Get Ready For Negative Interest Rates In The US

Tyler Durden's picture

With Fed mouthpiece Jon Hilsenrath warning - in no lesser status-quo narrative-deliverer than The Wall Street Journal - that The ECB's actions (and pre-emptive collapse in the EUR) means the U.S. economy must deal with a rapidly strengthening dollar that will make American goods more expensive abroad, potentially slowing both U.S. growth and inflation; and Treasury Secretary Lew coming out his crypt to mention "unfair FX moves," it appears The Fed (and powers that be) are worrying about King Dollar. This suggests, as Mises Canada's Patrick Barron predicts, the Fed will start charging negative interest rates on bank reserve accounts as the final tool in the war on savings and wealth in order to spur the Keynesian goal of increasing “aggregate demand”. If savers won’t spend their money, the government will take it from them.


As The Wall Street Journal explains,

The European Central Bank’s launch of an aggressive program this week to buy more than €1 trillion in bonds poses important tests for the U.S. economy and the Federal Reserve.


Europe’s new program of money printing—and the resulting fall in the euro—means the U.S. economy must deal with a rapidly strengthening dollar that will make American goods more expensive abroad.


The stronger dollar could slow both U.S. growth and inflation, giving the Fed some incentive to hold off on its plan to raise short-term interest rates later this year from near zero.




A stronger dollar has three important implications for the U.S. economy, markets and policy makers. First, it tamps down inflation just as the Fed is trying to raise inflation closer to 2%. Second, it hurts exports and therefore economic growth. Lastly, the attraction of U.S. financial assets could heat up markets just as regulators keep watch for dangerous asset bubbles.




U.S. officials have been playing down that scenario, and, more broadly, resisting talk of a global currency war—competitive devaluations by countries eager to keep their currencies as low as possible to protect exports; but “The Fed faces a challenge having to navigate some pretty intense cross currents,” said Bruce Kasman, chief economist for J.P. Morgan Chase.


The U.S., in effect, is importing some of the world’s downward inflation pressure through currency movements.

Treasury Secretray Lew pipes in...


*  *  *

And Patrick Barron predicts (via Mises Canada)...

I predict that the Fed will start charging negative interest rates on bank reserve accounts, which will ripple through the markets and result in negative interest rates on savings at banks.


I make this prediction only because it is the logical action of the Keynesian managers of our economy and monetary policy.


Our exporters will scream that they can’t sell goods overseas, due to the stronger dollar.


So, what is the Fed’s option? Follow the lead of Switzerland and Denmark and impose negative interest rates in order to drive down the foreign exchange rate of the dollar.


It is the final tool in the war on savings and wealth in order to spur the Keynesian goal of increasing “aggregate demand”.


If savers won’t spend their money, the government will take it from them.

*  *  *

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lolmao500's picture

This is good for mortgages right? Right? What about negative interest rate mortgages? That would surely help the housing market!

Pool Shark's picture



But,... but,.. Hilsen...'what's his name' said the Fed is going to raise rates.

This is unpossible!

WayBehind's picture

strengthening dollar that will make American goods more expensive abroad. ...

American goods? What goods? We dont make anything ... its all made in China and they will be happy to take Russian Rubles or Iranian Tollars

Publicus's picture

You can not have negative interest rate when you are a reserve currency.

quintago's picture

i laughed hard at this one

Soul Glow's picture


                        0 > -1

SWRichmond's picture

Poisoning the "well" of excess reserves, by charging interest instead of paying on them, was a move i predicted here years ago, as an indicator of end game.

It's coming.  Of course it is.  We knew it would, must. Nothing is fixed, nothing is better, nothing is recovered.

cifo's picture

You cannot "be paid" a negative interest when you live paycheck-to-paycheck.

knukles's picture

Betcha Uncle Sam does it just fine.

Anybody anywhere is going to want US dollars and US yields right now.
It may be a tattered dirty shirt, but it's just about the last shirt on the block.

Save_America1st's picture


It's still on fire-sale and way under price of production per ounce. 

Stack your fucking asses off, bitchez...cuz when this fucked up game ends and everything collapses...stackers just might be the central banks of their respective communities. 

Phyzz will win in the end.  And if any of us die before that happens, who fucking cares...leave it to somebody else who understands what's going on so they may carry on. 

Get out of the bankster system NOW.  Do it now before harsher capital controls restrict your ability to withdraw however much "money" you have in their criminal bankster system.

Get it out phyzz, hold a good amount of straight cash as dry powder.  Do whatever ya gotta do, but get your shit outta the system now or you will never get it back.

Or don't and fucking suffer.  Your choice. 

You have been warned plenty, over and over and fucking over again.


Self-enslavement's picture
Self-enslavement (not verified) Save_America1st Jan 25, 2015 7:37 AM

We the people?

Who are you kidding. More like We the Banksters. We have your money printing press. Ha ha. We buy everything we want, everything with real value, even your women and children, with little pieces of green paper and you are left holding the bag. We get your farms, your businesses, your homes, your forests, mountains, rivers and oceans. You people never learn. We then tell you that you have to pay back the money we spent on ourselves buying all your stuff because it's your "national debt". You just don't get it. We literally tax you to death. You never learn. We brainwash you with our media that blankets the nation, we brainwash your children to grow up and protect us by becoming cops. You never learn. We trick you and your children into going to foreign countries and bombing their children's limbs off so we can steal all their frickin resources. You must all be completely brain dead. We even come right out and tell you all the ways that we're screwing you over and we tell you exactly how we do it to you. You eat it up. You buy it like it's going out of style. You're pathetic. Of course we're going to continue. You're just begging us to screw you over. Why would we stop?

Blano's picture

Go long Bank of Sealy.

Arnold's picture

Our comercial bank in  Pennsylvania is 'charging' $20 per month for simple checking accounts with a balance less than $20,000.

Won't take long to wipe out that pay check to paycheck stuff.

ejmoosa's picture

So the more debt you owe, the more you can earn.  Think of the revenue the US government can earn if they can convert all their bonds to bonds that pay negative rates...

By God, this debt can pay for itself!

It's a miracle!

TheRideNeverEnds's picture

In Soviet Russia you pay the banks to borrow money.


In America, bank pays you!

RaceToTheBottom's picture

I am going to be like a bankster:
Please give me the money but I am going to choose not to spend it and keep it as reserves against a future rainy day.

knukles's picture

Thanks SoulGlow

from earlier....

Y'all just wait until they start actually buyin' the shit!  Y'all want negative rates, you gonna be gettin' negative rates world wide. 
And you all thought that inflation was the way outta this shit.
We're gonna be payin' them to borrow from us to spend on diddly fuck all useless oligarchy pocket lining projects on which they're gonna be makin' money borrowin'!

Talk about free fucking money!

This is the ultimate fucking shafting of the People.

Yes, they "make" money by borrowing.
QE 4evah, justified

Thus, print to make the deficit smaller!  (Of sorts)
Krugman's wet dream.

This will not end well, my friends.

The Implications Are Mind-boggling.
Goobermenits can now engage in unlimited "justifiable" QE as they're getting paid to do it, paid to borrow!!!!!!
Crony projects funded while "generating profits" from the borrowings.

I can see it now.  The Democrats (especially) touting this as the Great Way Forward for the Middle Class.
Justified Spend, Borrow and Print!
Free shit for everybody deluxe

fuck fuck fuck fuck fuck fuck fuck

OMG.  The way out never was inflation!  It's deflation!
Long Live the Liquidity Trap.

fuck fuck fuck fuck fuck

We've been looking down the wrong rabbit hole!

Soul Glow's picture

Krugman's splooge is dripping off the chrome printing press in the Mariner Eccles room.

knukles's picture

Well, I been sayin and doin' bond buyin' but now it becomes entirely clear.
It'll be when everything yields less that ZERO that people start rushing to buy the least negative yield in a deflationary environment.

Do you all realize that this is a reason for the liquidity Trap?
If things have negative yields, I'll take cash, thank you very much.

Oh fuck fuck fuck fuck fuck
I'm getting ready to throw up.

Soul Glow's picture

When I couldn't think gold and silver could shine any brighter.

TheRideNeverEnds's picture

what about when gold and silver are going down 10% per year when bonds are returning -1%?. 

cnmcdee's picture

The answer to QE1 QE2 QE3 and EU1 is Gold!


post turtle saver's picture

have I not been saying Cash Is King?

ThroxxOfVron's picture

"OMG.  The way out never was inflation!  It's deflation!

Long Live the Liquidity Trap.

fuck fuck fuck fuck fuck 

We've been looking down the wrong rabbit hole! "


Deflation for the 1% = Real Assets & Labor on sale.  They off loaded THEIR bad debt onto the govenment/99% and got CASH. 

Trickle Up eCONoME !


Inflation for the 99% = penury.  What inflation?  It's what the Banksters call THE SPREAD.  

The 'little people' will NEVER be granted negative interest rate loans!

You will know that the system is totally fucking upside down when corporations and rich people start trying to get a tax loophole so they don't have to pay capital gains on interest from borrowing.


'Privatize the profits & socialize the losses' shoulda told us everything we needed to know about how the process underway.

TeamDepends's picture

Uh huh, tell that to Yellen, right to his face!

Seize Mars's picture


Ha ha ha hah ha hA HAHAHAHAHAHAH!!!!!!

Gent's picture

Oh yea?  Just wait until next Christmas.  You will be needing a submarine to hunt yield regardless of what currency is vommiting out of some central bankers ass.

Greenskeeper_Carl's picture

Looks like those mattresses are going to look more and more attractive.

Or check those guys out. Highly recommend them.

andrewp111's picture

Who says you can't?

People say and think lots of things that prove to be wrong.

ThroxxOfVron's picture

"You can not have negative interest rate when you are a reserve currency. "


Oh, shit...  That IS funny.   


inflation+fees+taxes > return on deposit/bond

-what do you call it?

quintago's picture

this explains why Merrill Lynch just gave me a mortgage for 1.75%

CoolClo's picture

"this explains why Merrill Lynch just took from me a mortgage for 1.75%".


There, just fixed it for you..


You gave them a mortgage (on the property) in exchange for the money they gave to you so you could purchase the property..

Usurious's picture
Usurious (not verified) CoolClo Jan 24, 2015 9:33 PM



banks do not loan, they Borrow(deposits for speculation)...........the so called 'borrower' merely accessed his/her own 'credit'.......for this the bank charged him a 'vig' of 1.75 %......

quintago's picture

actually i cash out refi'd the shit out of the property at a ridiculous appraisal

ThroxxOfVron's picture

Property cannot generate income in and of itself.

Forests and woodland creatures don't pay bills.  Farmland don't farm itself.  Steel doens't forge itself into products.   Etc.


SWRichmond's picture

As far as I am concerned, all capital either comes from the earth or is the result of human action.  This is why "human farming" in the form of income taxes is so insidious, and so universal.  It also explains why the 1% want to crowd us into cities and deny us access to land.

Ward cleaver's picture

Yes we do. Social Media devices, Bad movies
and Rap music.

Nehweh Gahnin's picture

We make Burger King burgers.  Oh wait...

TeamDepends's picture

Don't you worry none, pilgrim! They will compensate by giving you a negative toaster, which turns bread into dough.

MalteseFalcon's picture

If interest rates go negative will time start running backwards?

I don't want to go back to high school.

noben's picture

Or re-endure 14 years of Bushama.

RaceToTheBottom's picture

What you expect Jaimie Dimon to give back his billions?

Pooper Popper's picture

I wonder if the words,"You can eat the peanuts out of my shit" means anything to the fucking banksters!


trulz4lulz's picture

Give me Liberty or give me NIRP!!!!

kaiserhoff's picture

Except that you will never, ever be able to sell that house for more than a third of what you paid.  Buyers look at the monthly nut, and a 7% loan was normal once, and will be again.

There has never been a worsse time to chain yourself to a money pit.

quintago's picture

except during inflation...which we're told doesn't exist

disabledvet's picture

Well thats just it isn't it?



Arrowflinger's picture

About as good as an arrow launched after its cockfeather fell off

Greenskeeper_Carl's picture

Not necessarily. If they are trying to get people to refinance right now, that sorta tells you which direction the banks expect interest rates to go. And that depends on why you are buying a house. If it's an investment, ya you will probably owe more than it's worth in the next few years, but if you are buying it to love in long term and have a decent amount of equity in it, it's not going to matter if it loses a third of its value unless you do something stupid with a home equity line of credit since you are living in it, not investing in it