An

a day keeps the doctor away
Everything here is my personal opinion. I do not speak for my employer.
November 2015
December 2015

2015-11-23 »

I spent a few years working in the banking world (no, not investment banking: the super slow-moving savings & loan stuff.  If you think that doesn't sound like me, well, it doesn't sound like me :)).

While I was there, the international banking crash of 2008 happened (not my fault).  Around that time, a couple people mentioned the idea of negative rates to me, and that was shot down by anyone with "real experience" as being totally mathematically impossible; they treated zero interest like an asymptote, not a threshold.  I kind of suspected they were incorrect though I wasn't sure I understood the economic theory well enough.  Well, I guess they were incorrect: https://news.yahoo.com/swiss-alternative-bank-breaks-negative-rates-taboo-055303880.html

I find it amusing how hard people have to work to rationalize negative interest rates.  It isn't that complicated; if my savings account rate drops from 1% to 0%, or from 0.25% to -0.75%, the absolute value difference in my account balance next year is the same.  The rest just follows from there.

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