A couple of years ago, Economic Collapse News warned that the Federal Reserve was preparing for the United States for subzero interest rates (SEE: Is the Federal Reserve preparing U.S. banks for negative interest rates?).
It was reported at the time:
Officials at the Fed have iterated many times that they are not in the vicinity of slashing rates to below zero – their regular denials is just a tad too intense. New York Fed President William Dudley confirmed last month that monetary policy makers weren’t really considering negative rates.
“But I suppose if the economy were to unexpectedly weaken dramatically, and we decided that we needed to use a full array of monetary policy tools to provide stimulus, it’s something that we would contemplate as a potential action,” he said on Jan. 15.
With that being said, the Fed has noted that it’s quite open to subzero rates in the event of another economic calamity.
Fed Chair Janet Yellen said late last year that negative interest rates are on the table should a financial crisis transpire.
“Potentially anything – including negative interest rates – would be on the table. But we would have to study carefully how they would work here in the U.S. context,” Yellen told a House of Representatives committee in November.
Moreover, Fed Vice Chairman Stanley Fischer told a meeting of the Council on Foreign Relations (CFR) that negative interest rates are working better than he anticipated in countries that have instituted them.
Well, now it is almost expected that negative rates will be instituted once the real economic downturn happens.
Former Fed Chair Alan Greenspan is now warning America to get ready.
Speaking in an interview with CNBC, he pointed out many major central banks are at or near zero and teetering into negative territory. He listed Belgium, Germany, France, and Japan as markets selling 10-year sovereign bonds with a negative rate.
He contended that the aging population is increasing demand for bonds, sending yields lower.
“We’re so used to the idea that we don’t have negative interest rates, but if you get a significant change in the attitude of the population, they look for coupon,” Greenspan said. “As a result of that, there’s a tendency to disregard the fact that that has an effect in the net interest rate that they receive.”
Greenspan, a former gold bug, added that investors are looking for hard assets like gold because traders want something of value down the road.
Get ready to stack your capital in the microwave!
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