The fact that various governments are issuing bonds with negative interest rates has been worrying enough. Now, corporations are doing the same thing, though for a different reason. Government set negative interest rates to encourage people and corporations to put wealth into circulation. If money accumulates and stagnates the economy stagnates and tries to operate with less money. The idea was to charge negative rates to provide disincentives to stagnation and therefore invigorate the economy. The success or lack of success is being tested. Corporations are also issuing bonds with negative interest rates, but for them it is a sign that they don’t see sufficient reason to invest in their products and services, possibly because they expect growth to slow – which becomes a self-fulfilling prophecy. One difference is that corporations exist within a competitive marketplace. If a corporation decides to invest in negative interest instead of R&D, it could lose to a competitor that develops a superior product or service. Until that happens, stagnation continues to be a threat and negative interest rates continue to confuse and worry economists.
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