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This mindset is why I think negative rates are going to mess things up. People aren’t going to behave rationally. If you want to save the rational choice in thi
by b_tterc_p 7y ago
This mindset is why I think negative rates are going to mess things up. People aren’t going to behave rationally. If you want to save the rational choice in this situation is to accept a small negative rate that is secure although slightly negative. But... a lot of people are probably going to do one of your two ideas. Neither of which are really “good” for the economy.
- fujiters 7y agoI'm a bit surprised that negative nominal interest rates are a thing. If you print enough money, inflation starts to rise. Why not print money such that you can still provide a positive nominal interest rate so people don't start bank runs and stuff money in mattresses? True, the real return would be negative, but that would be the case either way.
- Paradigma11 7y agoBecause is just doesnt work. Since 2000 the amount of € (M3) has tripled while the economy grew by 50%. The money is just parked and not circulating in the economy. This is why it does not contribute to inflation. There are no good investments to be found, so adding money just adds to the sea of parked money.