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Here's a fun thought experiment - ask yourself what happens if the Fed drops interest rates to -1000%, and home prices & equities go basically to infinity... A

Here's a fun thought experiment - ask yourself what happens if the Fed drops interest rates to -1000%, and home prices & equities go basically to infinity... Anyone who owned equities or houses before the interest rate move is set for life, anyone who didn't lost basically all of their savings. It's interesting how many people try to explain away this with Fed-speak and pretend it doesn't matter.

maxerickson 3y ago
Doesn't the value of $1 go to infinity also? What's the value of the thought experiment?
nabla9 3y ago
That would change only nominal valuation, not real values. Nobody becomes richer or poorer when nominal value of currency changes. btw. Central banks interest rate can go negative only little until it becomes cheaper to hold money assets or transfer them to other assets. Nobody holds cash if interest rate is -5%. This is why deflationary spiral can't be countered with just going below zero.