Negative Interest Rates?

high-performance said:
I really don't understand negative interest rates.

It is central bank punishing people owning notes or gift cards that if they don't use the cash, it lose value?

or the gov't wants people to spend the cash and stimulate the economy?

If too much cash is sitting in stale assets like bonds, stocks. or bitcoins.

tax is the way to go. like tax on assets. or increase in capital gains in paper.

as now there is no tax on paper gains.

The proposed policy is too much people are having too much cash and doing nothing with like Buffet has 130 billion in cash.

there are not assets to buy? or nothing to invest.

Bonds are too low. Stocks are too high. limited investment opportunities. hence fund managers are buying bitcoins. or gold.
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Simple
Basically you pay to store your money think of it like storage cost
Lol
 
Negative rates (Theoretically) essentially force investors to move capital into greater yielding investments - buy businesses, buy stocks, invest in business infrastructure...
 
bone said:
The negative yield trickles down only so far.

For example, in the EU where there have been negative benchmark rates for some time now - consumer loans such as auto and home mortgages are still positive.

For example, as of today in Germany the Ten Year Bund Yield is around -0.55%; but a typical German 30 year fixed mortgage rate is around 1.65% on a 275,000 Euro loan.
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It did trickled down:

https://www.cnbc.com/2019/08/12/dan...r-mortgages-with-negative-interest-rates.html

I am waiting for this to happen in the US. Trump would love it, all homeowners would love it.
 
mortgage rates would actually go up as there is risk of mortgage default as jobs are harder to get. People who get laid off may not able to find jobs. or banks want higher downpayment

Instead of 10% downpayment, you'll need like 30% downpayment and higher mortgage qualifications. if homes are less liquid.

Mortgage rates won't get negative rates as they are not traded. You might get negative rates in 'trading' these bonds in the illiquid manipulated electronic markets but not in the real world.
 
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