FOMC Stunner: One FOMC Member Forecasts Negative Interest Rates Are Coming To The US

Tyler Durden's picture

The biggest shocker in today's Fed announcement is not that the Fed did not hike: that was telegraphed far away. It is highlighted on  the chart below in red: for the first time ever, one FOMC predicts negative rates in 2015 and 2016. Was it permadove Kocherlakota: probably not, he is out next year...

 

In retrospect, this too should come as no surprise: over the weekend we asked if "Yellen About To Shock Everyone: Goldman Says The "Fed Should Think About Easing." The lack of a hike was not a shock, but the negative dot, oh yes.

And earlier today we hinted at just this: NIRP:

So: instead of QE4 - forget hikes - is the Fed going to shock us with NIRP in the coming months?

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NoDebt's picture

I'm not touching Janet Yellen's dot.

IRC162's picture

....and what will prevent a run on the banks in this scenario?  Time to start a continual digital-to-paper withdrawal drain for the next 3 months.  NIRP my safe, bitchez

Manthong's picture

They are going to need to impose cash and capital flow controls first or else you won’t find a dime of cash around except in everyone’s mattresses.

This looks like beach head softening to me.

Captain Debtcrash's picture

Negative rates huh?  I thought negative rates were not legal under current US law for treasuries.  I know this is the fed funds rate and not treasuries but normally they track pretty closely.  How will they deal with the required divergence?  I guess that guaranteed spread could be handed to the banks.

Money Counterfeiter's picture

Bank run in 1, 2, 3.  Deflation during the 1929-33 period was -40%.  They know massive layoffs are coming and will be printing up a lot of cash for the banks and the top 1% to stay afloat.  Same shit different year.

Trump playing the role of Herbert Hoover.  One wonders if he will call his trade protection bill Smoot-Hawley.  lol 

SofaPapa's picture

I'm actually surprised it's taken this long.  You know more than one are thinking about it.  Only one has gone so far as to go on the record.

Tarzan's picture

Actually make that two,  I said months ago after the last Fed meeting, when Greece was the latest scapegoat, that we would see Negative rates before they hike the rates, if ever.  Listen to what they say then expect the opposite!

Wayne Angell, Former Fed Governor, to Niel Cavuto Minutes ago,

"I don't think these low interest rates have meant that much"

"We're about where we would have been"

"No I don't think there's much Bubble out there, I'm not worried about that"

 

Here's a quote from the book, A Nation of Deadbeats, by Professor Scott Reynolds Nelson concerning the great depression.

"In 1928 the bond market seized up as foreign borrowers (Germany especially) began to default; banks then provided high-interest call loans to speculators in the stock market.  Stock Valuations doubled between 1928 and 1929 and then crashed.  With both kinds of toxic assets on there hands, hundreds of banks like the Bank of the United States failed between 1929 and 1933."

You may think a 4% loan is a low rate, but that ignores the relative primary rates being payed.  Leveraged money in the hands of speculators pumping evaluations is a disaster waiting to happen IMHO.

I'm just a blue collar guy with little, but growing, knowledge of the exotic and complex finance industry and may be way off, so tell me how it's different this time, how this will not lead to failed banks and a depression???

knukles's picture

Todja
Get ready for the Japanese model, right here in River City, folks.
Getchur bond income while you still can.  Barbell it with gold.
                                 Ray Dalio will NOT like this for his Rick Parity program

Beam Me Up Scotty's picture

When will they PAY ME for my mortgage???

Helix6's picture

S'not the way it works.  See, here's how it works.  You pay them.

Muppet's picture

Look at the dots.   All but one, voted for raising... so why didn't raise occur?    Maybe the one was Fed Governor Blankfein?

 

ersatz007's picture

the Longer Run looks like a Christmas Tree.  So everything is fine.  

Hype Alert's picture

It's called circling the drain.

Ignatius's picture

"We're gonna have to kill our way out, OK?"

brockhardman's picture

Guess they think people are not paying attention to the fact that treasuries are being dumped en masse by China and other BRICS countries?  Our leaders will not address this problem until there is blood in the streets.  Then they really get to take over.  Hope they know what's waiting for them.  Behind every blade of grass.

Helix6's picture

I know my deer rifle is a poor match against their drones, but I really feel like I need to go out for some target practice.

IRC162's picture

Well shit, why didn't they implement this to a-bomb the war on drugs years ago?  Nobody's 'guy' has a credit card swipe, nor will he take checks ;-)

wendigo's picture

Hafta nitpick. 'Snacks', one of my dealers, would accept credit and debit cards. I never used them, but the option was there. 

IRC162's picture

that is awesome!  I wonder what the CC transaction description looked like on the statement? Snacks......nice...now he'd get a 1099-k and file at least a Schedule C for his endeavors...

bania's picture

damn right plebes, time for you to pay off my mortgage

mtndds's picture

OH shit, say it aint so.  This is a bad dream I cant seem to wake up from.

AGuy's picture

Saucer, Rocket, Sword, Spider, and Unbrellla. Those are the icons created from that chart? What does it mean? War? /sarc

 

knukles's picture

No no, that's not an umbrella, it's a make believe Christmas tree.  See, by this time in December, nobody'll have shit left except a few lumps of coal.

john_connor's picture

QE forever and negative interest rates will only exacerbate systemic reset and stock crash.

 

Its called a liquidity trap.  See Japan

Oldballplayer's picture

Fuck 'em. Short this bitch into the ground, just like that kraut pilot in the alps.

NoDebt's picture

It's not him.  It's somebody who makes him look like a hawk. 

lehmen_sisters's picture

Lmfao. Jesus christ this is a good day. 

NoDebt's picture

It's always a fucking trap.  it wouldn't work if it wasn't.

Latitude25's picture

Agreed.  Bought some PMs at 1:30 before the inevitable continuation of the scam

Fukushima Fricassee's picture

Negative is damn sure the forcast.

Dicey's picture

Yeah, especially once they've abolished currency.

JenkinsLane's picture

NIRPdom for the serfdom.

Slomotrainwreck's picture

Fuck this shit. I want NTRPdom (Negative Tax Rate Policy). I want my shit back, even if it is lousy fiat.

ForWhomTheTollBuilds's picture

I know Jim Rickards isn't so popular in some circles but this is one of the many "bullets" he said the fed has left. This, more QE and helicopter money.

 

Stop saying that the Fed is "losing credability".  Japan just started QE 10 and they seem plenty "credible" to the bond market, such as it is.  Strap in, this rides' gonna be a long one.

Raoul_Luke's picture

Agreed!  Helicopter money is definitely in the mix now.

Never One Roach's picture

Remind me again why gold is not budging.

Dicey's picture

Gold has budged and so has PM mining stocks.

Tyrone Shoelaces's picture

If I paint a huge H on my roof, will they bomb my house with hundies?

 

 

venturen's picture

roll the guillotines...it is the only way

zaphod42's picture

Or, stand back and nuke 'em from orbit.  It's the only way to be sure.

starman's picture

If an interest rate is at zero can we still call it interest rate? 

nope-1004's picture

+1

 

Technically no, because no multiple exists to calculate return over time.  Theoretically, yes, because a price of zero for something used as a medium of exchange means the unit of exchange is worthless.

ForWhomTheTollBuilds's picture

You remined me of Jim Grants joke about there not being any interest rates to observe (Grants Interest Rate Obsserver).

 

I'm gonna miss that guy when they arrest him for running a terrorist kiddie porn ring.