Originally Posted by Chuckanut
Apparently, some mortgages in Europe are now have negative interest rates meaning that the banks are paying people to borrow money to buy their homes. The corona virus has kept the negative rates around longer than anybody expected.
IMO...Very unlikely negative rates are going to happen in the USA for the following reasons:
1. US Fed is committed to avoid negative interest rates.
2. US Fed has an inflation rate target of +2% to help pay the deficit (2% inflation = wages goes up = more tax revenues).
3. US Fed have to adjust the treasury rate market to positive interest in order to acquire investor money to pay for the deficit.
4. European money is coming in which drives up the US stock market. A negative rate may crash the US Stock market since European investors has an exchange rate risk and they may pull out of the US and invest in countries without a negative rate.
In other words, a negative interest rate will create more problems than trying to stimulate the economy. US decided to stimulate the economy with stimulus checks instead. You normally do not do both.