Posted on 05/12/2020 10:54:31 AM PDT by aimhigh
President Donald Trump on Tuesday again pushed the Federal Reserve to adopt negative interest rates, even as several members of the US central bank have said they do not see a need for rates - now near zero - to move into negative territory.
"As long as other countries are receiving the benefits of Negative Rates, the USA should also accept the 'GIFT'. Big numbers!" he tweeted.
(Excerpt) Read more at jpost.com ...
Um, no.
Bad idea.
No, sorry.
Medium of exchange, store of value.
Negative interest rates (real and nominal) don’t meet the second criterion, and in fact lead (with a delay) to inflation and a worsening of the store of value character of the dollar.
I no longer believe anything the media says.
I am having a hard time understanding why Trump would back this.
I have heard discussed a link between negative interest rates and devaluing existing debt which is something Leftists would love because it gives them an excuse to spend more of our money, but beyond that, what?
Sure, why not, it will reduce interest expenses for highly leveraged construction business.
Come on, what is the biggest expense for a construction business like the Trump corporation? It is mortgage INTEREST! Lower the interest expense higher the profits.
Let’s stick with reducing regulations and taxes on small businesses, which Trump has already successfully implemented.
Capital formation is important for economic growth. How do Negative rates help that?
The banks are currently not having liquidity issues so I don’t see what benefit negative rates will bring.
Negative rates is the same as giving money away. So, no. Let the other countries suffer the consequences of their negative rates.
But, if the rates do go negative, everybody and their cousins will be lined-up for the freebies, just like they line up for the current ‘free’ government services and giveaways.
I myself will be looking to make some money from the negative rates, and might invest in Apple, Google, Amazon, Microsoft, Facebook; nothing to lose, especially since I could write off any losses, and go after more negative rate lending.
So they will pay me to buy a house?
It may dry up the money needed for loans as well.
You think they faked his Tweet?
Savings accounts will be worthless.
They don’t have liquidity issues “yet”. From what I am hearing, they are hoarding and waiting with baited breath for a crisis that may come as renters and mortgagees fall further behind on their payments.
A friend of mine builds homes. Mostly remodels older properties for investment clients but has built one for himself to sell as well. He says the banks are just not moving any paperwork on non-conforming (jumbo) loans. Most Americans don’t need a jumbo loan, but in all the major cities you can’t get a home for $450,000 - you can’t even get a condo for that.
With 35 million unemployed, and those with businesses mostly operating well below 2019 revenue forecasts... well, all I can say is we are far from knowing the true impact of all they have done to wreck this economy.
I guess he wants to force capital off the sidelines and into the economy but that's not going to happen until businesses see signs of demand.
I was being facetious of course. NIRP is silliness. Designed to force money out of savings instruments and into risk. But of course nobody will lend money at negative returns.
And see my post above, banks aren’t going to be underwriting a lot of home mortgage loans. There is money on the sidelines, I hear, but it is waiting to scoop up foreclosures in commercial real estate they expect to see starting in Q4 and beyond.
I am sorry, the President is wrong on this. Wall Street operates on leverage. Main Street does not.
how would this affect china
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