The US Federal Reserve could be the next central bank to introduce previously unthinkable negative interest rates.
This was the opinion of the former President of the Minneapolis Federal Reserve, who argued on April 24 that interest rates, which had already dropped by 0.25%, should continue to fall, although this is not possible.
Kocherlakota: Federal Reserve “should” fight the recession with negative interest rates
“Unprecedented situations require unprecedented action”Narayana Kocherlakota wrote for Bloomberg.
So the US Federal Reserve must fight a rapidly worsening recession by bringing interest rates below zero for the first time in history.
Negative interest rates essentially mean that banks have to pay to keep their deposits and pass the costs on to customers. The phenomenon is already underway in EuropeWhile Kocherlakota believes that American institutions will swallow the pain instead of raising money.
“… economists are now realizing that this is not the case because it is expensive to keep billions (or trillions) of dollars of paper money safe,” he continued.
President Donald Trump has repeatedly expressed support for the lower rateslast year direct criticism of the President of the Federal ReserveJerome Powell for the cuts not being dramatic enough. Now he can finally get his wish.
60-year Fed rate. Source: Macro Trends
“” E = mc2 no longer exists? “
However, for advocates of Bitcoin as safe money, such decisions are increasingly raising the alarm.
Negative interest rates and raw material pricescombined with unprecedented public spending, They create a paradoxical situation that many economists have found unsustainable in the past century.
Like the moderators from 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 negative interest rates when time was worthless, it was one thing,” Herbert said.
“… now we have the negative energy costs, so E = mc2 no longer exists?”
Cointelegraph previously reported criticism from former presidential candidate Ron Paul, who says the Federal Reserve model has already collapsed.
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