To Claim That the North Atlantic as a Whole Needs Fiscal Consolidation Is Nuts!
I mean: What can one possibly say when confronted by this?
Well, one can quote Ben Bernanke:
...if the real interest rate were expected to be negative indefinitely, almost any investment is profitable. For example, at a negative (or even zero) interest rate, it would pay to level the Rocky Mountains to save even the small amount of fuel expended by trains and cars that currently must climb steep grades. It’s therefore questionable that the economy’s equilibrium real rate can really be negative for an extended period...
So where is our Rhine-Danube-Po tunnel-canal underneath the Alps?
I understand that the marginal holder of Bunds is expecting the euro to rise relative to the dollar in the future. But why not simply hold zero-yielding deposits instead? Presumably it is some form of counterparty risk. But what form of counterparty risk.
I am supposed to be a trained professional. I am supposed to understand this stuff...
