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00:00I have to ask you about your courageous book The Curse of Cash folks. It was my Book of the Year a few years ago. Ever important now can give us an update on the efficacy of negative interest rates in the United Kingdom and in the United States of America. Given how their financial systems are so different from Europe would negative interest rates help . Well right now there's so much going on. I don't think it would be a good idea to do something so experimental this minute. But if in two years after the government is you know gone through many more stimulus spending measures after the Federal Reserve has you know basically tried to guarantee ever it did a credit provider of last resort in the economy for a long time that things still aren't growing. If the interest rates are very low I absolutely think that this should be on the table. It's just silly to take it off the table. Yes it would work. But it has to be done the right way. I don't think even Europe's done it the right way. You have to deal with cash hoarding so that you can make interest rates very negative. But let it be noted that the studies coming out of the European Central Bank have by and large been finding that negative interest rates have worked fairly well haven't caused the problems. People said there has been passed through in the banking sector from you know certainly the healthy banks and they find the effects on investment are very similar to normal monetary policy. And I think that's what we could expect in the United States and the United Kingdom . Are we nationalizing our bond market. I mean that's the question that Chairman Paul is going to get from the Senate today. All these different programs including announcement yesterday that they will in some way and let's say it's efficacious they will buy corporate bonds troubled in less troubled turn. Is it anything but a mass nationalization of our debt . Well it depends on what happens next. So if it turns out that things get better pretty quickly this clearly will you know look like a pretty low cost move that had a big benefit. But you know it's funny. Usually in crises before this they would say well here's a company that we think is solvent but there's a liquidity problem. So we're going to provide liquidity and make sure that they can still get financing and not needlessly go bankrupt. That's usually the main idea. The thing is if the virus goes on there a lot of companies that will need to change radically. They will be liquid because of the Fed but not solve it because of the virus. And I think they're going to run into trouble. They're taking a gamble. It's a smart gamble perhaps . But absolutely it's a gamble. Of course this can't go on forever. You can't just have the taxpayer guarantee every credit in the economy .

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Harvard’s Rogoff: Negative Rates Should Be on the Table for Fed

Harvard University Economics Professor Kenneth Rogoff explains how and when the Federal Reserve could approach using negative interest rates. He speaks on “Bloomberg Surveillance.” (Source: Bloomberg)

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