Relevant:
2016-08-09 — wsj.com
...
Recent economic data show consumers are saving more in Germany and Japan, and in Denmark, Switzerland and Sweden, three non-eurozone countries with negative rates, savings are at their highest since 1995, the year the Organization for Economic Cooperation and Development started collecting data on those countries. Companies in Europe, the Middle East, Africa and Japan also are holding on to more cash.
...
But there is a growing suspicion that part of problem may be negative rates themselves. Some economists and bankers contend that negative rates communicate fear over the growth outlook and the central bank's ability to manage it.
...
Low interest rates should encourage consumers and businesses to spend by depressing returns on savings and safe assets such as government bonds. Such spending should create demand for goods, help lift sagging inflation and boost economic growth.
It's amazing how dense these scribblers and economists are; paragraph after paragraph ignoring what the opening anecdote clearly shows: suppressed rates on savings force people to save more, not spend more. People don't replace lack of savings/investment returns with spending; that's just insanity. When returns on savings are lowered, you have less money. Why in the world would the rational (or even vaguely sane) thing for anyone to do be to spend more money? It doesn't even pass the sniff test, but journalists and economists can't figure it out. Perhaps they are confused by the fact that a professional money managers behave differently -- they seek yield in response, which equates to amped-up, more reckless speculation, which looks something like increased spending.
source article |
permalink |
discuss |
subscribe by:
|
RSS |
email 
Comments: Be the first to add a comment
add a comment | go to forum thread
Note: Comments may take a few minutes to show up on this page. If you go to the forum thread, however, you can see them immediately.
