http://www.bloomberg.com/quicktake/negative-interest-rates

By Andrew WalkerBBC World Service Economics correspondent

Interest rates are now negative, below zero, for a growing number of borrowers, mainly in the financial markets. It means in effect they are being paid to borrow someone else’s money. So what on earth is going on?

Perhaps the first thing worth stating is that negative interest rates are probably not coming to a High Street near you in the near future.

http://www.bbc.com/news/business-32284393

The False Promise of Negative Interest Rates 

by Robert Skidelsky

https://goo.gl/1qjmjY

By Christopher J. Waller, Executive Vice President and Director of Research

If you pick up any principles of economics textbook, there will typically be a discussion of taxes and tax incidence. Tax incidence describes who bears the burden of a tax. For example, suppose the government levies a payroll tax on a firm. The burden of the tax may be borne by the firm, the workers or the firm’s customers.

How can this be if the firm is responsible for paying the tax? The firm may bear the burden of the tax by accepting lower after-tax profits. However, the firm can pass the tax onto its workers by paying them lower wages or hiring fewer workers. The firm can also pass the tax onto its customers by charging them a higher price for the firm’s output. In general, all parties bear some portion of the tax.

https://www.stlouisfed.org/on-the-economy/2016/may/negative-interest-rates-tax-sheep-clothing

Murray Rothbard would be turning in his grave. The American economist wrote in his 1983 book ‘The Mystery of Banking‘ that central bank intervention was often disastrous. Whether the latest round of stimulus, which has generated a slew of negative rates globally, will end badly is yet to be seen, but it’s already turned the most basic investment concepts on their head.

http://www.bloomberg.com/gadfly/articles/2016-07-14/how-central-banks-inverted-the-world

MUMBAI: For the first time ever, nearly $13 trillion worth of government bonds worldwide — representing more than a third of all government debt — have negative interest rates. Returns or yields on bonds drop as their prices rise following an increase in demand. Demand for bonds and gold has soared as central banks kept interest rates down and investors rushed to safe haven investments following Brexit, or UK’s vote to leave the European Union.

http://goo.gl/RbXo84

WSJ:  Janet Yellen Invokes Fed’s Legal Right to Use Negative Interest Rates

Tick tock?

R

This means when central banks get together and come up with a crazy idea, they can implement it with little to no oversight. The Federal Reserve doesn’t need to get permission from Congress or the president, and this lack of answerability is much the same in most industrialized countries. Unfortunately, this largely unchecked power also doesn’t tend to attract much notice because a headline like “Central Banks Pursuing Irrational Policies” doesn’t really garner a lot of attention.

Move Reflects Plummeting Borrowing Costs Across Europe

Germany on Wednesday sold five-year government debt at a negative yield for the first time on record, reflecting plunging borrowing costs across the region in the run-up to the European Central Bank’s sovereign-bond-buying program.

The German Finance Agency sold €3.281 billion ($3.72 billion) of bonds maturing in April 2020 at an average yield of minus 0.08%. At a similar deal in January, the yield was 0.05%.

The negative yield means investors are effectively paying the German state for holding its debt. Even so, bond prices—which climb when yields drop—are expected to rise further once the ECB starts its latest round of stimulus measures next month, meaning investors could potentially sell the bonds at a profit.

CNBC:  5,000 Year Low

The numbers are daunting if not shocking: $12.3 trillion of money printing, nearly $10 trillion in negative-yielding global bonds, 654 interest rate cuts since Lehman Brothers collapsed in 2008.

Those actions have resulted in global growth in advanced economies that likely won’t eclipse 2 percent this year, inflation levels that remain well below targets and a burgeoning global debt problem that remains unresolved, withstood only through the lowest interest rates the world has seen in 5,000 years.

http://www.cnbc.com/2016/06/13/12-trillion-of-qe-and-the-lowest-rates-in-5000-years-for-this.html