I think in Japan, it actually cost money to keep money in the bank causing a negative nominal yield, so the cost of keeping it in the bank is as you say for security. When would you actually have negative nominal yield in the US? I am curious.By the way, maybe a little bit of a tangent, but . . . .
Negative nominal yields are sometimes considered a bit of a puzzle because why would you not then just stuff cash under your mattress? The typical answer is someone might steal it. In other words, storing cash has a cost, and you can see a negative nominal yields as basically paying the storage cost. But this puts some sort of practical constraint on negative nominal yields explainable by this effect, as at some point buying a vault and hiring security guards and such will actually cost less.
OK, so if there is a practical limit on how far negative nominal yields can go, then there might be a related limit on how far negative real yields can go, namely whatever the practical limit is on negative nominal yields minus expected inflation. Of course expected inflation is a variable, so this limit would also be a variable. But at any given time, there might be a practical limit on negative real yields that is a function of storage costs and expected inflation.
But that could still be pretty bad by historic standards. C'est la guerre.
Negative real yield on the other hand is really common in the US. Milliions keep money in the bank at 0.02% interest, which is a positive nominal yield but a negative real one.
Statistics: Posted by gavinsiu — Sun Feb 08, 2026 2:30 pm — Replies 69 — Views 3233