So what does it mean when I hear NEGATIVE INTEREST RATES?
Updated: Oct 14, 2020
To say we are in unprecedented times is an understatement. We have never been "here" before; negative interest rates and global money printing. 5 years ago, if you suggested negative interest rates, you'd be laughed out of the room or the discussion. Now they're here, and happening.
Negative interest rates actually are a signal of deteriorating economic conditions. They mean that the central banks AND the commercial banks are actually CONSTRICTING lending. Despite the rates being low, there is no incentive for lenders to LEND. Just ask any small business person if they are able to get the help they need to sustain the severe economic downfall they're experiencing right now, and they'll likely tell you how tough it is. Now if you're Walmart on the other hand... lol you could receive BILLIONS in loans! HAHA. SAD.
Negative interest rates also become a reality when the inflation rate (money printing) is higher than zero. WHICH IT IS LOL. Our inflation rate, some experts would argue, is probably close to 10% annually! So, with a central bank rate of lets say, 0.25%, and an inflation rate of 10% - you actually have to MINUS the 10% inflation rate FROM 0.25% Yes - integers have come back to haunt you lol. UGH.
Negative interest rates also almost FORCE people to spend their money (before it loses more value), or they have to invest it somewhere to get some sort of return to protect against that inflation eating it alive. So the stock market, real estate or precious metals become the stars of the show. It is taking record amounts of debt to produce even minimal growth. Growth being "GDP". It has taken a $187 TRILLION DOLLARS in the last 20 years to get 'only' $46 TRILLION DOLLARS of global growth. And as technology continues to advance, pressuring our inflationary system with DEFLATION - this is gona get ugly!!!
Our current system is built on debt and inflation, but technology DOES NOT exist in that environment. So we are running into the end of an era. Our generation, and likely our parents generations, have never lived through times like this. We have never lived through a monetary reset, currency failure, or hyper inflation. But just because we haven't - doesn't mean it can't and won't happen. Some experts are not even using the word IF anymore, its simply a matter of WHEN.
Be prepared. Educate yourself, the future is closer than you think.