The Fed Wants to Test How Banks Would Handle Negative Rates


#1

As interest rates turn negative around the world, the Federal Reserve is asking banks to consider the possibility of the same happening in the U.S.
In its annual stress test for 2016, the Fed said it will assess the resilience of big banks to a number of possible situations, including one where the rate on the three-month U.S. Treasury bill stays below zero for a prolonged period.
“The severely adverse scenario is characterized by a severe global recession, accompanied by a period of heightened corporate financial stress and negative yields for short-term U.S. Treasury securities,” the central bank said in announcing the stress tests last week.

In that particular simulation, the unemployment rate doubles to 10 percent, the same level it reached in the aftermath of the last financial crisis.
Three-month bill rates have slipped slightly below zero several times in recent years, including in September after the Fed delayed rate liftoff amid global financial market turmoil, touching a low of minus 0.05 percent on Oct. 2.

The Fed Wants to Test How Banks Would Handle Negative Rates - Bloomberg Business

Remember deficit spending is the way to go./sarcasm Not only do we pay service fees now our principle will be reduced by negative interest if this becomes the norm. Will people start taking their money out of banks?


#2

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Abolish the Fed!!**
I tell you, whoever the nominee is needs to appoint Rand Paul AND Ron Paul to the Fed and SecTreas, whichever one wherever.


#3

Time to start putting your money under the mattress.


#4

Next we will hear about how the government is going to confiscate your bank accounts and such like what happened on Cypress. All for our good don’t you know?

Cyprus government raids private checking and savings accounts as citizens panic - NaturalNews.com


#5

First, let me say that this is more supply side theory run amok. The problem is not access to capitol or a lack of it, the problem is a shift in wealth and flat or declining wages over the last 30 years for the bottom 2/3’rds. In that sense I agree that the idea of negative rates is attacking the problem from the wrong end…We have a demand problem, not a supply problem.

Having said that, RET has strenuously argued that the Fed is a private organization objecting to my assertion that it has aspects of both public an private…

So who else here agrees with RET, is the Fed strictly private? If so, how does negative rates, a fiscal policy, have anything whatsoever to do with government? You guys want your cake and eat it to…Either the Fed is a government agency, it’s both public and private or it’s private…What is it?