Apple just proved that the zero lower bound still exists
felix salmon
381

Thanks for you article I found it helpful. However there is one issue I take exception with in your article. That being your example that “ Financially speaking, the difference between a 0.1% yield and a -0.1% yield is exactly the same as the difference between a 1.9% yield and a 2.1% yield.”

Surely you don’t believe this to be the case, financially speaking? Mathematically speaking is would be techincailly correct as to the difference in space and time between these to objects. However once an object moves below the zero bound limit the physical properties of that object changes.

Financially speaking the negative object (yield) indicates a financial lose and outflow of cash. Normally financially speaking increasing yields would be a good thing. However if the yield is below zero an increasing of that yield would increase its distance from zero or further into the negative.

I strongly doubt that anyone financially speaking or otherwise would consider two sets of businesses for example as being exactly the same relative to each other where business a1 is -100,000 and business a2 is +100,000 and the second set of businesses b1 is making +400,000 and b2 is making +600,000. The difference between these two sets of business is 200,000. But clearly the mathematical difference between these two sets of business does not tell you anything about the financial conditions of them. Financially speaking all else being equal one business is in serious trouble and unless something changes only one business , A1, is headed to oblivion.

The sign in from of a number is extremely important and indicates the direction it is headed. And any number with a negative sign before it is headed towards oblivion, the greater the increase the faster it will reach oblivion. Financially speaking nothing with a negative sign in front of it is ever good for the long term financial health of anyone or any economy. While natural markets will at times correct with negative signs indicating those corrections an forced negative especially when coming from a government spells nothing but disaster for all.