Wednesday, May 25, 2016

Weird Consequences Of NIRP
Patrick Watson via Mauldin Economics highlights the odd & counterintuitive consequences of negative interest rates .. like prices of many things falling .. or banks paying you to borrow money .. or banks demanding free money .. "U.S. banks freaked out this year when Congress changed a law that allowed them to collect tax-free, no-risk 6% dividends on their shares in the regional Federal Reserve Banks. The American Bankers Association, considering a legal challenge, asserted in a letter to the Fed that banks have a Constitutional right to free cash from the Fed. Even Congress can't take it away, say the bankers The idea seems preposterous, so we'll see what courts think. But the fact that banks would make such a bold claim suggests they are desperate for revenue. We'll see more weirdness if the winds of deflation and the perversions of negative interest rates persist."
LINK HERE to the article

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