Negative nominal rates can 'work' if cb/govt announces neg rate & buys loans; & it's a partial debt jubilee 4 refinancers via fiscal policyScott Fullwiler @stf18 via Twitter
UPDATE from the comments
STF said...The point being that if the CB/Govt holds the negative rate assets, then you don't get all the potential problems of the banking sector and money markets trying to deal with negative rates on their asset side, or excess reserve taxes, etc. And the lost equity for the lender of a negative rate loan comes out of the govt, not the private sector. Hard to put all that into 140 characters on Twitter!
The point being that if the CB/Govt holds the negative rate assets, then you don't get all the potential problems of the banking sector and money markets trying to deal with negative rates on their asset side, or excess reserve taxes, etc. And the lost equity for the lender of a negative rate loan comes out of the govt, not the private sector. Hard to put all that into 140 characters on Twitter!
ReplyDeleteThanks, Scott. I added your comment as an update to the post.
ReplyDeletepouch. can you please do not a 140 chars but a full post on it? my mind just wraps into singularity trying to contemplate negative rates. tnx
ReplyDeletemy mind just wraps into singularity trying to contemplate negative rates.
ReplyDeletecosigned