World's longest negative rate experiment shows perversions
From Denmark's experiences, the logic of cheap money fuelling investment doesn't hold once rates drop below zero
Copenhagen
WHEN interest rates are high, people borrow less and save more. When they're low, savings go down and borrowing goes up. But what happens when rates stay negative?
In Denmark, where rates have been below zero longer than anywhere else on the planet, the private sector is saving more than it did when rates were positive (before 2012). Private investment is down and the economy is in a "low-growth crisis", to quote Handelsbanken. The latest inflation data shows prices have stagnated.
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