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Is this a US problem? In India you can easily get 5% interest in savings account. Maybe an opportunity to move money to Indian banks through crypto and then get

by frontman1988 4y ago

Is this a US problem? In India you can easily get 5% interest in savings account. Maybe an opportunity to move money to Indian banks through crypto and then get it back after getting that sweet interest.

polskibus 4y ago
Savings accounts rates are also lagging behind central bank rates and inflation in EU, for example Poland.
deleted 4y ago
[deleted]
Youden 4y ago
Over the past 10 years, inflation in India has typically been ~5% [0] and the currency has also fallen against the USD at ~4% per year [1], so I don't think this is a good idea. [0]: https://tradingeconomics.com/india/inflation-cpi https://tradingeconomics.com/india/inflation-cpi [1]: https://www.xe.com/currencycharts/?from=INR&to=USD&view=10Y https://www.xe.com/currencycharts/?from=INR&to=USD&view=10Y
- imtringued 4y ago
  If countries adopted negative interest rates we could stop the inflation nonsense and then you could easily compare countries based on their interest rate. In this case the Indian interest rate would be somewhere between -1% and 0% instead of 5% inflation and 4-5% interest.
  - JumpCrisscross 4y ago
    > countries adopted negative interest rates we could stop the inflation If you're talking about monetary policy, this is wrong. Low rates spur inflation. Raising rates fights it. Countries that implemented negative rates did so to fight deflation and spur inflation. If you're talking about how we quote and talk about rates, we quote nominally because that's how most bonds are written. When you buy a 10Y Treasury, it will pay you a specific nominal rate. You know that ex ante. Inflation is whatever it is now, but we have zero guarantee around what it will be between now and ten years hence. Also, there is no single figure for inflation. It's a measure on a basket of goods. That basket is designed to approximate the average American's, but nobody is an average American. (Or an average Indian.) Your experience of inflation will be different from mine based on our purchasing preferences. (This doesn't make inflation subjective. Just heterogenous.)
  - anm89 4y ago
    this is totally backwards. negative interest rates cause inflation, not the other way around
Ozzie_osman 4y ago
This is true in most developing countries, and generally reflects the fact that holding your money in a savings account in that country carries a lot more risk than in the US, as anyone who has been through an economic / currency crisis can tell you. For example, banks could place limits on your ability to withdraw, or the government can limit your ability to move money out of the country, or in extreme cases, they can just force conversion to the local currency. (This is assuming its a dollar savings account. If you're getting 5% on local currency, you're exposed to the biggest risk of all: devaluation)
NovemberWhiskey 4y ago
The idea is common in countries with low domestic interest rates, but you get unwanted exposure to FX rates as well: i.e. you can end up richer in INR but poorer in USD. Japan is the classic example of this - lots of consumers who bought structured products like power-reverse dual coupon notes to get exposure to higher foreign interest rates got annihilated when JPY appreciated vs USD in the 2005-2010 time period.

polskibus 4y ago

Savings accounts rates are also lagging behind central bank rates and inflation in EU, for example Poland.

deleted 4y ago

[deleted]

Youden 4y ago

Over the past 10 years, inflation in India has typically been ~5% [0] and the currency has also fallen against the USD at ~4% per year [1], so I don't think this is a good idea. [0]: https://tradingeconomics.com/india/inflation-cpi https://tradingeconomics.com/india/inflation-cpi [1]: https://www.xe.com/currencycharts/?from=INR&to=USD&view=10Y https://www.xe.com/currencycharts/?from=INR&to=USD&view=10Y

imtringued 4y ago
If countries adopted negative interest rates we could stop the inflation nonsense and then you could easily compare countries based on their interest rate. In this case the Indian interest rate would be somewhere between -1% and 0% instead of 5% inflation and 4-5% interest.
- JumpCrisscross 4y ago
  > countries adopted negative interest rates we could stop the inflation If you're talking about monetary policy, this is wrong. Low rates spur inflation. Raising rates fights it. Countries that implemented negative rates did so to fight deflation and spur inflation. If you're talking about how we quote and talk about rates, we quote nominally because that's how most bonds are written. When you buy a 10Y Treasury, it will pay you a specific nominal rate. You know that ex ante. Inflation is whatever it is now, but we have zero guarantee around what it will be between now and ten years hence. Also, there is no single figure for inflation. It's a measure on a basket of goods. That basket is designed to approximate the average American's, but nobody is an average American. (Or an average Indian.) Your experience of inflation will be different from mine based on our purchasing preferences. (This doesn't make inflation subjective. Just heterogenous.)
- anm89 4y ago
  this is totally backwards. negative interest rates cause inflation, not the other way around

Ozzie_osman 4y ago

This is true in most developing countries, and generally reflects the fact that holding your money in a savings account in that country carries a lot more risk than in the US, as anyone who has been through an economic / currency crisis can tell you. For example, banks could place limits on your ability to withdraw, or the government can limit your ability to move money out of the country, or in extreme cases, they can just force conversion to the local currency. (This is assuming its a dollar savings account. If you're getting 5% on local currency, you're exposed to the biggest risk of all: devaluation)

NovemberWhiskey 4y ago

The idea is common in countries with low domestic interest rates, but you get unwanted exposure to FX rates as well: i.e. you can end up richer in INR but poorer in USD. Japan is the classic example of this - lots of consumers who bought structured products like power-reverse dual coupon notes to get exposure to higher foreign interest rates got annihilated when JPY appreciated vs USD in the 2005-2010 time period.