Subzero interest rates may not arrive in the United States with rampant price inflation looming in the background. But if they do become implemented by the Federal Reserve, one iconic billionaire investor is warning to take your money out of the banks and place it under the mattress.
Speaking in an interview with CNBC on Monday, Warren Buffett said he would take his money out of the banks if customers are charged money on deposits.
“If currency in a bank is worth less than currency in your hands … that could produce something in the way of behavior,” he said. “It’s a different world. If you have a lot of money in euros, as we do … you’re better off putting it under your mattress than in a bank.”
For the most part, Buffett thinks the U.S. central bank and other policymakers have done a good job. He conceded, though, that it’s hard to predict interest rates and how they can affect the overall economy. Buffett added that he doesn’t bet on central bank moves, but admitted that it’s a “fascinating movie to watch.”
“We have close to $60 billion that’s out invested at about a quarter of percent or less,” Buffett said. “One point on $60 billion is $600 million a year. If we were getting 3 or 4 percent on that money, that’s a couple billion to us. You notice it.”
Several central banks have opted for negative interest rates. Fed Chair Janet Yellen said that subzero rates are on the table in the event of a financial catastrophe (SEE: Yikes! Janet Yellen would consider negative interest rates if economy collapses).
I am already getting negative interest on my checking and savings, because my Credit Union now charges a $4.95 per month service fee on my checking account. It was free checking for over 20 years. $1,188,000 in additional profit for the CU, .05% interest for the members savings accounts????