[ad_1]
The United States Federal Reserve may be the next central bank to adopt previously unthinkable negative interest rates.
That was the opinion of the former president of the Minneapolis Federal Reserve, who on April 24 argued that interest rates, already down 0.25%, should go down even more, although they cannot.
Kocherlakota: Federal Reserve “Should” Fight Recession With Negative Rates
“Unprecedented situations require unprecedented actions”Narayana Kocherlakota wrote for Bloomberg.
So the US Federal Reserve You must fight a rapidly deepening recession by bringing interest rates below zero for the first time in history.
Negative rates essentially mean that banks must pay to keep their deposits, passing the costs on to customers. The phenomenon is already underway in EuropeWhile Kocherlakota anticipates that American institutions will swallow the pain instead of accumulating cash.
“… Economists now recognize that does not happen, because it is expensive to safely store billions (or trillions) of dollars of paper money,” he continued.
President Donald Trump has repeatedly expressed his support for the lower rates, last year directly criticizing the president of the Federal ReserveJerome Powell for not making the cuts dramatic enough. Now, he may finally get his wish.
60-year Fed interest rate. Source: Macro trends
“” E = mc2 no longer exists? “
However, for proponents of Bitcoin as safe money, such decisions are causing increasing alarm.
Negative rates and negative commodity prices, combined with unprecedented public spending, they create a paradoxical situation that many economists throughout the last century have concluded is unsustainable.
Like the presenters of RT, Max Keizer and Stacy Herbert, they explained in the last edition of their financial news program Keizer Report, negative rates mean that time costs nothing.
“When we got to negative interest rates, when time was worthless, that was one thing,” said Herbert.
“… now we have the negative cost of energy, so E = mc2 no longer exists?”
Cointelegraph previously reported on criticism from former presidential candidate Ron Paul, who says the Federal Reserve model has already crumbled.
It may interest you:
