Implications of a Negative Interest Rate | Forex Factory

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Implications of a Negative Interest Rate

  • #1
  • First Post: Sep 12, 2011 2:55am Sep 12, 2011 2:55am
should the US adjust their interest rate to a negative value? would that help anything?

thanks!
  • #2
  • Sep 12, 2011 3:38am Sep 12, 2011 3:38am
That would reduce the demand for the US Treasury Notes. That wouldn't help the domestic situation - banks would borrow from Fed and would just sit on that money, paying negative interest (that is, getting paid interest).
  • #3
  • Sep 12, 2011 3:49am Sep 12, 2011 3:49am
Quoting enivid
That would reduce the demand for the US Treasury Notes. That wouldn't help the domestic situation - banks would borrow from Fed and would just sit on that money, paying negative interest (that is, getting paid interest).
thanks for the reply.

the goal is to help the economy. so maybe if the banks carried over a negative interest rate in the name of doing good, businesses and the average person would feel empowered to help grow the economy.

and in terms of reducing demand for US Treasuries, wouldn't it be ok to stop borrowing for a little while?
  • #4
  • Sep 12, 2011 6:06am Sep 12, 2011 6:06am
If you take real inflation the rates are already negative. That's why gold is high.
  • #5
  • Sep 13, 2011 2:46am Sep 13, 2011 2:46am
Quoting FXForLife
the goal is to help the economy. so maybe if the banks carried over a negative interest rate in the name of doing good, businesses and the average person would feel empowered to help grow the economy.
You know, banks prefer profit to doing good .

Quoting FXForLife
and in terms of reducing demand for US Treasuries, wouldn't it be ok to stop borrowing for a little while?
From one point of view it would, but from the other, how the budget spending would be financed if borrowing is to stop suddenly?
  • #6
  • Sep 13, 2011 2:52am Sep 13, 2011 2:52am
Quoting seagreen
If you take real inflation the rates are already negative. That's why gold is high.
thanks for the reply. something to think about.
  • #7
  • Sep 13, 2011 2:56am Sep 13, 2011 2:56am
Quoting enivid
You know, banks prefer profit to doing good .



From one point of view it would, but from the other, how the budget spending would be financed if borrowing is to stop suddenly?
ok. let me pose a question. how much does budget spending rely on taxes as opposed to debt to fund its activity?
  • #8
  • Sep 13, 2011 5:56am Sep 13, 2011 5:56am
Quoting FXForLife
thanks for the reply. something to think about.
http://krugman.blogs.nytimes.com/201...golden-spikes/
  • #9
  • Sep 14, 2011 8:35am Sep 14, 2011 8:35am
I cannot see this happening, and frankly it probably will not help them. The problem with the US is that the politicians lock Obama from taking the necessary steps in order to overcome the bad situation of the economy. Until the American leaders don’t collaborate, the future for the Americans will be gray..
  • #10
  • Sep 14, 2011 10:49am Sep 14, 2011 10:49am
Quoting FXForLife
ok. let me pose a question. how much does budget spending rely on taxes as opposed to debt to fund its activity?
See the budget report here:
http://www.fms.treas.gov/mts/mts0811.pdf

Deficits are covered with debt.
  • #11
  • Last Post: Sep 14, 2011 11:29am Sep 14, 2011 11:29am
Quoting FXForLife
should the US adjust their interest rate to a negative value? would that help anything?

thanks!

//---

the answers would be no and not much....

//---

if your refering to helping the states economy, only time will help there.....

things must run their course...... debts must evaporate.... they can not be paid back......

one of the risks of being wealthy is in loaning money to those that are not.... the wealthy are not going to be rushed into forgiving those debts.....

so we wait......h
to trade and code, keep both simple... no call to impress....h
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