Collection: Charlie Munger - #9 'Negative Interest Rate"


Video Link: https://youtu.be/b0HSsiA8X80


In this episode, Charlie Munger was asked regarding on negative interest rate. Whether he is for negative interest rates or against them? And does he see 10 years of low interest rates posing a systemic risk to the supply of insurance?

In this episode, you’ll learn:

  • What is Charlie Munger views on negative interest rate?

  • What can the government/FED do about it?

To check out all Collection: Charlie Munger <click here>

[Transcript]

AUDIENCE MEMBER 00:08

There are over $10 trillion around the world with negative yield and by the president’s Twitter feed it seems he wants to bring negative interest rates to the United States. Are you for negative interest rates or against them?


CHARLIE MUNGER 00:26

Negative interest rates make me very nervous. However, I don’t think the authorities had much choice. It’s politically impossible to do big stimulus rapidly and the only weapon they had in a crisis was to print money and change interest rates. I think it was probably the right thing we’ve done.


Of course, it makes me nervous. I think having worked once, people will overdo it. That’s the nature of government people and of course that makes me nervous.


I don’t know what to do about this.


AUDIENCE MEMBER 01:16

Do you see 10 years of low interest rates posing a systemic risk to the supply of insurance?


CHARLIE MUNGER 01:24

I am made uncomfortable with the idea of extremely low interest rates, or negative interest rates even more extreme, lasting a long time. I don’t think anybody knows how those will work.


If you are a little uneasy, welcome to the club. I think it’s dangerous and peculiar. But I think we had to do what we did.


In other words, I don’t have any good solution for you. I think you’re right to be worried about it.

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