On: The Fed Wants to Test How Banks Would Handle Negative Rates

[maxxxxx]

"This may help raise demand for labor, but pay can never go higher than productivity, which usually requires capital investments."

In the last decades pay for the average worker has not kept up with productivity.

[toomuchtodo → maxxxxx]

https://thecurrentmoment.files.wordpress.com/2011/08/product...

Also, if monetary policy is driving rates negative, technically, capital "required" for productivity is literally free.

[nickff → toomuchtodo]

>"Also, if monetary policy is driving rates negative, technically, capital "required" for productivity is literally free."

This is only superficially true. Real interest rates also take inflation risk and investment risk into account, so they could easily be quite signiifcant even when the central bank says there is a negative interest rate.