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Stupidity aside I’ve been curious how the US will react once negative rates do hit the US. It’s just a matter of time with the trend. I forget exactly where it is but a large portion of bonds in the rest of the world has hit negative rates. It’ll be a new phenomenon and certainly isn’t going to be a healthy one.
For starters:
Real estate prices continue going up
Banks will have to get creative at charging customers
You don’t get it, do you? The central banks are all-in for Modern Monetary Theory. MMT advocates unlimited debt to finance anything. And what is the best interest rate for nations signed up for unlimited debt? Yes, that would be zero or even negative.
The central banks don’t care what you’re “subscribed” to. In 2011 Congress essentially eliminated the debt ceiling in the U.S. Over in the EU for Germany bond yields are low or negative. Bank of Japan is the poster child for zero rates. China? — PBoC has floated more debt than the USA and their economy is only 2/3 the size of ours.
1. Trump is a real estate developer. Real estate deals are built on debt. Zero interest rates would be great for real estate developers.
2. The hints of a coming recession have Trump scared. He is searching for anything to keep the recession at bay until November 5, 2020.
3. Trump is completely clueless about economics as he has not read a book since 5th grade. Watching Larry Kudlow on TV does make you an economist.
4. Trump wants to prove that he can push Jerome Powell around.
Location: Was Midvalley Oregon; Now Eastside Seattle area
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USA fiscal year ends October 31, IIRC.
Congress and DJT will need to find a workable solution in the shortterm. I would be looking at higher debt. i have no idea how conservatives can reconcile the debt burden other than the debt will fall mostly on the middle class and lower economic classes. I don't expect a good outcome since no-jaw, majority Senate leader McConnell, will reject anything that comes from the Democratic heavy House, even if a good portion of House Republicans are for a rational budget.
You don’t get it, do you? The central banks are all-in for Modern Monetary Theory. MMT advocates unlimited debt to finance anything. And what is the best interest rate for nations signed up for unlimited debt? Yes, that would be zero or even negative.
Now do you get it?
US Central Bank has raised interest rates nine times over three years. This does not seem compatible with a primary directive of zero or negative interest rates.
A serious consequence of these rates and unlinking the dollar is inflation. It's why a "normal" house these days costs $250k-$300k is most metro areas. It's why daycare costs $2,000/month. It's why a new Corolla is $20,000.
It really hurts the poor and middle class as they have little room to bargain for higher wages. It primarily helps the upper and wealthy classes as their investments were bought at much lower prices and allows for the payoff of debt at inflated incomes and they typically own businesses that can raise prices and give themselves a pay raise.
Central banks pretend to loan real money while countries pretend they’ll pay it back.
It’s the serpent eating it’s own tail. The world war 2 victory powers and victory zones set up by the U.S just need to maintain control of the presses.
“Control food, and you control the people. Control oil and you can control continents. Control money, and you control the world”.
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