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Disagree. Your linkages are backwards. This is about liquidity. Lower rates are a way to create liquidity (as it makes is painful to hold onto cash). My take
by abcampbell 11y ago
Disagree. Your linkages are backwards.
This is about liquidity.
Lower rates are a way to create liquidity (as it makes is painful to hold onto cash).
My take:
https://medium.com/@alexanderbcampbell/a-turn-in-thecapitalcycle-4fd0b6193579#.z2bwauhez https://medium.com/@alexanderbcampbell/a-turn-in-thecapitalc...
- rrggrr 11y agohttps://research.stlouisfed.org/fred2/series/EXCSRESNS https://research.stlouisfed.org/fred2/series/EXCSRESNS There is no liquidity problem in the United States. Bank & large corporate balance sheets are flush with cash. There is very much a velocity problem. https://research.stlouisfed.org/fred2/series/M2V https://research.stlouisfed.org/fred2/series/M2V The velocity problem is the intersection of demographic changes (wealth holders are old), corporate tax policies (money is sequestered) and pervasive fear over global economic stability (china). Negative interest rates cannot change any of these factors, and I question if negative interest rates will force the flow of significant funds into commodities, thus reversing the current deflationary spiral. If the USGOV wants inflation create it the old fashioned way... incentivize risk taking.