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26 May 2016

Sweden: Negative Interest Rates

Clients have been asking about negative interest rates, how they work and what impact they will have into the future.

Our response has been to simply say that we do not know.

This is truly mind boggling stuff that makes no sense and would probably have Benjamin Graham (the farther of value investing) rolling in his grave.

We have attached a paper that details the impact of negative interest rates in Sweden and the resulting benefit to that economy.

The big concern is that it is also fueling a residential housing boom in Sweden. Yet again more money going into an asset class that once built adds little in the way of ongoing economic value to the economy.

We are not saying that there is anything wrong with debt as long as a large portion of it is being used to invest into creating productive assets such as infrastructure and business which employ people and drive economic activity.


At Newealth we are always looking to support and promote our clients wherever possible and if you have any ideas or comments, please feel free to email me or to call me on +61 2 9267 2322.

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