What Effect Could a Negative Interest Rate Have Over an Economy?

analyst75

Well-Known Member
Hello.

1. What effect would a negative interest rate have over an economy?

2. Is it positive of negative effect? In addition, what prompts a central bank to reduce their interest rate to negative (-)?

3. What do they hope to achieve by doing this?

4. What effect would this have on the fixed deposits or borrowed money in such countries?

For example, the interest rate in Switzerland is currently negative.

These are vital questions and answers would be appreciated.

Thank you.
 

the golden gun

RINSE & REPEAT
analyst75 said:
Hello.

1. What effect would a negative interest rate have over an economy?

2. Is it positive of negative effect? In addition, what prompts a central bank to reduce their interest rate to negative (-)?

3. What do they hope to achieve by doing this?

4. What effect would this have on the fixed deposits or borrowed money in such countries?

For example, the interest rate in Switzerland is currently negative.

These are vital questions and answers would be appreciated.

Thank you.
it means the world is about the end. you should invest in arms, ammunition, rations, and a bomb shelter. good luck.
 

$erenityNow

Active Member
A negative interest rate will force patient money to get off the sidelines. It's a 4th quarter Hail Mary pass, and one of the last arrows in the quiver of central planners...er, um...I mean bankers. Macroeconomically, they hope that negative interest rates will increase the money supply but as a debt note. This is evident by their choice to decouple their currency from the Euro at the expense of exports. When businesses and citizens take the bait and sign on the dotted line for new, cheap debt, the SNB is free to raise rates in the future; everyone that does this is trapped and therefore has to eat the new, higher rates of interest that will surely come in the future. You can opt not to participate in that dog and pony show, but at the expense of them scamming negative interest off of your bank deposits (I believe it will only happen on deposits of $200,000 or more. Retirees must be delighted at having worked and saved a lifetime, only to get TKO'd by the stroke of a pen). So the only fiscally sound choice is to take your money out of the bank and find a Carribean country that will do a Switzerland...to Switzerland and protect your wealth. Is negative interest a positive or negative effect? That depends on your view of politics, central planni...um, banking overreach and wealth redistribution theory. If I may be flip, in today's world of doublespeak, every solution is merely the next problem to solve. Markets exist because of supply and demand, therefore instead of everyone running around teaching Falling Sky theory, we need to identify the next crisis to trade. I love this ICT order block stuff because it transcends markets. RSI, MACD and many other indicators just aren't lining up with past strategy, and I fear they never may again, but supply and demand...order blocks and mitigation zones; that's stuff you can earn enough to survive from. No matter how many ropes they tie around the economy, free markets remain free, but never the same.

(To clarify, I was writing from the perspective of a Swiss Citizen, though lower interest rates dynamically force us all to draw the same conclusions).
 

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