Sunday, October 20, 2019
"US in one bad recession away from zero rates"
A long term White House economic advisory has predicted little change in fed rates unless major policy changes are enacted. He warns that if a recession comes in the near future the US will follow the European central banks and Japan into negative interest rates. While the Fed has stated it wont consider negative rates in the near future president Trump has been outspoken in wanting negative interest rates in the US. How do you think negative interest rates would effect the economy? Should they even be considered?
https://www.cnbc.com/2019/10/14/larry-summers-economy-one-bad-recession-away-from-zero-rates.html
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I am interested in the prospect of negative rates, and I would like to see the fed be more open to actual problem solving solutions as opposed to fiat policy norms. It seems as though the world economy is headed into a serious downturn, so there is no reason to be stubborn and not respond to this effectively. We shall see.
ReplyDeleteNegative interest rates are a very interesting concept, as they absolutely prioritize spending, rather than saving. Saving would actually charge lenders money as opposed to earning interest. I would be very interested to see how they would work to increase a period of economic decline such as after a depression, but am concerned of possible outcomes if they are sent negative before what is being heavily predicted as an upcoming recession.
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