The Bank of Japan’s historic move to end the country’s negative interest rate policy after nearly two decades triggered a jolt upward to new all-time highs for gold against the yen. But what are the implications for gold in the medium and longer term? The answer is far from simple.
Are negative interest rates in our future?
Jerome Powell says absolutely not. But Jerome Powell also once said balance sheet reduction was on autopilot and that the Federal Reserve wasn’t going to cut interest rates. What the Fed chair says today doesn’t necessarily line up with what the Fed chair does tomorrow.
In fact, the markets are starting to bet on negative rates. They are, after all, the next logical step in the Fed’s trek down the path of extraordinary monetary policy.
Are negative interest rates in our future?
The markets are starting to think so.
On Thursday, Fed fund futures contracts began pricing in negative interest rates. They were initially priced in for December but then shifted to early 2021. This doesn’t guarantee negative rates, but it does indicate markets are beginning to expect them.
While impeachment proceedings kicked off at home President Trump was in Davos, Switzerland, talking up the US economy. He called it the best economy in American history. Is it though? In this episode of the Friday Gold Wrap podcast, host Mike Maharrey talks about the economy, what’s really driving it, and why this might be a good time to think about gold.
President Trump recently took aim at the Federal Reserve once again, accusing the central bank of “holding back” America’s economy. The president was responding to a FOX Business Varney & Co. segment about negative interest rates in Europe and Japan.
Trump said the Fed should follow the lead of European and Japanese central banks into the world of negative rates.
Donald Trump has been badgering Federal Reserve Chairman Jerome Powell for months, begging for lower interest rates. Yesterday, he took things to another level, saying that the “boneheads” at the Fed need to push rates into negative territory.
In his podcast, Peter Schiff said negative interest rates are boneheaded.
Negative-yielding debt surged to over $15 trillion earlier this month. This pile of negatively-yielding paper includes government and corporate bonds, along with some euro junk bonds.
In a recent episode of the Wolf Street Report, Wolf Richter called this “NIRP absurdity.” And it could be coming to America.
Negative interest rates started out as a short-term emergency experiment during the Great Recession. Now it has turned into the new normal. How will this end?
In a recent interview with CNBC’s Rick Santelli, investment guru Jim Grant talked about the Fed’s sudden about-face when it comes to its balance sheet reduction program, as well as the phenomenon of negative interest rates. In short, Grant said the central banks have done us “no favors.”
Last week, Pres. Donald Trump nominated Marvin Goodfriend to fill a vacancy on the Federal Reserve Board of Governors. When we reported the news, we called him “another swamp creature” – a member of the Washington D.C./Wall Street clan Trump promised to drain away.
We’re not alone in our thinking. In an article on the Mises Wire, Tho Bishop called Goodfriend’s nomination “a dangerous act of outright betrayal to Trump’s core constituency of working-class voters.”
It’s true Goodfriend’s views on monetary policy don’t fit in with the current Fed status quo. But that’s not a good thing. Goodfriend isn’t a fan of the conventional radical policy of quantitative easing. He’s actually a proponent of an even more radical policy.
Following is Bishop’s analysis in its entirety.
Pres. Donald Trump has nominated another swamp creature to sit on the Federal Reserve board of governors.
Marvin Goodfriend does not come from the ranks of politicians. He’s an academic – an economics professor at Carnegie Mellon University. But he’s perfectly suited for the role of central planner. He fits right in with the other central bankers running what investment guru Jim Grant once called “the Ph.D. standard” monetary system, as opposed to the gold standard.
