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On 10 Nov 98, at 15:59, richard macneil wrote:
> Have been hearing regularly about negative interest rates .How can that be?
Richard,
Imagine a situation where you were so afraid of the safety of your
money in a banking institution, and so afraid of the viability of the
bank itself, that you made a huge rush to deposit your money in
the safety (!!??) of the government.
You would make that deposit by buying Tbills, and if there were
many, many like you, your buying would drive the price up and up
(therefore the yield down and down) till it crossed zero.
In essence, the buyers are so afraid that they are PAYING for the
govement to hold their money....
Cliff
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