If Toy Story hero Buzz Lightyear, the computer-generated space traveller, ever found himself grounded and chained to a desk trading financial instruments, there's a good chance he'd be exhorting his colleagues with a slightly altered chant.

Rather than "infinity", he'd most likely be yelling: "To zero and beyond."

After Wall Street's tremors last week, sparked by signs of a slowdown in the US economy, there's every chance interest rates globally could soon be hurtling into negative territory.

America, the one developed economy that until late last year appeared to be normalising, has done an abrupt U-turn.

Nine rate hikes between 2016 and late 2018, accompanied by a wind back of quantitative easing, had the economy on the cusp of returning to normal.

As the world's biggest economy, there was a chance its recovery — and its rising interest rates regime — perhaps would be enough to drag the global economy along with it.

Unfortunately, those hopes have evaporated and, instead, the globe is on the cusp of an entirely new chapter in the study of economics.

As the wheels have begun to fall off the great American recovery, it and almost every developed nation — including our own — are now staring down the barrel of interest rates heading to zero, and beyond.

What was considered a "radical experiment" in the aftermath of the financial crisis could well become the norm. It's a concept starkly at odds with thousands of years of accepted principles that have driven our understanding of human behaviour.

With zero and negative rates, the time value of money no longer applies. The trade-off between risk and reward becomes obsolete. Speculation takes over from investment.

How the tariff war backfired

The impact of America's trade war with China now has become apparent. Growth in China has slowed, output has declined, major exporters to China, like Germany, are hurting and now the US economy is sputtering.

While US unemployment has been very low and GDP growth until recently has been as high as 3.2 per cent, much of that was driven by a massive fiscal spur soon after Donald Trump was elected president.

The US budget deficit is likely to blow out to $US1 trillion this year, almost double that of just three years ago, leaving it ill equipped to handle a looming crisis. That injection provided a massive stimulus at a time when jobs growth was strong. For a time, it masked the impact of the tariff war.

But that stimulus impact is starting to wane, just as the effects of the trade war really are starting to hit home.

This could explain the triple whammy last week, when poor manufacturing and service industry data combined with weaker-than-expected jobs numbers spooked American investors. And those numbers came after recent GDP figures showed a slowdown.

That's prompted concerns for American-company, third-quarter earnings which are due in coming weeks. Despite the trepidation, and the volatility coursing through financial markets, it's worth remembering Wall Street is still 18 per cent higher than where it started the year.

The reason? There have been two rate cuts since January and the chances of further cuts have soared since last week's run of poor numbers.

The worse the news becomes, the greater the chance of rate cuts and the more stock investors like it. No risk, all reward.

Don't bet on a lasting trade deal

For most of the past two years, ever since the White House began rattling the trade sabres, investors have been beholden to the President's Twitter account.

Talk of a deal sends stocks higher. The following day, a tirade of abuse and the deal is off. Shares drop.

But is a deal even possible? While a face-saving truce may be signed, it's unlikely the economic relationship between the two superpowers will ever be the same.

For years, cooperation and trade were mutually beneficial to both nations. China dragged itself out of poverty and US consumers received cheap goods.

Now, however, America and China are vying to preserve what both perceive as their rightful place in history; global domination.

It would be a mistake to believe American opposition to China's economic and military build-up began with Donald Trump. And it certainly won't end with his departure, however that comes about.

The Bush and Obama administrations' concerted push for the Trans Pacific Partnership (TPP) — sold on the global stage as a free trade policy — was all about cementing US corporate domination and curbing China's global strategic ambitions.

Far more subtle, it was a policy that avoided the excesses and posturing of the Trump administration and dodged many of the potential short-to-medium-term costs on American consumers.

Those costs, which began when Mr Trump dumped the TPP in his first few weeks in office, are now rising, as are the chances of drastic slowdown in the US economy, now driving global monetary policy into the unknown.

Can negative rates stave off another crash?

Philip Lowe doesn't think so. The Reserve Bank of Australia governor has abandoned all hope of an unassisted turnaround in our fortunes and joined the global race to the bottom on interest rates.

But he's acutely aware of the potentially debilitating effects of a financial market fallout, especially given that investors have thrown caution to the wind.

"Normally, when people feel uncertain about the future, they want to be compensated for taking on risk," he told a dinner last week after the Reserve Bank board had just cut interest rates for the third time this year.

"At the moment though, despite the uncertainty, credit spreads are low and asset prices are generally high.

"At our meeting today, we talked about the possibility that a shock somewhere in the global system could cause a recalibration, leading to a disruptive repricing of risk."

And where do we go if that happens?

Low rates have led to rampant speculation. Risk no longer matters. If global rates are below zero and there is a "shock", how will central banks and governments respond?

Even lower rates, that plunge us further into negative territory? That should work.