{"id":14332,"date":"2015-04-23T11:15:24","date_gmt":"2015-04-23T11:15:24","guid":{"rendered":"https:\/\/stateofthenation2012.com\/?p=14332"},"modified":"2015-04-23T11:15:24","modified_gmt":"2015-04-23T11:15:24","slug":"the-crazy-world-of-negative-interest-rates","status":"publish","type":"post","link":"https:\/\/stateofthenation2012.com\/?p=14332","title":{"rendered":"The CRAZY World Of Negative Interest Rates"},"content":{"rendered":"

Negative interest rates: Coming to America?<\/h1>\n

By Michael Santoli
\nYahoo Finance<\/p>\n

American savers have had it hard enough, earning next to nothing on bank deposits and money market funds. But could it get worse, with banks here charging depositors interest to hold their money and high-quality bonds yielding nothing at all?<\/p>\n

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Related Stories<\/h2>\n<\/div>\n
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  1. Why central banks should embrace negative interest rates \u2014 and get rid of currency<\/a> MarketWatch<\/span><\/li>\n
  2. Ultra-Low Yields in the Developed World Affects Your Investments<\/a> Market Realist<\/span><\/li>\n
  3. Why Is Spain Getting a Better Deal on the Bond Market Than the U.S.?<\/a> The Fiscal Times<\/span><\/li>\n
  4. Low Interest Rates: A Self-Defeating Strategy<\/a> Barrons.com<\/span><\/li>\n
  5. European Bonds: Why Would Anyone Pay to Lend Money?<\/a> Market Realist<\/span><\/li>\n<\/ol>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n<\/div>\n<\/div>\n<\/div>\n

    It might seem a curious question, given broad expectations for higher U.S. interest rates, as job growth gathers momentum and the Federal Reserve has openly hinted it is eager to end its seven-year policy of near-zero short-term interest rates.<\/p>\n

    Yet a collapse in interest rates overseas and the continuing risk of financial shocks is spurring Wall Street economists at least to mull the unlikely prospect of such a scenario developing here.<\/p>\n

    The specter of negative interest rates has been sweeping across Europe for months. The European Central Bank and those of Switzerland, Sweden and Denmark have set official overnight interest rates among banks below zero in an aggressive effort to encourage borrowing, energize economic growth and stave off deflation, a spiral in which people continually expect prices to fall.<\/p>\n

    As a result, some banks in Denmark are charging customers<\/a> for the privilege of keeping their money in deposit accounts there.<\/p>\n

    Economists at Goldman Sachs Friday explored the possibility that, under unexpected and unwelcome circumstances, rates in the U.S. could slide below zero as well.<\/p>\n

    The firm concludes that it is \u201cextremely unlikely\u201d that the Fed would move in this direction.<\/p>\n

    For one thing, the U.S. is growing at nearly the fastest rate among mature economies, which has led the Fed to set the stage for the first short-term interest rate hike in nearly nine years.<\/p>\n

    Wall Street is debating whether this might occur in June, September or perhaps early 2016. But for now, Fed Chair Janet Yellen\u2019s stated intention and the market consensus is that the next move for rates is up, and likely within the year. If it happens, it will be a modest dose of good news for savers, who could expect to collect slightly more on their money.<\/p>\n

    Even if damaging financial shocks struck to derail the U.S. recovery or rupture financial markets, a rush to negative rates here appears unlikely. And without negative rates on money banks deposit with the Fed, consumer interest rates would not turn negative.<\/p>\n

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