The reality is that the American economy has experienced negative real interest rates now for about five years. Real interest rates are interest rates minus the “inflation” rate (here defined not as the increase in the supply of money and credit, but rather by its effect of higher prices). In other words, those putting money into interest-bearing savings accounts — such as CDs, money market accounts, and checking accounts — are experiencing a decline in what their savings will actually buy.

Now, as a way to deal with continued economic stagnation, some financial elites such as those who run the world’s central banks and the IMF are even desirous of seeing negative nominal rates, in which a person would actually have to pay the financial institution to put money into the bank!

It is remarkable that any educated person could make such proposals in a serious manner. Not only will such policies fail to stimulate the economy, but negative interest rates are just a method of income redistribution from savers to borrowers. These policies are particularly brutal to retired persons, who are already receiving such low interest rates that, in real terms, they are actually losing money by putting it into the bank. But such manipulation of the interest rates by the U.S. Federal Reserve System and other leading central banks of the world, keeping interest rates artificially low, is popular with those who borrow money, such as home buyers.

Source: IMF Calls for Negative Interest Rates

Daily Newsletter Sign Up!

Subscribe to our mailing list and receive daily news, Bible studies and more in your inbox.



News and Bible Study

Visit our Bible Study, Video and Bible Question and Answer sections and enjoy these articles.

Comments

You are invited to participate in our Christian Community by leaving a comment. We would love to read your point of view and inspiring messages, but before you do please read our Community Guidelines. Please note all comments are moderated (Ephesians 4:29).