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Why Negative Interest Rates Are Dangerous

Money For the Rest of Us

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The Dangers of Negative Rates

When I was in graduate school, well undergrad and graduate school, one of the basic formulas of finance was how do you value a stream of cash flows that go into infinity? So a perpetuity. In all investments are like that. The final reason I want to discuss today why negative rates are so dangerous is it makes investing significantly more risky. Not only are expected returns go down, but the risk of investing goes up.

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