Record low yields clear way for ‘heli money’

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By Phil Thornton
26 Sep 2019

Populist governments will be tempted to use the opportunity presented by record low yields to borrow money at close to zero interest rates to reverse austerity and fund major spending schemes, according to the authors of a study into long-term asset returns. Meanwhile, an economist elsewhere suggested lax monetary policy has meant sovereign credit default swap (CDS) prices are underrepresenting risks.

Economists at Deutsche Bank said that although global debt was already at a record high as a share of GDP, with interest rates close to zero central banks had effectively invited governments to experiment with more unconventional policies.

Jim Reid, Deutsche’s global head of thematic research and ...

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