Thursday, April 14, 2016

How Negative Interest Rates 
Take Money Out Of Your Pocket
Economist Satyajit Das explains how negative interest rates result in lost wealth to consumers .. financial repression: "Central bankers since the financial crisis have sought to use low interest rates to boost global economic growth and increase inflation in order to bring elevated debt levels under control .. Negative rates are intended to increase the speed of circulation of money, as everyone seeks to avoid the loss caused by holding cash .. It is also designed to encourage banks to lend aggressively. A key objective is to reduce excess reserves held by banks at central banks. The money is the result of QE schemes that have not flowed into the real economy. Negative rates impose a cost on banks, forcing them to increase loans, thereby reducing their excess reserves .. The unstated objective of negative interest rates is currency manipulation. Negative rates are a methamphetamine-boosted form of zero- or low-interest rate policy, designed to devalue a currency as investors move capital elsewhere to avoid a loss .. Negative interest rates are the result of a failure of policies to deal with unsustainable debt levels."
LINK HERE to the essay

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