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Old 09-12-2019, 01:02 PM
 
Location: Washington Park, Denver
7,146 posts, read 6,756,666 times
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Quote:
Originally Posted by Avondalist View Post
This was the best data set I could find, and it's missing Germany and France, and recent data for other countries including the US. The recent nominal rate changes are what is driving this discussion.

https://data.worldbank.org/indicator...008&view=chart

In the selected countries that had data, only Australia, New Zealand, and South Korea had higher real interest rates.

If you have a better source I'd be interested to see it.
Right. This works. A lot more parity than you get when discussing nominal rates.

You do understand that the market ultimately is setting these rates, right? The Fed can control the interbank lending rate, but they move it with the market. If the fed all of a sudden changed the rate to 10%, market rates would not go to 10%.
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Old 09-12-2019, 01:06 PM
 
Location: Tucson AZ & Leipzig, Germany
2,549 posts, read 7,860,840 times
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Real Estate people love low interest rates, because it lets their customers qualify for a larger loan than they otherwise could afford. Then those customers can be sold a higher price home or other property, than they otherwise would have bought. Low interest rates in effect juice the prices in the real estate market (at least in the places where real estate is relatively healthy).

Our President is still a real estate guy. He never divested interest in the Trump Organization and the multitude of investments that it owns. His sons run the day to day operations of the Organization (sounds like a Godfather novel) but Donald J Trump Sr will still benefit if the near zero interest rates sustain or elevate the real estate market.
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Old 09-12-2019, 05:54 PM
 
1,590 posts, read 380,493 times
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"The Greatest Economy Ever" needs negative rates. Sounds right!
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Old 09-12-2019, 07:42 PM
 
Location: Brawndo-Thirst-Mutilator-Nation
16,767 posts, read 16,908,075 times
Reputation: 12935
Like it or not, we are headed back to ZIRP.
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Old 09-12-2019, 07:46 PM
 
Location: Middle of the ocean
32,725 posts, read 20,608,334 times
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Quote:
Originally Posted by BigCityDreamer View Post
Lower interest rates means the stock market goes higher.

Everybody is invested in the stock market, right?
Does it?

It also means you have to pay the bank to have money in your savings account.
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Old 09-12-2019, 08:50 PM
 
30,707 posts, read 47,917,951 times
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Quote:
Originally Posted by redguard57 View Post
This is pretty much it.

That said, the chatter is that the Fed is going to "slash" interest rates, which I take to mean probably 100 basis points. So Trump probably is foreshadowing a significant drop in interest rates.

How this short term thinking is going to screw us is:

When there is an actual recession, the Fed will have no more arrows in its quiver to respond. Regardless of the outcome of the 2020 presidential election, we are very likely to have divided government - the Senate will probably stay Republican and the House Democratic. That means the government will be dysfunctional and powerless to provide any stimulus.

The Feds QE provided the stimulus that the government could not after 2010. They should have increased interest rates back to at least the 4% range in the mid-late 2010s, but they never got that far.

So we are expending all our economic ammunition before the real battle commences.
Because Trump has no clue about what works for ALL America
He is only interested in HIMSELF, HIS business, and HIS family who would ALL greatly benefit from lower rates
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Old 09-13-2019, 05:20 AM
 
328 posts, read 154,632 times
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Quote:
Originally Posted by Mikala43 View Post
Does it?

It also means you have to pay the bank to have money in your savings account.
Which is exactly what the rulers want. People will pull their money out and spend it or put it in the only game in town, wall street. It's glorious.
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Old 09-13-2019, 09:32 AM
 
Location: Washington Park, Denver
7,146 posts, read 6,756,666 times
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Quote:
Originally Posted by Mikala43 View Post

It also means you have to pay the bank to have money in your savings account.
No it doesn’t. Nominal rates would likely still be positive if Real rates were negative. It means it would effectively cost you money in inflationary terms, but you wouldn’t actually have an account show a negative interest rate.

Think about it this way...If inflation is 3% and the bank is paying 2% interest, the Real rate is -1%. It is costing you 1% to keep your money in the bank versus inflation, but it would be costing you 3% if you kept it in your freezer.
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Old 09-13-2019, 09:50 AM
 
Location: Middle of the ocean
32,725 posts, read 20,608,334 times
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Quote:
Originally Posted by SkyDog77 View Post
No it doesn’t. Nominal rates would likely still be positive if Real rates were negative. It means it would effectively cost you money in inflationary terms, but you wouldn’t actually have an account show a negative interest rate.

Think about it this way...If inflation is 3% and the bank is paying 2% interest, the Real rate is -1%. It is costing you 1% to keep your money in the bank versus inflation, but it would be costing you 3% if you kept it in your freezer.
That's not how I am reading it:

Typically, commercial banks will pay account-holders a small interest rate for storing their money with the bank. With negative interest rates, account holders get charged a nominal rate instead, so they lose money by keeping it in the bank.

The idea behind negative interest rates on savings accounts is to encourage people to spend. If savers have to pay for their money to be stored, ideally they'll be more likely to spend it instead.


https://markets.businessinsider.com/...9-8-1028516867
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Old 09-13-2019, 10:02 AM
 
Location: North Carolina
3,649 posts, read 2,423,397 times
Reputation: 4738
They're still not going to loan you money.
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