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  1. #1
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    Interesting Articles on Negative Rates

    I forget where I read the articles but there were two studies which found that negative rates in Europe were actually having the opposite effect of causing people to save more as oppose to spend more because they get less returns and are fearful of the economy. Although we are not negative in the US I would think that low rates could also be muting spending as well. Businesses may like the to buy back shares or borrow for dividends or refinance debt but on an individual level it would be interesting to see if it is materially helping consumer spending. We certainly live in strange times.

  2. Stocks/Investments Moderator boneil's Avatar
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    #2
    It is interesting for sure. If low rates hasn't gotten the economy booming by now, then I would think that they are detrimental. And if they are, then what happens when we do go into a recession. I think a recession hits in the next administration regardless of who wins. But that being said, I would think negative rates would cause fear and panic. Money would come out of banks and either go into the mattress or into bonds driving yields lower. Raising rates may be just as detrimental on paying our debt? And of course, if we do go into a recession or get close to one, does that mean more easy money from the fed which leads to more highs in the market? It seams that the Fed has to really walk a tight wire. Do just enough to keep the economy above even but not too much so we can leave rates low.
    Thanos was the hero

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    #3
    I sat down the other night and was thinking how these low rates affected me since I am not retired. I realized that over the past 3 years that I had been putting more money away for retirement. I didn't connect the low rates to this but realized I had adjusted my anticipated income in retirement down from when I first started saving which made me set a higher retirement goal. I had first chalked this up thinking that the goal was a result of me getting older but I think it was really a result of me lowering my income expectations to 3percent on principal. I wonder if this same thing is playing out with others and if retirement savings are increasing. It was a weird epiphany when I read the article.

  4. Stocks/Investments Moderator boneil's Avatar
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    #4
    I'm going to be handling some money for my mother. It's not money that she needs to live, but will be used to make living a little more comfortable. She doesn't want it in the stock market and thinks that she will earn interest on it sitting in a savings account. She's not up to date on interest rates. I'm not sure what I'm going to do with it.
    Thanos was the hero

  5. Member
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    #5
    Quote Originally Posted by boneil View Post
    I'm going to be handling some money for my mother. It's not money that she needs to live, but will be used to make living a little more comfortable. She doesn't want it in the stock market and thinks that she will earn interest on it sitting in a savings account. She's not up to date on interest rates. I'm not sure what I'm going to do with it.
    That is a tough one. Even if she wanted some stocks for income that would also be tough.