Contact us
CALL US NOW 1-888-GOLD-160
(1-888-465-3160)

Going Negative: Analysts See Increasing Likelihood of Sub-Zero US Interest Rates

  by    1   0

Mainstream analysts have started seriously talking about the possibility of negative US interest rates in the near future.

negative-interest-rates1

On the heels of the Bank of Japan dropping a key interest rate to negative 0.1% late last month and indicating it is willing to go deeper into negative territory, Bloomberg reports that American analysts see an increasing likelihood that the Federal Reserve is willing to follow suit:

If the world’s biggest economy weakens enough that traditional policy measures don’t help, the Fed may consider pushing rates below zero, according to Bank of America Corp. and JPMorgan Chase & Co. That step would broaden the Fed’s toolkit beyond what was available during the financial crisis, when it slashed its overnight benchmark near zero and bought bonds to stimulate the economy.”

With negative interest rates, banks literally charge customers to hold their money. Central planners believe negative rates can spur spending. If it costs money to keep cash in banks, the thought is people will just go ahead and spend their money, thus jump-starting the economy.

The European Central Bank went negative in the summer of 2014, and went on to cut its deposit rate to negative 0.2% in September of that same year. Some European countries have cut even deeper. For example, in Sweden, the benchmark interest rate sits at negative 0.35%. The Swiss and Danish central banks have cut all the way to negative 0.75%.

With Japan now on the negative rate bandwagon, resistance to such cuts in the US continue to evaporate. Janet Yellen told a congressional committee that she would consider negative rates last fall:

Potentially anything – including negative interest rates – would be on the table. But we would have to study carefully how they would work here in the US context.”

Negative interest rates are a tool of last resort. As the New York Times put it:

Moving to negative rates reflects a measure of desperation on the part of central banks. Their traditional tools have been largely exhausted, as most countries’ interest rates have been pushed to almost nothing.”

According to Bloomberg, the question of negative interest rates won’t come up until it looks like the economy has entered recession. The Fed remains in denial about the state of the US economy, but as Peter Schiff has said repeatedly over the last month, the US may well already be in a recession. The reality of negative interest rates could be right around the corner.

Peter has said consistently since the Fed rate hike in December that its next move will be back to zero, then probably into negative territory, with another round of quantitative easing. He repeated this prediction in his most recent Gold Videocast:

In fact, not only do I think the Federal Reserve is not going to raise rates any more, but they’re actually going to lower them. And they’re not going to stop at zero. We already have the Bank of Japan now with negative rates. They joined the ECB. The Fed’s going to be next.”

This represents another good reason to own gold. When it costs you to keep your cash in the bank, you can either spend it or stuff it under the mattress. In fact, some people in Sweden have gone to the extreme of hiding their cash in the microwave to avoid the penalties of negative rates. Buying gold allows you to safely store your wealth free from the manipulations of the central planners.

WhyBuyGoldNowBanner.070815.590

Get Peter Schiff’s most important Gold headlines once per week – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning more about physical gold and silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!


Related Posts

10% Gold in Your Investment Portfolio; Get Ahead of the Crowd

Last week, Independent Strategy head David Roche said gold could hit $2,000 by the end of the year. And Rosche isn’t the only big name in the investment world who sees a shiny future for the yellow metal. Mark Mobius recently said he thinks gold could push above $1,500 as central banks move interest rates […]

READ MORE →

World Gold Council: Gold Could Shine as Heightened Risk Meets Easy Money

Gold Flows into ETFs for Second Straight MonthGold will likely shine over the next six to 12 months as heightened risk meets easy money — this according to the World Gold Council’s mid-year outlook. Gold ranked as one of the best-performing assets through the first half of 2019, beaten only by stock markets – which have also been supported by the turn […]

READ MORE →

Gold-Backed ETF Gold Holdings Chart Biggest Increase in Seven Years

Holdings in global gold-backed ETFs surged in June, charting their largest increase in seven years driven by increased geopolitical uncertainty, fear of an economic slowdown and widespread anticipation of looser central bank monetary policy. Globally, gold holdings in ETFs rose sharply by 127 tons last month, according to the latest data from the World Gold […]

READ MORE →

Poland Gobbles Up Gold, Plans to Bring It Home

Poland has added 100 tons of gold to its reserves through the first half of this year and plans to move at least half of its hoard from England to National Bank of Poland vaults in Warsaw. We’ve reported extensively on gold purchases by central banks, particularly China and Russia as those countries seek to […]

READ MORE →

China Adds to Gold Hoard for the Seventh Straight Month

For the seventh straight month, China added a significant amount of gold to its official reserves. The People’s Bank of China’s gold hoard grew another 10.3 tons in June, according to information released by the bank. Over the last seven months, the Chinese have increased their gold reserves by just over 84 tons.

READ MORE →

One thought on “Going Negative: Analysts See Increasing Likelihood of Sub-Zero US Interest Rates

  1. It may be that this time around the ‘tool of last resort’ will be the decision of the People. Look around. Every day more and more wake up and say ‘No More’ to the government’s tyrannical oppressive actions. And with the increasing awareness that the ‘Fed’ is not a governmental agency but a small group of wealthy, greedy bankers … look out!

    2016 is shaping up to be an interesting year.

    Good article, thanks.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Call Now