Negative interest rates

Joined
Mar 21, 2006
Messages
10,611
Location
Las Vegas NV
 Quote:
If all of this seems too outlandish, there is a more prosaic way of obtaining negative interest rates: through inflation. Suppose that, looking ahead, the Fed commits itself to producing significant inflation. In this case, while nominal interest rates could remain at zero, real interest rates — interest rates measured in purchasing power — could become negative. If people were confident that they could repay their zero-interest loans in devalued dollars, they would have significant incentive to borrow and spend. Having the central bank embrace inflation would shock economists and Fed watchers who view price stability as the foremost goal of monetary policy. But there are worse things than inflation. And guess what? We have them today. A little more inflation might be preferable to rising unemployment or a series of fiscal measures that pile on debt bequeathed to future generations. Ben S. Bernanke, the Fed chairman, is the perfect person to make this commitment to higher inflation. Mr. Bernanke has long been an advocate of inflation targeting. In the past, advocates of inflation targeting have stressed the need to keep inflation from getting out of hand. But in the current environment, the goal could be to produce enough inflation to ensure that the real interest rate is sufficiently negative.
http://www.nytimes.com/2009/04/19/business/economy/19view.html This would SCREW people that are dependant on savings or fixed income.
 
Joined
Oct 11, 2002
Messages
22,187
Location
Colorado Springs
This will screw EVERYONE in the long run. \:\( It's rearranging the chairs on the deck of the titanic. We've gotten in the hole from burrowing and spending, so why would burrowing and spending get us out of the hole? I'd rather have a person living from paycheck to paycheck in the real world making monetary policy than the suits at the Fed.
 
Joined
Sep 28, 2002
Messages
39,802
Location
Pottstown, PA
 Quote:
This would SCREW people that are dependant on savings or fixed income.
So? We've been screwed in other ways. Sure sounds like an entitlement notion ..and a bit odd from someone like you. "If this occurs, it will be "unfair" \:\( "
 
Joined
Aug 5, 2002
Messages
19,005
Location
Silicon Valley
I thought the low interest, low tax, high growth till it bust policy was in placed since Reagan, but only temporarily reduced during the Clinton times. The choice we have is so limited right now: we either let most of the industry (auto, finance, insurance, government, defense, construction, etc) fail by not doing anything, or any other choices that will indirectly lead to inflation. The money was already made, spent, and borrowed during the boom time, so you can only do so much in the bust time without filing for bankruptcy or going communist.
 

Tempest

Thread starter
Joined
Mar 21, 2006
Messages
10,611
Location
Las Vegas NV
 Originally Posted By: PandaBear
The money was already made, spent, and borrowed during the boom time, so you can only do so much in the bust time without filing for bankruptcy or going communist.
If I would have said that...and you are on the right path.
 

Tempest

Thread starter
Joined
Mar 21, 2006
Messages
10,611
Location
Las Vegas NV
 Quote:
If this occurs, it will be "unfair"
Having the FED intentionally devalue the dollar is not some random event....
 
Joined
Dec 12, 2002
Messages
43,673
Location
'Stralia
Didn't I say that this was the plan to pay back the impossible defecit ? Inflate until it's manageable...been done before.
 

Tempest

Thread starter
Joined
Mar 21, 2006
Messages
10,611
Location
Las Vegas NV
 Originally Posted By: Shannow
Didn't I say that this was the plan to pay back the impossible defecit ? Inflate until it's manageable...been done before.
Only way out now. Our kids will have a lower standard of living due to the decisions that are, and have been, made for political expediency. And the spending and printing continues...
 
Joined
Aug 21, 2008
Messages
25,051
Location
ON, Canada eh?
 Originally Posted By: Tempest
 Originally Posted By: StevieC
This kinds of stuff makes me go:
Care to explain?
Do you really need me to?
 

Tempest

Thread starter
Joined
Mar 21, 2006
Messages
10,611
Location
Las Vegas NV
 Originally Posted By: StevieC
 Originally Posted By: Tempest
 Originally Posted By: StevieC
This kinds of stuff makes me go:
Care to explain?
Do you really need me to?
It would be nice to add something of value to the conversation...
 
Joined
Jun 15, 2003
Messages
36,790
Location
ME
They've been creating the situation where you MUST buy stocks/bonds/risky investments just to tread water for decades now. (keeps the industrialists well-fed.) Only in the last couple of years has it made sense to sit on cash for something cheaper around the corner... and you bet they're working to "fix" that.
 
Joined
Aug 5, 2002
Messages
19,005
Location
Silicon Valley
 Originally Posted By: eljefino
They've been creating the situation where you MUST buy stocks/bonds/risky investments just to tread water for decades now. (keeps the industrialists well-fed.) Only in the last couple of years has it made sense to sit on cash for something cheaper around the corner... and you bet they're working to "fix" that.
People said I was nut when my wife and I put all of our 401k in cash, anticipating a bust 3 years ago. They still don't believe me today. Imagine without the 401k and IRA, how would the value of stock drop? Isn't that artificially inflating the value of stocks?
 
Last edited:
Joined
Oct 17, 2008
Messages
682
Location
ontario canada
me too!!! St. Ronald Regan, thank you!!! Deregulators - thanks!!! Union busters - thanks!!! Globalization and outsourcing to private sector to "reduce costs" - thanks!!! thank you, thank you, thank you!!!
 

Tempest

Thread starter
Joined
Mar 21, 2006
Messages
10,611
Location
Las Vegas NV
 Originally Posted By: scoobie
me too!!! St. Ronald Regan, thank you!!! Deregulators - thanks!!! Union busters - thanks!!! Globalization and outsourcing to private sector to "reduce costs" - thanks!!! thank you, thank you, thank you!!!
How's your medical practice??
 

Tempest

Thread starter
Joined
Mar 21, 2006
Messages
10,611
Location
Las Vegas NV
 Originally Posted By: PandaBear
 Originally Posted By: eljefino
They've been creating the situation where you MUST buy stocks/bonds/risky investments just to tread water for decades now. (keeps the industrialists well-fed.) Only in the last couple of years has it made sense to sit on cash for something cheaper around the corner... and you bet they're working to "fix" that.
People said I was nut when my wife and I put all of our 401k in cash, anticipating a bust 3 years ago. They still don't believe me today. Imagine without the 401k and IRA, how would the value of stock drop? Isn't that artificially inflating the value of stocks?
The FED is trying to inflate the value of EVERYTHING with what they are doing. They are just trying to keep the bubble inflated rather than let things bottom, all at the expense of our kids future..
 
Joined
Jun 15, 2003
Messages
36,790
Location
ME
 Originally Posted By: PandaBear
Imagine without the 401k and IRA, how would the value of stock drop? Isn't that artificially inflating the value of stocks?
There was a form my software printed out with my taxes I never saw before, believe it's 8880, where I got a 10% credit, eg free money, for putting money in my IRA... on top of knocking my contrib off my AGI. They're very serious about fanning those flames...
 
Joined
Jun 11, 2002
Messages
3,346
Location
Clarksville, Tennessee
I'm planning on negative interest rates, Hence the reason I bought a brand new F150 and financed for 60 months (almost went 72 but couldn't bring myself to do it) Also have a 30 year mortgage. Now I'm sitting back awaiting hyperinflation. Let those banks squirm when I'm only paying 5%! I'm socking away metals now, when the inflation hits, those will go through the roof.
 
Joined
Jun 11, 2002
Messages
3,346
Location
Clarksville, Tennessee
 Originally Posted By: eljefino
and you bet they're working to "fix" that.
Yup. good by dollar. I'll be interested to see how the "convert us" the NWO currency. Will we turn all of our current dollars in for a set rate or will we just have to start getting paid in new currency as the dollar will be worthless? That's the question
 
Top