负利率有什么问题？

Apr 13, 2016 Joseph E. Stiglitz

纽约—1月初我写道，今年的经济条件和2015年一样疲软，为2008年全球金融危机爆发以来最糟糕的一年。此外，如过去十年中反复发生的，今年过去几个月后，其他人较为乐观的预测纷纷向下修正。

基本问题——这一问题自金融危机以来一直困扰着全球经济，但略有恶化——是全球总需求不足。目前，欧洲央行的反应是实施刺激措施，加入了日本银行和其他一些央行的行列，证明“零下限”——利率无法为负——只是传统经济学家想象中的极限。

但是，在尝试负利率的非正统实验的经济体中，没有一个回归增长和充分就业。一些经济体的结果出人意料：某些贷款利率实际有所上升。

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Joseph E. Stiglitz

Writing for PS since 2001
268 Commentaries

Joseph E. Stiglitz, University Professor at Columbia University, is the co-winner of the 2001 Nobel Memorial Prize, former chairman of the President’s Council of Economic Advisers, and former Chief Economist of the World Bank. His most recent book is People, Power, and Profits: Progressive Capitalism for an Age of Discontent.

The Great Malaise Continues PS OnPoint
James Gourley/ZumaPress

The Great Malaise Continues

Joseph E. Stiglitz traces the roots of economic stagnation in much of the world – and sees little improvement ahead.

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lu_hao Dec 15, 2017

what is the wealth effect?
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ishaq yusuf Nov 24, 2016

The article clearly captures the current situation in Nigeria where the central bank's monetary policies have done little or nothing to stimulate the economy. There is an urgent need to rethink growth strategies by policymakers else central banks may lose their relevancies.
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Melih Erdoğmuş Apr 26, 2016

Nice job about pointing out the problems of full employment. Not just because everyone is supposed to be subject to have eight-hour shift but also the others have to work more to minimize the lack of enough solid work done by each of every economy in the world.
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Diogo Baptista Apr 24, 2016

Finally, a very "econo-pragmatic" opinion. Couldn't agree more with the state of the art, as the overall central banks approach has been drifting from "real economy" towards "bureaucratic & institutional economy". It's just easier this way, that's how "they" learned and it's the way institutions have been setup.
Probably, economy needs an overall upgrade on its assumptions and approaches (models) because the classic & neo-classic schools are no longer up to date, when it comes to explaining and predicting the "globalized world economy", as we know it.
The ball is also on the universities side, pairing with central banks and think-tanks.
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eric zepp Apr 20, 2016

Outside the Iron Triangle of government, central banks, and major corporations, these rates do very little positive in an environment replete with policies that inhibit growth. Until policy makers give up their 100 yr.–old progressive fantasies and figure that one out, we’re doomed to low-growth, increasing inequality.
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G. A. Pakela Apr 19, 2016

Bravo to Dr. Stiglitz for pointing out that the unconventional monetary policy promoted by the former doctoral students of Stanley Fischer have not borne fruit. Somehow the theory underlying unconventional monetary policy has to account for the fact that the last great recession in the early 1980s featured a recovery that accelerated out of a monetary policy that featured real and nominal interest rates that topped 1000 basis points. It is not as if the Federal Reserve needs to tighten policy to prevent inflation - it needs to begin selling off its portfolio of Treasuries in order to meet the demand in the market for risk-free securities and allow interest rates to find the level set by the market. This would reflate the IRAs, 401Ks, pension plans and insurance investments and as Dr. Stiglitz alludes, open up the credit spigot for SMEs. Of course this would lead to an increase in the budget deficit, but at least the interest payments by the Treasury to the private sector would be recycled into the economy instead of sitting dormant at the Fed.
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george sos Apr 19, 2016

“garbage in, garbage out.”....well said!!
If we soon do not disconnect science from propaganda and fake science(politics directed science ,or in other words,charlatans who bought a degree from some set-up by the few university,in order to prepare the next generation of mercenaries of the rich) ,if we dont get all the fake scientists out and if we dont stop allowing the few impose their "code" upon society ,we are in for a big big fall...all over the world will (and already is) instability and war the main concern.
Talking about greece for example (that i have personal knowledge) most people on the streets are waiting (and it seems somehow unavoidable) a war of some or the other kind.After 5 years (6 now) of austerity and IMF trickery blackmail and lies,we only fear war...we are already in one anyway.
So unless the rich want to continue to exist ,they better come up with a different way....
Or,i predict a riot....(or many many more)
dont say i did not warn you.
Paraphrasing slightly the words of a truly "healthy" businessman (bezos)(and he has got it right in this respect.):
"unless we share ,we ll all be dead" he said..:(
i second that..
PS:no word about economies like saudi arabia depended on "islamic baking"..:):)(as ethical as the western one i suppose.LOL)
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David Jed D. Schwartz Apr 19, 2016

Hello, Your point that interest rates extended by banks to borrowers are very different from the interest rates given to depositors and purchasers of Treasury issues seems well taken. I had been mulling making the same point myself even before reading your piece. And I personally had I guess erroneously suggested that interest rates have been set by Treasury issue yields. Likely the difference between Treasury yields and interest rates offered by banks to borrowers, whether private individuals or SME or larger scale corporate varies and is revealing. The apparent fact that depositors tend to get negative returns but that borrowers must pay interest "throw the nose" cannot be a good structural indicator. Likely it means that the banks have it way "too good." And that market conditions for production and profit and indeed "living' are extremely risky, given the relatively low aggregate demand wage pool. Which suggests that a frame for raising wages and generating justifiable welfare transfers is what is missing and needed.
- David Jed D. Schwartz Apr 19, 2016
  
  s.b. "through the nose" or perhaps "threw the nose"?
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yw yap Apr 18, 2016

I guess there is too much economics input w/o much from social. When we get CBs to decide I guess their focus will be on money & being pressured on Economic growth. Naturally, there gotta be Wake-Sleep cycle in order to rejuvenate. However, due to "Greed Is Good" misguidance, we continue to just push push w/o the need for pause for rejuvenation. Guess E.F. Schumacher isn't sleeping well. Sigh!
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Derek Louden Apr 17, 2016

Consumption - constrained by low wages, part-time work, maxed out borrowing / high debt.
Investment - firms won't invest if markets are already oversupplied.
Government Spending - Constrained due to bank bailouts, tax evasion, war on terror.
Exports - competitive devaluation of currencies can't overcome lack of demand in global as well as domestic markets.
To boost AD distribution of income has to change. If all the disposable income sits with 1% of the population we all lose including the 1% in the long run. Picketty's analysis was everywhere lauded but nowhere implemented. I'm not holding my breath.
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Peter Tremulis Apr 17, 2016

Buy a classic car, it's a hard asset that you can have fun driving. I know some who have done this and are having much more fun and making a better return than watching for the monthly account statement from the bank.
- Bala Subramanian Apr 18, 2016
  
  Antonio Vives is quite right in his observations. However, in defense of Prof: Stiglitz, no one including the professor is able to prescribe any policy solution without a reliable model to base it on. So, it is imperative that we do not rely on the old technologies of the past century of modeling and start using the actual data of the global economy. It is necessary to make all economic activities transparent and begin including non-digitized sectors of the global populations through accelerated programs/incentives to have them digitized as quickly as possible, to make the entire global economy digitized and available for policy making.
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Peter Tremulis Apr 17, 2016

Negative rates are just another form of taxation in that most global, national and regional banks are still under some form of Government support. When banks charge negative rates they take money from those that have it and reduce the government support payments that the bank would otherwise receive. The government support payments are funded by the taxpayers, so this is a reverse tax. A bit like a Robin Hood tax, take from the rich and give to the poor. What is amazing is that anyone with money would pay a bank to hold capital. It indicates that bankers are out of ideas as to how to invest wisely as a fiduciary and the governments and regulators are supporting it since, again, its a new form of taxation. Any other attempt to characterize this as sound fiscal policy is pure BS.
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Antonio Vives Apr 17, 2016

As usual from a two handed economist: good diagnosis, no policy prescription. Ok, central banks got it wrong, then what would Stiglitz do? Tell us. Not just "finance SMEs through small banks" How?? You can take the horse to the river but cannot make it drink. Are small banks more willing to lend to SMEs in the face of slowing consumer demand? Are they less risk averse than large banks. Not even under normal conditions are most banks lending to SMEs. What would Stiglitz do if he were Chairman of a Central Bank??
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lakshma reddy Apr 17, 2016

I am of the opinion that the economists have lost track in mountains of data pouring from several sources and due to their outmoded conventional pure economic models;where as one need to global macro model on lines of thermo dynamic law of conservation of energy and matter with powerful strokes given by sovereign nation states on global dynamic economic and political balancing equation.
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Hari Politopoulos Apr 17, 2016

Tax the rich and spend on the poor. Isn't that the rational response to a shortfall in aggregate demand, especially when both capital and income are so highly concentrated?
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Marco Saba Apr 17, 2016

Depleted economics and why it happens
by Marco Saba, president at IASSEM, April 17, 2016

The depleted economics is defined as the normal economics with a lower content of two very active isotopes: money and banking.
Most commentators in economics forget to tell that the point is how do you account for money creation. A fiat money with no real liability associated - because it is irredeemable - must be accounted as an asset in the cash flow account at the time of creation before being spent or lent out. In accounting terms CASH is: coins, banknotes AND deposits (the same as in the definition of the M1 aggregate). By removing the ASSET quality of that money the bankers are appropriating the seigniorage on the principal (capital). In a 100% sovereign nation, the money created by banks should be an asset for the bank and a corresponding liability to the Treasury. I.e. the Treasury should write in his books an entry corresponding to the 100% seigniorage on the capital creation received from the banking cartel as an asset - and a liability to the public of the same sum.
The difference from the government earning this seigniorage is that the government shall respond politically to the public of the sum involved while bankers do not.
You have to read this paper to understand the accounting point: Cash Flow Accounting in Banks— A study of practice, Ásgeir B. Torfason, University of Gothenburg, 2014
https://gupea.ub.gu.se/handle/2077/35272

This problem is so important that the Swiss central bank this year suppressed completely the CASH FLOW STATEMENT from her annual report, here: Torfason-Syndrome*: the Swiss central bank suppress the cash flow statement
http://leconomistamascherato.blogspot.it/2016/04/torfason-syndrome-swiss-central-bank.html

It is the same approach we have on radio-toxicity cancer-causing of nuclear radionuclide: DON'T LOOK, DON’T FIND !
- Robert Lunn Apr 17, 2016
  
  What? Another "waste of time" comment.
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Angel Gavieiro Apr 17, 2016

As discussed in previous related articles in the last 2 months, and well complemented by Prof. Stiglitz today, Negative Rates are just another pitiful sign of the diminishing returns of CB monetary policy in the current economic context of global deflationary pull.
If anything, in alignment with the point below by Mr. Procyon, I think this policy is more a reflexion of CB's fear to an uncontrolled correction of both equity & bond markets, potentially leading to an eventual market crisis... so the steroids keep flowing to the markets (until the day they stop having any effect even there... when will that happen? when rates reach -5%, -10%?).

Coming to the SME lending. Here I share the views below of Mr. Aurelius, effectively, I think the paradigm shift that we (and CBs and policy makers) need to learn is how consider macro & micro dynamics together when setting policy. How on earth can we incentivize private banks to lend while at the same time we are setting a regulatory corset in the direction of "more capital & less leverage & more liquid assets & more asset-liability matching & less risk-taking" (i.e. Basel III and other related regulation)... the perfect formula to stop SME lending on its tracks. Pls. let me clarify: definitely banks needed re-regulation, but probably this effort has not been well calibrated and, what is my point, definitely has not been coordinated properly with the supposed intent of the monetary policy applied by CBs.
Under these conditions, there are only 2 ways those SME can receive the funding they need, either outside the banking system (i.e. hence the FinTech lending boom we have seen, for SMEs and consumer finance) or through public intervention (i.e. taking a Public Bank for that purpose). It has been sad to witness, again, old mental paradigms curtailing the solutions; in Europe, usage of Public Banks could have prevented many SMEs to go bankrupt post 2008, but the "non-interventionist" mentality still prevailing precluded that to happen (e.g. in the UK, the government still was obsessed with pushing the Merlin Programme of compulsory lending targets through private banks, that failed to cover SMEs enough... when all along UK owned 82% of RBS which decided to keep at arms-length, only for a few year later to create the (public) British Business Bank... how much easier would have been to fully nationalize RBS at the start and redirect its activity to the purpose? -while, btw, accelerating its restructuring & cutting bonus pools-).

Thus, still a lot of mental paradigm change is required at the centre of global & country policy-making if we are to have a chance to find a viable solution to this economic mess.
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John Doyle Apr 17, 2016

Modern Monetary Mechanics, aka MMT knows exactly what the macroeconomic state is. It is not one of those stupid economic models so beloved of mainstream economists but it describes the REALITY of the fiat currency world. Central bankers actually understand this but seem afraid to speak out.
Within the bounds of the productive capacity of the economy there is a large Output Gap ready to be filled with deficit spending. This will put currency into the non government sector and act as stimulus for the economy. It should be aimed to achieve full employment [under 2% unemployment]
Once this happens then the economy will grow again.
- Jose araujo Apr 19, 2016
  
  @Jason
  
  I don't know of any models that incorporate Debt... This guys are shooting from the hip based on their prejudices and appealing to the common sense, they don't understand that debt is just an accounting identity that in the macro sense has no difference from equity.
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- Jason H Apr 19, 2016
  
  Thanks JohnDoyle you are correct. It's all explained easily through MMT rather than imaginary models that don't reflect the real world like private debt. Read here on the folly of Japan's negative interest rates from MMT: http://bilbo.economicoutlook.net/blog/?p=32883
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Paras Shridher Apr 17, 2016

It is a very interesting article.
One point that I would like to emphasize more is somewhat related to the solution of all this mess with regard to the "wrong model" as being followed by ECB.
In my opinion, assuming rational expectations hypothesis, the effect of the QE or any monetary stimulus is not being passed on due to inequality among the portfolios backing the borrowers and hence "rationing" becomes important here provided the banks run profitably. So, involvement of small and marginal banks into the policy formulation with regard to credit rationing seems somewhat a way out to make the scheme effective provided the other determinants about investment decision.
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Jason H Apr 17, 2016

Way too much private debt already worldwide so the solution is government deficit spending so the private sector has a surplus to pay down its private debt obligations. It's the only solution yet even so-called "progressive" economists aren't saying it loudly and clearly. The only ones who are are considered outside the mainstream but actually inhabit reality.

If interested start with ecobomist bill Mitchell's wealth of information about how money really works not the fantasy the main stream economists think: http://bilbo.economicoutlook.net/blog/?p=33094

Then watch the longer technical version explaining why mainstream economics ignoring private debt keeps leading the booms and busts: http://youtu.be/CCKo9HxgDrk
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Reaz Ali Apr 16, 2016

Just one thing that Mr. Stiglitz forgot or conveniently overlooked. The role of expectations in policy. He has sounded too deterministic.So, to borrow from Lucas critique of econometric models, even though the underlying economic conditions have changed since the crisis, and pre-crisis models have been used(incorrectly as Stiglitz mentioned) before and after the crisis, peoples' expectations have closely mirrored the important policy variables, such as real interest rate. So, what is it to expect that societies expectations will change quickly and exactly as to how the appropriate model should be, in these times(post crisis till 2015)? Evidence states that societies expectations only change slowly if at all, and if it did change quickly and immediately, only then would expectations be rational and models have the desired outcomes.
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markets aurelius Apr 16, 2016

Brilliant article, Prof. I would add one more point. Pre-crisis, the banks used their capital to build massive trading machines, which made banks information monopolies. They became the bid to all of their customers' offers and the offer to all their customers' bids. Over time, they became liquidity and information sinks. This allowed them to widen bid-ask spreads, and capture increasing rents on the flow business they conducted each day. Their residual risks were traded among each other or laid off on regulated exchanges.

The important thing CB policy failed to account for was that CBs were responding to information from markets -- interest rates, equity and commodity prices, etc. -- generated by the residual trading of the banks. In time, these signals increasingly reflected price manipulation by the banks' trading desks, many of which were found guilty of rigging these critical prices (although, as in every case of all the financial malfeasance that has come to light post-crisis, no one actually was found guilty of such actions. Paying the billions in fines is just another cost of doing business, ultimately borne by shareholders.)

The other interesting thing that happened as a result of the creation of these information monopolies was the banks (including the then-but-no-longer-existing investment banks) were able to create the impression the toxic securities they manufactured actually had a bid and were tradeable. Until they weren't. Then the entire edifice they created -- from the bond issuance that funded the mortgage brokers to the credit-rating agencies' fictions, and everything in between -- collapsed under its own weight.

The CBs and other key regulators didn't see it coming because they didn't know what they were looking at. They were impressing each other with financial-accelerator models and taking a victory lap on having ushered in "the great moderation." This required they spend their time endlessly refining their dynamic stochastic general equilibrium (DSGE) models so they could keep the great moderation going.

We know how this ended.

The crisis wiped out bank capital, forcing the Fed to become the "bad bank" and absorb all of the dreck generated by the heretofore unimaginable venality of the bank employees via the various Maiden Lane LLCs et al. In return the Fed flooded the banking system with liquidity, all of which, to this day, remains trapped in the system.

This says to me the level of bank-capital destruction must have been so enormous that the banks still are not able to effectively intermediate these reserve additions. Of course, as you say, the demand for credit also collapsed, mostly from the relentless drive to delever among households and firms. Most households and firms never again want to find themselves so levered that the loss of a job or customer could wipe them out -- as it did their neighbors and competitors, who were just a tad more over-levered than they were.

Because the CBs do not understand the intermediation process or the motivations of the bankers, they find themselves implementing policies that may be effective in another dimension -- literally, an entirely different set of facts that produces an entirely different reality. Their policies certainly do not have any utility in the dimension we all find ourselves occupying at present.
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Tomas Kurian Apr 16, 2016

Let us be honest: there are no RETAIL negative interest rates (NIR) implemented. ( only wholesale, which is a big difference, these are not passed to the depositors)
Retail meaning that all depositors would be affected, not just banks.

Only RETAIL NIR whose proceeds would be income of government and used as fiscal stimulus would provide necessary boost to aggregate demand and move billions of unused resources to circulation again.

Of course, this needs fully digital currency, which would prevent money hoarders from getting their cash out of the banks.

So some more steps are needed to make this tool work ( some nations are already working on digitalization, albeit very slowly)

Periodic taxation of accumulated capital
http://www.genomofcapitalism.com/index.php/16-periodic-taxation-of-accumulated-capital-2

and further reading in Genom of Capitalism
http://www.genomofcapitalism.com
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dan baur Apr 15, 2016

The wet dreams of an academic with no skin in the game have a zero chance of impacting the reality.

Turns out you can do what you want only with your own money. Subject to the many restrictions imposed by the state of course.
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Philip George Apr 15, 2016

So economists are beginning to abandon the nonsensical idea that ultra-low interest rates spur the economy. For graphical proof here's a graph of industrial and commercial loans v/s the Federal Funds Rate: https://research.stlouisfed.org/fred2/graph/?g=3I8H

I wrote about this way back in 2011: http://www.philipji.com/item/2011-07-24/why-banks-do-not-lend-at-near-zero-interest-rates
- Jose araujo Apr 15, 2016
  
  @Philip
  
  The intention of low rates interest rates isn't to spur the economy. Zero lower bound isn't a policy remedy, its the consequence of liquidity trap conditions.
  
  We are living in times of near zero interest rates because there is no investment, there is a strong preference for liquidity and gov.bonds.
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F. W. Croft Apr 14, 2016

What's wrong with negative interest rates? Oh, yeah - they don't work! If this was a great idea Japan wouldn't have had the last twenty years.
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Procyon Mukherjee Apr 14, 2016

The biggest saver of the world, the S&P 500 is sitting on savings of $3 Trillion and it makes a great sense to have ultra low rates for taking debt to make buy-backs happen. The case for low rates to spur consumption and demand is a weak argument.
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Paul Daley Apr 14, 2016

Good article, but I have to reiterate, if central banks are stymied in their efforts to create demand by weak member banks or governments facing unsustainable debts, then they should move on their own to acquire the powers they need to lend against income directly to taxpayers. It's only an historical accident, a function of the way they were formed, that they only have part of the powers of all other banks. Give them the powers they need, and let them do the job, but end their independence and place them under much tighter democratic control.
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Gerald Silverberg Apr 14, 2016

While we are mobilizing insightful adages ("garbage in, garbage out") "pushing on a string" seems even more appropriate with respect to the effect of interest rates on investment:
https://en.wikipedia.org/wiki/Pushing_on_a_string?wprov=sfla1
But then, this is nothing Prof. Stiglitz is not already thoroughly familiar with.
As to models, it is not only central banks that may be overestimating the effectiveness of negative real interest rates, but also Keynesians in the Wicksellian/Hicksian tradition like Krugman. In this respect the 1940 Kaldor model with a nonlinear investment function and multiple equilibria may capture the point better.
- Jose araujo Apr 14, 2016
  
  I don't see your point on the Keynesian models and negative interest rates. If you use this models you would understand why the interest rates are negative, its not a policy mechanism but the consequence of the change in the liquidity preference.
  
  Keynesian were right on the multiplayer effect, regarding the monetarist approach,The "Keynesian" approach was to try to tilt the LM by changing expectation, but all that are familiar with the model know that was a very long shot.
  
  The models used by Central Banks are Lucas inspired and all that micro foundations mambo jambo, that failed miserably
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Rob Carter Apr 14, 2016

RC NB: Stiglitz is no better proposing to transfer Government and Corporate problematic Debt To Private debt, which won't ever create any lasting Consumption demand, just foreclosure on equities and a return through 2008 to 1929;.
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M M Apr 13, 2016

This article is factually correct, no doubt about it. Some of the commentators herein, including myself have touched on many of the issues mentioned in this article in our debates during the last few months. One point to make is that lending rates by banks have already increased (they are in double digits) and credit availability has already declined if not disappeared. But there are more significant risks than the wrong or inadequate models used by Central Bankers, these are to state just a few, the recently introduced money laundering regulations and significant penalties that can be imposed on banks in case of non-compliance (the Panama Papers leak is only the tip of the iceberg in this whole saga); the banks’ balance sheets have not recovered from the 2008 crisis and have thus far been cosmetically fixed (5 out of the 8 big banks in the US have failed the recent US regulators stress tests and in the EU the majority of high street banks are still in deep trouble); There was never in the last 7 years or so any will by the politicians to address the fundamental problems in the financial system neither is there today; the toughening of credit criteria / scoring by the regulators / central bankers and credit reference agencies, etc.
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Douglas Carr Apr 13, 2016

Great column. The fallacy of negative interest rates and other extraordinary monetary policies is that there is a sustainable arbitrage between the cost of capital and the return to capital. Lower the riskless rate, asset prices rise, and expected future returns to capital go down. Lower expected future returns to capital mean lower investment and thus lower growth. Japan's 20 hears of failure with ultralow interest rates demonstrate the failure of this model. Subpar U.S. growth with ultralow rates since the Crisis only adds to the case against these policies.
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Paul Friesen Apr 13, 2016

Good article, as usual. Central banks can't do this using conventional policy, or even the sort of non-conventional policy tried so far. To boost demand, we need to get money into the hands of people who will spend it. That could be done by government stimulus or by some sort of "helicopter drop".
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Steve Hurst Apr 13, 2016

Most SMEs I know have little enthusiasm to borrow from vampire banks
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dan baur Apr 13, 2016

"Aggregate demand" nonsense strikes again. Banzai!

Sure, Japan's Kamikaze Keynesianism is failing due to German austerity. That's because they were allies in the Franco-Prussian war.

China and Korea's Keynesianism is failing because, like the austerian Germans, their ancestors too come from Africa.

The European SME can't wait to get some loans so it can pay ten times as much in VAT and other taxes to the benefit fund of the Bruxelles bureaucrat - the most important person in that insane asylum. Complying with all nonsense rules and regulations is also very fun.

Let's replace Draghi's wrong model with Stiglitz's wrong model. The train wreck isn't going anywhere anyway.
- Jason H Apr 19, 2016
  
  Dan, Abenomics is very far from Keynesian stimulus it's neo-liberal to the core which is why they're trapped. read this to try to understand: http://bilbo.economicoutlook.net/blog/?p=33094
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- Jose araujo Apr 14, 2016
  
  And how is Abenomics Keynesian, may I ask?
  
  And how is the situation in Japan caused by Abenomics? To my knowledge even if the effects of monetarist policies are little, they have caused no arm.
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Jose araujo Apr 13, 2016

Always a pleasure to read prof Stiglitz.

One of the few that make any sense of this whole mess.
- dan baur Apr 15, 2016
  
  Sure, if in "sense" you include zero sense.
  
  How is Japan keynesian you ask. Isn't "stimulus" the cornerstone of keynesianism? They all want to revive the patient by applying enbalming chemicals to restore the appearances. This is the fallacy of Keynes.
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