Skip to main content

Main menu

  • Home
  • Current Issue
  • Past Issues
  • Videos
  • Submit an article
  • More
    • About JPM
    • Awards
    • Editorial Board
    • Published Ahead of Print (PAP)
  • IPR Logo
  • About Us
  • Journals
  • Publish
  • Advertise
  • Videos
  • Webinars
  • More
    • Awards
    • Article Licensing
    • Academic Use
  • Follow IIJ on LinkedIn
  • Follow IIJ on Twitter

User menu

  • Sample our Content
  • Request a Demo
  • Log in

Search

  • ADVANCED SEARCH: Discover more content by journal, author or time frame
The Journal of Portfolio Management
  • IPR Logo
  • About Us
  • Journals
  • Publish
  • Advertise
  • Videos
  • Webinars
  • More
    • Awards
    • Article Licensing
    • Academic Use
  • Sample our Content
  • Request a Demo
  • Log in
The Journal of Portfolio Management

The Journal of Portfolio Management

ADVANCED SEARCH: Discover more content by journal, author or time frame

  • Home
  • Current Issue
  • Past Issues
  • Videos
  • Submit an article
  • More
    • About JPM
    • Awards
    • Editorial Board
    • Published Ahead of Print (PAP)
  • Follow IIJ on LinkedIn
  • Follow IIJ on Twitter

Five Mysteries Surrounding Low and Negative Interest Rates

Laurence B. Siegel and Stephen C. Sexauer
The Journal of Portfolio Management Spring 2017, 43 (3) 77-86; DOI: https://doi.org/10.3905/jpm.2017.43.3.077
Laurence B. Siegel
is the Gary P. Brinson Director of Research at the CFA Institute Research Foundation in Charlottesville, VA.
  • Find this author on Google Scholar
  • Find this author on PubMed
  • Search for this author on this site
  • For correspondence: lbsiegel@uchicago.edu
Stephen C. Sexauer
is CIO at the San Diego County Employees Retirement Association in San Diego, CA.
  • Find this author on Google Scholar
  • Find this author on PubMed
  • Search for this author on this site
  • For correspondence: ssexauer@uchicago.edu
  • Article
  • Info & Metrics
  • PDF (Subscribers Only)
Loading

Click to login and read the full article.

Don’t have access? Click here to request a demo 
Alternatively, Call a member of the team to discuss membership options
US and Overseas: +1 646-931-9045
EMEA: +44 0207 139 1600

Abstract

The authors explore the consequences of zero and negative interest rates for the economy, the capital markets, and incentives facing producers and consumers. They characterize the current regime as monetary Keynesianism—using central bank policy to pursue traditionally Keynesian goals of economic stimulus. They argue that monetary stimulus during and after the Great Recession did not spark massive inflation because the nature of the money supply has changed; the increased money supply did not stimulate the economy very much because borrowers are satiated and cannot be induced by low interest rates to borrow more. Moreover, low interest rates mean that savers need to redouble their savings efforts, instead of spending. The authors conclude by recommending that investors wait for better conditions, which will come eventually. In the meantime, the authors recommend that investors ignore stories of impending Armageddon, discount the mythology of central bankers as the new masters of the universe, and be suspicious of new solutions that purport to perform financial alchemy in a low-growth world.

TOPIC: Financial crises and financial market history

  • © 2017 Pageant Media Ltd
View Full Text

Don’t have access? Click here to request a demo

Alternatively, Call a member of the team to discuss membership options

US and Overseas: +1 646-931-9045

UK: 0207 139 1600

Log in using your username and password

Forgot your user name or password?
PreviousNext
Back to top

Explore our content to discover more relevant research

  • By topic
  • Across journals
  • From the experts
  • Monthly highlights
  • Special collections

In this issue

The Journal of Portfolio Management: 43 (3)
The Journal of Portfolio Management
Vol. 43, Issue 3
Spring 2017
  • Table of Contents
  • Index by author
Print
Download PDF
Article Alerts
Sign In to Email Alerts with your Email Address
Email Article

Thank you for your interest in spreading the word on The Journal of Portfolio Management.

NOTE: We only request your email address so that the person you are recommending the page to knows that you wanted them to see it, and that it is not junk mail. We do not capture any email address.

Enter multiple addresses on separate lines or separate them with commas.
Five Mysteries Surrounding Low and Negative Interest Rates
(Your Name) has sent you a message from The Journal of Portfolio Management
(Your Name) thought you would like to see the The Journal of Portfolio Management web site.
CAPTCHA
This question is for testing whether or not you are a human visitor and to prevent automated spam submissions.
Citation Tools
Five Mysteries Surrounding Low and Negative Interest Rates
Laurence B. Siegel, Stephen C. Sexauer
The Journal of Portfolio Management Apr 2017, 43 (3) 77-86; DOI: 10.3905/jpm.2017.43.3.077

Citation Manager Formats

  • BibTeX
  • Bookends
  • EasyBib
  • EndNote (tagged)
  • EndNote 8 (xml)
  • Medlars
  • Mendeley
  • Papers
  • RefWorks Tagged
  • Ref Manager
  • RIS
  • Zotero
Save To My Folders
Share
Five Mysteries Surrounding Low and Negative Interest Rates
Laurence B. Siegel, Stephen C. Sexauer
The Journal of Portfolio Management Apr 2017, 43 (3) 77-86; DOI: 10.3905/jpm.2017.43.3.077
del.icio.us logo Digg logo Reddit logo Twitter logo Facebook logo Google logo LinkedIn logo Mendeley logo
Tweet Widget Facebook Like LinkedIn logo

Jump to section

  • Article
    • Abstract
    • Mystery #1: How can quantitative easing—which in the United States expanded the Fed’s balance sheet from $892 billion in January 2008 to $4.4 trillion in April 2016—not have ignited massive inflation or, at a minimum, a large rise in the inflation risk premium?
    • Mystery #2: Are low nominal and real rates due to monetary Keynesianism or to supply and demand for capital?
    • Mystery #3: Do very low, even negative, interest rates stimulate economic growth?
    • Mystery #4: Are low rates a market forecast of low productivity growth and, hence, low returns to capital?
    • Mystery #5: What are the costs of this form of financial repression?
    • CONCLUSION
    • ENDNOTES
    • REFERENCES
  • Info & Metrics
  • PDF (Subscribers Only)
  • PDF (Subscribers Only)

Similar Articles

Cited By...

  • No citing articles found.
  • Google Scholar
LONDON
One London Wall, London, EC2Y 5EA
United Kingdom
+44 207 139 1600
 
NEW YORK
41 Madison Avenue, New York, NY 10010
USA
+1 646 931 9045
pm-research@pageantmedia.com
 

Stay Connected

  • Follow IIJ on LinkedIn
  • Follow IIJ on Twitter

MORE FROM PMR

  • News
  • Awards
  • Investment Guides
  • Videos
  • About PMR

INFORMATION FOR

  • Academics
  • Agents
  • Authors
  • Content Usage Terms

GET INVOLVED

  • Advertise
  • Publish
  • Article Licensing
  • Contact Us
  • Subscribe Now
  • Sign In
  • Update your profile
  • Give us your feedback

© 2022 Pageant Media Ltd | All Rights Reserved | ISSN: 0095-4918 | E-ISSN: 2168-8656

  • Site Map
  • Terms & Conditions
  • Privacy Policy
  • Cookies