Interest rates have been sliding for seven centuries. Dive into the historical forces driving this trend and examine whether the recent interest rate spike is just a blip on the radar. Topics covered include: How the supply of savings and the demand to borrow impact interest rates Why have interest rates been falling for over 700 years, and what might have changed recently to propel rates higher How lower rates have helped households increase their net worth and reduce their … [Read more...]
308: Coins and Cash: Shortages, Hoarding, and Threats
What is the cause of the current U.S. coin shortage and when have there been other shortages. Why is there a push to get rid of both the penny and the hundred dollar bill. Topics covered include: How many coins does the U.S. Mint produce each year and why hasn't it been enough to avert a coin shortage in 2020.How the U.S. coin shortage in the early 1960s differs from today.How much profit does the U.S. Mint make producing coins even though it loses money minting both pennies and … [Read more...]
296: Why Negative Prices Exist and What Can They Teach Us
Why the oil price fell below zero and what are other examples of negative prices. What lessons can we learn from negative prices. Topics covered include: How oil futures work and why the oil future prices fell below zero for the first time ever.Why has the United States Oil ETF (USO) lost so much money.How ETF authorized participants create new shares only so they can be shorted.How storage problems for oil and electricity can lead to negative prices.How negative interest rates are … [Read more...]
264: What Happens If U.S. Interest Rates Turn Negative?
Recently, the yield on the 30-year government bond in Germany went negative for the first time ever. Now there are 15 trillion dollars of bonds around the world, about 25% of the world’s bond supply that are priced so they earn a negative yield. That effectively means that investors are paying someone to hold their money. That there’s a cost to actually investing. The Math Behind Negative Yielding Bonds Most bonds that have a negative yield were not issued with a negative interest … [Read more...]
