Negative Interest Rates? Really?
Just this week, the Fed wizard, Janet Yellen said “Potentially anything – including negative interest rates – would be on the table. But we would have to study carefully how they would work here in the U.S. context,”
This comes on the heels of Uncle Sam telling us 3rd quarter GDP rang in at a depressing 1.5%. How can this be? Isn’t the good old USA a shining example of economic growth under the leadership of President Obama?
Well, what the White House tells us, and what the real numbers show are quite different. Could we actually enter an economic era of negative interest rates? Yowza… better hold off on that refi.
If inflation is what Yellen wants, inflation is exactly what she’d get if this policy is actually instituted. You think rent is high now? Imagine what will happen when large real estate companies can borrow untold sums of money for cheaper than free, buy up apartment complexes, housing units and even whole developments for rental purposes… They’d surely have renters by the proverbial balls.
Here’s more from CNBC:
Most of us have trouble conceptualizing negative numbers when we first face them in middle school. But in the adult world, negative numbers are becoming an increasingly normal part of the equation when it comes to interest rates.
In Europe, negative interest rates have shown up in credit markets for the better part of a year as investors give up positive returns for a modicum of safety. The return of principal has become more important than the return on principal.
For example, it has become quite common for investors to pay the Swedish and Swiss governments to hold their cash, which is how we define negative interest rates. Investors get less than zero to park their money in bills and notes.
more of this CNBC article available here: www.cnbc.com/2015/10/21/is-the-us-headed-for-negative-interest-rates-commentary.html