Negative Interest Rates Coming To US along with government-mandated helicopter money
To battle the Great Financial Crisis in 2008, the Federal Reserve cut interest rates to ZERO and printed trillions of dollars.
The result was an unprecedented, 10-year bull market in stocks, bonds, real estate and basically every other asset out there.
But the San Francisco Federal Reserve Bank says that wasn’t enough!
In a recent paper, the SF Fed said negative interest rates (-0.75% to be exact) would have allowed for a faster recovery.
So the SF Fed suggests throwing American savers under the bus (even more than they already have) to goose the financial system… and ultimately blow an even bigger bubble than we’re experiencing today.
Then, just yesterday, the president of the St. Louis Federal Reserve Bank, James Bullard, said the current monetary policy is too restrictive… meaning he wants lower interest rates.
Both the European Central Bank and the Bank of Japan were expected to start tightening policy this year (raising rates)… but they’ve both already committed to stay put… and maybe even cut rates further into negative territory.
China and India are both still easing.
The Federal Reserve has also started softening its language on further rate hikes after last December’s hike sent market’s plunging.
The trend is clear.
And this is what you need to understand…
Global central banks tried raising interest rates. But the economy couldn’t handle it… and that’s at a time when things are reportedly “booming.”
But what happens when there’s a recession? When this 10-year, artificial bull market inevitably reverses?
The writing is on the wall for further rate cuts. And major US Fed banks are already floating the idea of negative interest rates.
You can be sure there are very real discussions happening right now at high levels about bringing NIRP (negative interest rate policy) to the US.
A very well-respected financial analyst, a guy named Albert Edwards from SocGen, thinks we’ll not only see negative interest rates, but government-mandated helicopter money.
From his recent report:
“… as central banks thrash around for new tools, I have long thought the next recession would trigger the adoption of helicopter money and deeply negative Fed Funds. Clients have been sceptical of the latter because of the negative impact on bank margins, but now I am more convinced than ever that we will see negative Fed Funds.”
And what happens if the socialist politicians, who are gaining in popularity, win control of the government?
We’ll only see more government money spent to boost the economy, provide jobs and education for everyone, etc.
Higher taxes will come, too. But it won’t be enough to stem the bleeding – deficits are going to explode.
I’ve been writing a lot about these ideas. And every day, it seems, something else comes out in the news to reinforce what I see as giant risks to the economy – the rise of socialism, exploding government debt and a market crash.
I know most folks will see these signs and do nothing to protect themselves. That’s just the nature of the beast.
But if you, like me, are worried about these risks and want to learn solutions to these problems, continue reading… LINK
To your freedom, Simon Black, Founder, SovereignMan.com