Negative interest rates are something the United States has never seen before, I repeat never have seen or done before. When rates dip below 0, there are three things that generally happens. One major effect of negative rates, is banks will have to pay you to take out a loan. This is one thing I’m looking forward to as a real estate investor, because I’m currently paying 4 percent interest on my $111,636 mortgage that I owe. Which is historically low, a couple years ago you couldn’t get an mortgage rate lower than 15 percent! However these rates are hovering around 3.38. The second effect, would be that you would be charged a fee to save your money in a bank. In the long run, I would expect people to pull all of they’re money out and invest all it. The Third effect, would result in stimulating the economy.

Advertisements

Negative interest rates have been around for years, just not in America. Countries such as Japan and a few other European nations have implemented the idea but in limited form. “Negative interest rates are inevitable in the U.S.,” said Bankrate’s Greg McBride. President trump has also tweeted numerous times that he suggests some form of negative rates would benefit the United States, especially in a time like this.

With the possibility of these types of rates coming, the economy may benefit from stimulation due to a increase in lending. As a result it would become more affordable to borrow, and more expensive to save. You may see a increase in gold investing and even bitcoin being that there have been talks out creating a digital dollar in the past couple of months. It is uncertain whether this would affect the nation in a positive or negative way, because simply; this has not been done.

Advertisements

For more of my posts follow me on Pinterest at Ingramuniversal. Also, your comments are more than welcome!