Yields May Go Negative and Spur Much More Active Fiscal Response, Pimco's Fels Says

The video discusses the potential for negative yields in the US, which could occur due to a severe economic downturn or recession. Central banks, while influential, are not the main cause of low rates but are responding to global trends like the saving glut. The end game may involve a more active fiscal policy to counteract these trends, as monetary policy becomes exhausted.

What economic condition might lead the Federal Reserve to lower rates to zero in the US?

• High inflation

• A serious downturn or recession

• Increased consumer spending

• A booming economy

According to the transcript, what is a major factor driving down equilibrium interest rates globally?

• Decreasing population growth

• Rising inflation rates

• A global saving glut

• Increased government spending

How do central banks respond to the fundamental forces affecting the global economy?

• By adjusting monetary policies

• By setting fixed interest rates

• By increasing taxes

• By ignoring global trends

What is suggested as a potential solution to counteract the global saving glut?

• Activating more aggressive fiscal policies

• Increasing private sector savings

• Reducing government debt

• Implementing stricter monetary policies

What role is fiscal policy expected to play in the future according to the transcript?

• It will become less significant

• It will remain unchanged

• It will become more active

• It will be replaced by monetary policy