Ten Reasons Negative Interest Rates are Worse than Zero Interest Rates

[Smaulgld]

Seems like negative interest rates may be coming our way.


Don't forget to duck - here is why:


https://smaulgld.com/dark-side-negative-interest-rates/

[Zippyjuan]

Really? Fed still saying they will (eventually- someday) be raising them- not going negative.

[timosman]

Really? Fed still saying they will (eventually- someday) be raising them- not going negative.

It is called the head fake, dummy You are like a geek trying to give advice to jocks on how to score. Why don't you just go back to your basement ?

[Smaulgld]

Really? Fed still saying they will (eventually- someday) be raising them- not going negative.

Yes Fed President Kocherlakota has been explicit in his support of negative rates, Dudley hinted at them last week, and Yellen was on record as being for them before she was chair.

[timosman]

Yes Fed President Kocherlakota has been explicit in his support of negative rates, Dudley hinted at them last week, and Yellen was on record as being for them before she was chair.

Now all they need to do is to convince us to surrender the cash.

[Smaulgld]

US Treasury Commenting on Negative Rate -Just in case :-)
http://www.bloomberg.com/news/articl...heir-cash-safe

[timosman]

US Treasury Commenting on Negative Rate -Just in case :-)
http://www.bloomberg.com/news/articl...heir-cash-safe

Looks like somebody from China called Yellen and started with: WTF you think you are doing, you <censored>,<censored> <censored> ???

[Smaulgld]

Zippy in case you missed it http://www.cnbc.com/2015/09/20/fed-r...est-rates.html

[Chester Copperpot]

Really? Fed still saying they will (eventually- someday) be raising them- not going negative.

can we sue the federal reserve for all the times its lied about raising the interest rates and strengthening the dollar?


2nd question: why not?

final question: If the fed isnt doing anything wrong how come they wont show us the books?

[Zippyjuan]

Zippy in case you missed it http://www.cnbc.com/2015/09/20/fed-r...est-rates.html

In case you did not read the article:

The forecast is widely thought to be the work of Minneapolis Fed President Narayana Kocherlakota, a non-voting member of the committee who is known for his dovish views. In her press conference last week, Fed Chair Janet Yellen made clear that a negative federal funds rate "was not something that we considered very seriously at all today."

[Smaulgld]

Thanks zippy
i am aware that the fed is saying they are not interested in neg rates BUT the term is coming out of Fed presidents often in the past few months

[timosman]

Thanks zippy
i am aware that the fed is saying they are not interested in neg rates BUT the term is coming out of Fed presidents often in the past few months

and then something changes and they start giving it a serious thought:

We did not think about it initially very seriously, ha ha ha ha, but seeing how $#@!ed up the economy is, we feel we do not have any other course of action available to us, ha ha ha ha.

[Zippyjuan]

Thanks zippy
i am aware that the fed is saying they are not interested in neg rates BUT the term is coming out of Fed presidents often in the past few months

Kocherlakota only counts as one. And doesn't have a vote on policy and is gone at the end of the year.

Kocherlakota, known as the committee’s most dovish member, pointed to a stall in the upward trend of the prime working-age employment rate and low inflation as signs that U.S. monetary policy has already become too tight. He doesn’t vote on monetary policy this year and will leave the Minneapolis Fed on Dec. 31 to become an economics professor at the University of Rochester.

http://www.bloomberg.com/news/articl...interest-rates

[Smaulgld]

You CAN NOT take what the Fed says at face value.
Here is Bernanke in 2009 saying when the Fed would raise rates https://www.youtube.com/watch?v=odPfHY4ekHA&t=8m21s
The reason I wrote about negative interest rates wasn't to say they were imminent but that to be prepared for them because they are now on the Fed's radar as a tool of monetary policy

[Zippyjuan]

"When the economy is stronger" they will need to raise interest rates. See 8:28 in the interview. "That will be the time to unwind those programs, raise interest rates, reduce the money supply and make sure we have an economy which does not involve inflation" In the same interview he says he expected economic recovery to take a long time. Does he say when he would raise rates? That year (2009)? The next year?

[Smaulgld]

"When the economy is stronger" they will need to raise interest rates. See 8:28 in the interview. "That will be the time to unwind those programs, raise interest rates, reduce the money supply and make sure we have an economy which does not involve inflation" In the same interview he says he expected economic recovery to take a long time. Does he say when he would raise rates? That year (2009)? The next year?

Listen again Zippy! He doesn't say when the economy is "stronger"- he says when the economy BEGINS TO RECOVER they would raise rates.
Hasn't the economy begun to recover? I think the Fed has been touting a recovery for years. So why haven't they raised rates?

[Zippyjuan]

OK-he only tells lies. You are right- he should have raised rates back in 2010 (or what year was it he said he was going to raise rates by? He didn't say what year? My bad!) so today they could make them negative.

[Smaulgld]

OK-he only tells lies. You are right- he should have raised rates back in 2010 (or what year was it he said he was going to raise rates by? He didn't say what year? My bad!) so today they could make them negative.

My point is the Fed plays it by ear. No one would have thought in 2009 after he said that there would be another 5 years and $3.5 trillion more of QE. So when at least three Fed presidents mention negative interest rates, I consider it at face value and in the context of what they have already done and said.
In 2010 Janet Yellen said this “If it were positive to take interest rates into negative territory I would be voting for that”

[Zippyjuan]

"If it were positive to do so". Which apparently it wasn't since she didn't (she was a non-voting Fed member at the time anyways). And just last month she said she definitely ISN'T voting for that.

Fed Chair Janet Yellen made clear that a negative federal funds rate "was not something that we considered very seriously at all today."

[Smaulgld]

"If it were positive to do so". Which apparently it wasn't since she didn't (she was a non-voting Fed member at the time anyways). And just last month she said she definitely ISN'T voting for that.

I cant take what they say seriously when they say "seriously"! Because seriously, they have been seriously Wrong in their projections. I still don't think however that the fed is that dumb to do negative interest rates but they could surprise me

[timosman]

"If it were positive to do so". Which apparently it wasn't since she didn't (she was a non-voting Fed member at the time anyways). And just last month she said she definitely ISN'T voting for that.

You are too much of a simpleton to understand the game here. Going into negative interest rates is a very long process. First you need to plant the idea in people's brains. You do this by openly opposing the idea. Next, when looking for ways out of the impossible situation we are in, the idea will be there and will "occur" to everybody naturally.

[Chester Copperpot]

You are too much of a simpleton to understand the game here. Going into negative interest rates is a very long process. First you need to plant the idea in people's brains. You do this by openly opposing the idea. Next, when looking for ways out of the impossible situation we are in, the idea will be there and will "occur" to everybody naturally.

hes a paid disinfo agent for the banks

[timosman]

hes a paid disinfo agent for the banks

I honestly have no other explanation for his stupidity.

[Smaulgld]

"If it were positive to do so". Which apparently it wasn't since she didn't (she was a non-voting Fed member at the time anyways). And just last month she said she definitely ISN'T voting for that.

Fresh in from Reuters re Negative Interest Rates and the Fed:

At least six current Fed policymakers over the last two weeks have publicly discussed charging banks to park funds at the central bank. Four suggested it would be worth considering if the recovery falters badly and one, Minneapolis Fed President Narayana Kocherlakota, urged an immediate cut below zero.
http://finance.yahoo.com/news/negative-rates-way-radar-few-183602711.html

[Zippyjuan]

Four suggested it would be worth considering if the recovery falters badly

Article also notes:

To be sure, Fed policymakers have stressed that a rate hike and not a cut, is far more likely.

Based on September forecasts, they expect to lift rates once this year and to get them above 1 percent by the end of 2016.

New York Fed President William Dudley discussed negative rates in a TV interview but dismissed the idea. Lockhart said the idea of using the tool "in the near term is not very plausible to me."

[Zippyjuan]

I honestly have no other explanation for his stupidity.

Aye are too stoopid and dummm.

[Zippyjuan]

You are too much of a simpleton to understand the game here. Going into negative interest rates is a very long process. First you need to plant the idea in people's brains. You do this by openly opposing the idea. Next, when looking for ways out of the impossible situation we are in, the idea will be there and will "occur" to everybody naturally.

So you are thinking maybe in a few years perhaps?

[Smaulgld]

So you are thinking maybe in a few years perhaps?

The Fed raised the issue of negative interest rates not me! THEY raised it. Sure then they quickly say "but we are not going to do it"- then WHY BOTHER SAYING IT!
It wasn't has if commentators were predicting it (like many are predicting QE4)- although I did predict it here in 2013 :-) when she was appointed
https://smaulgld.com/negative-intere...-janet-yellen/

[Zippyjuan]

It seems so far that your predictions about her are wrong.

[Smaulgld]

It seems so far that your predictions about her are wrong.

Seems you are back to trolling again!