It was actually an important sign that the "housing bubble" was going to pop, admittedly not immediately. In fact, in 2006, prices stayed up fairly well with lots more liar loans and subprime loans, but because they were heading down. Of course, we all know what happened in 2008, but that's several years there, but the signs were there before. I think that's kind of what negative interest rates is doing to some people is...although it doesn't mean that things are going to blow up or an aftershocks are going to happen in three months. It's an indication, a strong sign, that something is funny with your economy. I think, financially the difference between getting a quarter percent or a tenth percent and having a negative interest rate isn't that much, but is it a sign that there's something wrong? It's very correct and it is something that is going to be, I think, looked at in the future. People are going to look back at this and say the time of negative interest rates is where things really did start to change. It's kind of like a 2005 period. One other thing though is like the "housing bubble," this is a "bubble" and when things do start to move they can move very quickly. So, always look for early signs, I think, negative interest rates is certainly one of them. When they do move, it can go very, very quickly after that.