Negative Interest Rates Why Doesn't America Just Shoot Itself In The Foot!

People that are trying to influence the Federal Reserve Board to make negative interest rates are idiots that are pursuing an effort to hurt the U.S. economy. The only circumstances where a competent Central Bank should make negative interest rates is if Banks in their economy were not fulfilling their role of lending money when they received good loan applications meaning the applications appeared such that the Banks would get paid all the principal and interest due on the loan; negative interest rates than would be a penalty on the Banks to move them to fulfill their role. America doesn't have any situation like that today; so today America's Central Bank making negative interest rates would be a breach of their duty. A Central Bank has a duty to support the finances of their banks to help them be as well capitalized as possible, has a duty to police banks in so far as to get them to not lend irresponsibly to not lend where the borrower defaults and they don't get their money back and Central Banks have a duty to support and maintain the foundational tenets of capitalism one being that persons and entities that loan money to businesses get rewarded for that activity.


Central Banks making interest rates negative breach these duties because it produces the following outcomes. Central Banks charging commercial banks for keeping cash on reserve at the Central Bank makes the commercial banks weaker because it reduces their capital position. Central Banks penalizing commercial banks for keeping reserves with the Central Bank creates undesirable and troubling pressure on the Commercial Banks to loan money risking putting them in a position where they make bad loans and for a commercial bank such can be catastrophic for that bank because they can lose the capital needed to operate as a bank. The Central Bank making negative interest rates makes their economy an Alice in Wonderland economy where up is down and everything is backward it stabs a knife into the heart of a capitalist economy it throws out this message widespread the economy is in a grave crisis mode the economy has mega problems!


Central Banks that pursue negative interest rates are trying to do to much they're trying to make up for the sins of the Executive and Legislative Branch of government and they cannot do it they are striving for a "bridge too far". On a personal note all these Central Banks in the West either being tempted with negative interest rates or actually pursuing them is largely due to the evil economic model of globalization. It is pure unadulterated evil, Globalization, how it has destroyed towns, families and individuals by offshoring manufacturing to other countries for what our world considers the almighty and glorious dollar. If individual countries governments did not keep betting and losing the house which globalization has got them into then countries would have stronger economic bases because they would have stronger production bases making things that the country needs and is priced at that supports good middle class jobs producing. Returning countries back to robust production economies would reduce the pressure on Central Banks to do crazy things like make negative interest rates to increase GDP, increase employment and increase inflation to good rates!

 

Its certainly the case that central banks have gone astray with their interest rate policy conservatism. However, this comment is unfortunately the most revealing. Rather than look for internal policy crisis, the globalisation boogeyman is applied. Its actually no different from the immigration boogeyman. Both are used to deflect from the real problem. Both are used to justify hiding from economic critique with petty nationalism.

The true victim of globalisation are in the 'poor south' (for my American chums who do not have a passport, that isn't a reference to a bloke riding about in a Dodge with a confederate flag on the roof). Failed by the WTO, trade relations are skewed in favour of the developed world. And outsourcing? You're asking the wrong question. You should be asking why American firms do not invest in American workers. You should be asking why you've encouraged these firms to become short term rent seekers and speculators.

 

Trump and Bush have already destroyed the economy, the ship is already sinking

mega tax cuts for the rich, two 10+ year wars, mega tax cuts for the corps - low interest rates, billions and now trillions dumped into the economy by the fed...

 

totally agree, excessive foreign outsourcing and excessive foreign imports are killing this country

manufacturing and information technology jobs have mostly left this country, corps have failed the American people

 

I have no problem with outsourcing. I have no problem with imports. I do have a problem with right wingers that have allowed big business to run amok.

 

Oh really? Do explain how exports, which account for 15% of the US GDP are killing the economy.

Exports amount to around 12% of the economy? Would you like to see those dwindle if we refuse imports?

The US is doing fine in the IT sector - but the high cost of education reduces the number of Yanks available. So, companies are obliged to either hire foreign help or export the work to places like India that have a pronounced competence in the matter. Btw, a student in India pays nothing for his/her diploma. Whereas American students must outlay $14K a year for theirs!

Will YOU-PLURAL stop blaming the world around you for problems that are "in-house". With free post-secondary education in the US there will be more programmers and American companies will not need to go elsewhere to find them!

So, boyz-'n-galls, if you want to do something about the problem, then look to the Dems for the answers and not the Replicants. Plenty of Democrat politicians have supported free or nearly free post-secondary education. It was part of Hillary's candidature proposal as well.

Stop blaming the world for problems that are intrinsically ours and nobody else ... !

 

The idea that outsourcing in the US reflects the cost of post-secondary education is clearly cretinous. And the idea the Dems, who are in the pocket on big business, provide an answer is 'pigs fly' territory.