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Negative interest rates indicate deflation. In deflation, cash is king - people are willing to hold cash rather than make investments or buy stuff. This gener
by wrycoder 7y ago
Negative interest rates indicate deflation. In deflation, cash is king - people are willing to hold cash rather than make investments or buy stuff. This generally reduces economic activity and also makes it difficult for governments to stimulate by reducing rates.
(In an inflationary environment, the wise thing is to put your cash into hard assets, since it will be worth less in the future. Deflation in the opposite.)
- roenxi 7y agoInterest rates are being set/managed by small technocratic committees in pretty much every country I've looked into. I'm a cynic and I don't believe they are as politically independent as most claim to be either. Interest rates set in that manner don't indicate anything about the underlying real economy. EDIT And as I'm arguing elsewhere in the thread, they measure inflation and it is positive.
- erk__ 7y agoAs far as I am aware the danish national bank have needed to print more money to devalue the danish krone because it is by law pegged to the euro, but as there is more trust in the krone they have needed to print more to make it within the 1% of the euro.