Negative Interest Rates: Can They Ever Occur Naturally? What is the “Natural Rate”?

by Mike ‘Mish’ Shedlock
Mish Talk

A question on negative interest rates has arisen in response to Negative Interest Rates: Have They Backfired Already?

Reader Tim stated “I really don’t see why negative rates could not occur naturally especially in a deflationary environment“.

In my article I stated upfront “Anyone with an ounce of common sense knows that negative interest rates cannot occur naturally, can only occur with government or central bank intervention, have nothing to do with free markets, and must fail eventually.”

In light of Tim’s question, let’s explore that idea.

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