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What impact do “negative interest rates” have on the psychology of everyday investors?

Bob Wiedemer
July 6, 2016
Video Transcript

Announcer: What impact do "negative interest rates" have on the psychology of everyday investors?

Robert Wiedemer: It's not as important, because frankly only getting a quarter percent or half a percent isn't much interest. You still have a fundamental problem in your bond market, you still have a fundamental disincentive to save, and that's an issue even at very, very low interest rates, but when you go to negative interest rates the issue is more that it just sounds crazy. Low interest rates can be--well, that's a problem, but when we go to negative interest rates--something is really screwed up. People worry more about the financial system and people worry a lot about the people running our financial system. Why are we paying...why am I paying to have you hold my money? It just doesn't make sense in a way that is more powerful, than is... well, I've got low interest rates, okay. Even though the difference between a negative interest rate and a slightly positive isn't much, it really raises the concern, which I think is very legitimate, that something is fundamentally going wrong here and that's why I think negative interest rates have such a negative impact on financial psychology right now.

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