Nazgul Girl
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Post by Nazgul Girl on Sept 9, 2019 19:49:24 GMT -5
Alan Greenspan recently stated that it is possible that negative interest rates could come to the US within 4 years. www.realclearpolitics.com/video/2019/09/04/alan_greenspan_only_a_matter_of_time_before_negative_interest_rates_spread_to_us.html What are peoples' thoughts on this ? Does anyone have strategies to survive a negative-interest rate economy ? Has anyone experienced that in Japan ? My only, hesitant conclusions would be don't carry too much debt, because any interest rate would have a percentage or two automatically added onto it, it things go negative, leveraging OPM to acquire more might not be such a hot idea, and that precious metals might be a somewhat safe harbor. My ideas could be totally wrong, though. What do others think ? |
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thyme4change
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Post by thyme4change on Sept 9, 2019 22:18:37 GMT -5
I couldn't get through the 13 minutes of Greenspan's slurring and what-not. I am a horrible and impatient person. Because of my inability to concentrate for that long, I am not sure what a negative interest rate really means. How much could it really push up costs? A quarter point? More?
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finnime
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Post by finnime on Sept 10, 2019 7:52:32 GMT -5
If we truly have a negative interest rate situation, debt is fine: you'll pay pack literally fewer dollars than you were loaned to begin with, regardless of inflation. The problem will be obtaining credit. Creditors will be reluctant to lend out anything.
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Value Buy
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Post by Value Buy on Sept 10, 2019 8:15:55 GMT -5
IDNT negative interest rates are helpful for anyone other than for funding the government's negative budgets they are running. So far Europe despite the fact governments are running negative rates, no one there seems to be buying precious metals as a hedge......
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Nazgul Girl
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Post by Nazgul Girl on Sept 10, 2019 16:33:35 GMT -5
Alan Greenspan had referenced the price of gold climbing due to low interest rates, so I wondered if it was a good stragety to buy some as a hedge. I know people do that in times of inflation, but most gold purchasing is due to fear.
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thyme4change
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Post by thyme4change on Sept 10, 2019 17:36:02 GMT -5
I am not a good person to have in this discussion. I never think gold is a good strategy. It doesn't have any inherent value, so it is as vulnerable as currency trading or commodity futures. Plenty of people have gotten rich on those things, but rarely the common investor.
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laterbloomer
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Post by laterbloomer on Sept 10, 2019 21:41:02 GMT -5
If we truly have a negative interest rate situation, debt is fine: you'll pay pack literally fewer dollars than you were loaned to begin with, regardless of inflation. The problem will be obtaining credit. Creditors will be reluctant to lend out anything. Now you know the banks will never let that become reality. They will get their money on both ends somehow. |
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Value Buy
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Post by Value Buy on Sept 11, 2019 7:59:50 GMT -5
If we truly have a negative interest rate situation, debt is fine: you'll pay pack literally fewer dollars than you were loaned to begin with, regardless of inflation. The problem will be obtaining credit. Creditors will be reluctant to lend out anything. Now you know the banks will never let that become reality. They will get their money on both ends somehow. When the banks in Germant report great earnings with negative interest rates, I will agree with this. Until then, not so much. |
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giramomma
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Post by giramomma on Sept 11, 2019 9:40:09 GMT -5
Sounds like Trump wants a negative interest rate: We'll see how long it takes the Fed to capitulate.
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thyme4change
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Post by thyme4change on Sept 11, 2019 11:17:42 GMT -5
How will negative interest rates affect wealthy people who own stocks in banks?
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haapai
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Post by haapai on Sept 11, 2019 12:41:16 GMT -5
If interest rates on bank deposits go negative, I will reconsider my strategy of saving up for cars and repairs. Basically, I'll have to do some math that I have never done before and evaluate whether the loss in the buying power of those deposits exceeds the likely interest costs of borrowing and the risks of borrowing.
I know how to set up that math. I love spreadsheets.
The two other wrinkles are the possibility of a deflationary economy (it has happened before, folks with mortgages love it) and an overvalued stock market. I haven't skulled out those two factors and how to analyze them yet.
It might be worth mentioning that I'm already getting a negative return on cash kept in the bank when inflation is factored in. I'm already tolerating negative real returns on cash deposits because I like how it reduces my default risk.
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