Trump seeks negative interest rates to boost economy

Trump seeks negative interest rates to boost economy

Postby Cactus Jack » Thu Sep 12, 2019 6:44 am ... me=topNews

U.S. President Donald Trump on Wednesday called on the “boneheads” at the Federal Reserve to push interest rates down into negative territory, a move reluctantly used by other world central banks to battle weak economic growth that risks punishing savers and banks’ earnings in the process.

Trump, in a pair of Twitter posts, said negative rates would save the government money on its debt, which including Social Security accounts has reached a record $22 trillion on Trump’s watch. He did not address the risks or financial market tensions that central banks in Europe and Japan have confronted as a result of their negative rate policy, or the larger issue that negative rates have not secured higher growth or higher inflation for those economies.

“The Federal Reserve should get our interest rates down to ZERO, or less, and we should then start to refinance our debt. INTEREST COST COULD BE BROUGHT WAY DOWN, while at the same time substantially lengthening the term,” Trump tweeted. “We have the great currency, power, and balance sheet... The USA should always be paying the ... lowest rate. No Inflation!”

“It is only the naïveté of (Fed Chairman) Jay Powell and the Federal Reserve that doesn’t allow us to do what other countries are already doing,” added Trump, who has repeatedly noted that rates are negative in Germany, Europe’s trading powerhouse.

The president’s comments precede a week in which the world’s major central banks, including the Fed, are expected to lower rates or otherwise loosen monetary policy in what is widely seen as a move to protect the global economy against risks partly rising from Trump’s trade war with China.

Negative interest rates would mean that financial institutions would have to pay central banks to park cash reserves, it's seen as a desperate measure when a country is going into a deep and serious recession.

The idea that it wouldn't cause inflation is - to put it mildly - somewhat fanciful as banks and lenders would almost certainly rush to liquidate reserves vastly increasing the money supply which always has the effect of pushing up inflation
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Re: Trump seeks negative interest rates to boost economy

Postby Cobs » Thu Sep 12, 2019 7:32 am

Free money eh?
Don and jezza Boris sitting in a tree.

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Re: Trump seeks negative interest rates to boost economy

Postby Rolluplostinspace » Thu Sep 12, 2019 1:35 pm

The good news about negative interest rates is if you can't keep the payments up on that loan you go round and break their legs.
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