
Mysterious: Latest memo from Howard Marks on negative interest rates - sumgame
https://www.oaktreecapital.com/insights/howard-marks-memos
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monkeydreams
This is an interesting read.

To my mind the current race to negative rates appears to be an outcome of the
ubiquity of a previous solution. Many countries have eschewed Keynesian
stimulus in favour of monetary policy (due to debt cycles, etc and the
difficulty in weaning the citizenry off stimulus when it becomes unnecessary).
This preference became dogma as monetary policy successes grew. This dogma has
led to ubiquity and, thus, the weaknesses of this approach are now becoming
obvious.

I think negative interest rates will begin a march back toward fiscal
stimulus. One day we might reach a balance but I think in 25 years time many
government treasuries will be overrun with fiscal stimulus in the form of
spending and the monetarists will be bemoaning the enormous debt that will
almost inevitably follow.

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sumgame
My concern is mainly how does the world change when the cost of borrowing is
negative ?

It seems like the rat race into buying more and more assets at extreme
premiums will continue as long as they believe that these assets will either
grow or stay constant in valuation.

It's quite an interesting paradgim shift that I don't think many people are
talking about.

Will we close the long term debt cycle via a depression ? Maybe. A sign of an
incoming depression is the populist movement all across the globe, I don't see
why we won't have a major revolution in the next few decades.

Or what happens if we head into world war 3 ?

I guess the best thing to do now is figure out sustainable cash flows like
Howard mentions.

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harel
I thought it was a memo from Howard Marks AKA Mr. Nice
([https://en.wikipedia.org/wiki/Howard_Marks](https://en.wikipedia.org/wiki/Howard_Marks)).
I couldn't understand what's an interest in interest rates to do with him.
Took me a few moments...

