{"id":17277,"date":"2016-02-02T12:21:24","date_gmt":"2016-02-02T17:21:24","guid":{"rendered":"http:\/\/olduvai.ca\/?p=17277"},"modified":"2016-02-02T12:21:58","modified_gmt":"2016-02-02T17:21:58","slug":"negative-interest-rates-already-in-feds-official-scenario","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=17277","title":{"rendered":"Negative Interest Rates Already in Fed\u2019s Official Scenario"},"content":{"rendered":"
\n

Negative Interest Rates Already in Fed\u2019s Official Scenario<\/a><\/h3>\n

But forget QE-4.<\/strong><\/p>\n<\/header>\n

\n

The Germans, with Teutonic precision, call them \u201cPunishment Interest<\/a>.\u201d Negative interest rates are spreading from the ECB\u2019s negative deposit rate across the bond market and to some savings accounts in the Eurozone. The idea is to enrich existing bond holders and flog savers until their mood improves. Stock prices are allowed to get crushed by reality.<\/p>\n

Negative interest rates destroy one of the most essential mechanisms in an economy: the pricing of risk. Investors end up taking huge risks with no reward. Many of them will get cleaned out down the road.<\/p>\n

In Switzerland, punishment interest already causes \u201cperverse unpredictable effects<\/a>,\u201d as mortgage rates have started to soar. It\u2019s wreaking havoc in Denmark and Sweden. Bank of Canada Governor Stephen Poloz let the idea float that he\u2019d unleash punishment interest to destroy the Canadian dollar. The Bank of Japan announced Friday morning \u2013 timed for maximum market effect \u2013 that it too would inflict negative interest rates on its subjects.<\/p>\n

In the US, Ben Bernanke has been out there preaching to the choir\u00a0about them. Over-indebted corporate America, except for the banks, would love this absurdity; it would allow them to\u00a0actually make money off their mountain of debt.<\/p>\n

\u201cPotentially anything \u2013 including negative interest rates \u2013 would be on the table,\u201d Fed Chair Janet Yellen told a House of Representatives committee in early November.<\/p>\n

Fed Vice Chair Stanley Fischer has been\u00a0publicly obsessing about them for a while. Monday, during the Q&A after his\u00a0speech<\/a>\u00a0at the Council on Foreign Relations, he said that negative interest rates are \u201cworking more than I can say I expected in 2012.\u201d<\/p>\n

It seems to be just\u00a0talk. But negative\u00a0interest rates are already baked into the official scenario for 2016.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Negative Interest Rates Already in Fed\u2019s Official Scenario But forget QE-4. The Germans, with Teutonic precision, call them \u201cPunishment Interest.\u201d Negative interest rates are spreading from the ECB\u2019s negative deposit rate across the bond market and to some savings accounts in the Eurozone. The idea is to enrich existing bond holders and flog savers until […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[942,68,953,4973,233,282,303,305,558,1389,8516,662,8854,943,771,4254,4255],"class_list":["post-17277","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bank-of-canada","tag-ben-bernanke","tag-council-on-foreign-relations","tag-denmark","tag-ecb","tag-european-central-bank","tag-fed","tag-federal-reserve","tag-negative-interest-rates","tag-nirp","tag-qe4","tag-quantitative-easing","tag-stanley-fischer","tag-stephen-poloz","tag-sweden","tag-wolf-richter","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/17277","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=17277"}],"version-history":[{"count":3,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/17277\/revisions"}],"predecessor-version":[{"id":17280,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/17277\/revisions\/17280"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=17277"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=17277"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=17277"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}