Will liabilities become “assets”

Financial world changes “plus” to “minus”

In September 2019, US President Donald Trump, in his original manner via Twitter, suggested that the US Federal Reserve move interest rates to a negative zone from zero and below to refinancing the US government ‘s current $23 trillion debt and extend its maturity. The idea of zeroing out rates to stimulate growth is tempting, especially when the amount of accumulated debt is huge and virtually all markets are dependent on changes in the US Federal Reserve monetary policy. But emergency measures that temporarily worked after the 2008 crisis could prove disastrous to the global financial system if applied for populist reasons on a permanent basis.

“I don ‘t understand anything,” Alice said. “It ‘s all so confusing!

“It ‘s just that you ‘re not used to living in reverse,” the Queen explained good-natured. “At first everyone has a little dizzy head…

Lewis Carroll, “Alice in the Mirror,” 1871

Negative rates are a relatively new phenomenon in the monetary policy of central banks. Since 2008, many central banks have reduced interest rates to zero and near-zero in order to help their economies overcome the effects of the global economic crisis. It didn ‘t help everyone. In developed countries, economic growth remained…