We already know that bank deposits are seeing negative real interest rates (nominal rate - inflation = neg value), but what would happen if we see nominal rates actually go negative? I would assume a run on banks for one thing, and there would go the buffer for loans that each bank needs to carry. Maybe that forces people back into the stock and bond markets looking for returns/yields. IDK.

On the flip side, everyone will take on more leverage! Guess that would be the point, but damn if that isn't kicking the can down the road.

Scary stuff if you ask me.

http://www.foxnews.com/opinion/2016/02/1...offin.html

Quote:Imagine having to pay your bank to take your money! It sounds crazy, but that’s what Fed Chief Janet Yellen says could happen here. It’s called a negative interest rate. Many central banks around the world have begun to use negative interest rates, and Janet Yellen told Congress this week that she “wouldn’t take them off the table” as a potential “tool” if the economy slips into a recession.

Wall Street loves this. Corporations are addicted to cheap money. They can borrow money for a pittance to cover their payrolls and a lot of other expenses. And they’ve recently got in the habit of borrowing money to buy back their own stock, which increases their stock price (at least temporarily). In fact, companies have borrowed so much for these stock buybacks and super generous dividends that Morgan Stanley recently warned: “…corporate balance sheets are no longer as pristine as they were in the immediate aftermath of the financial crisis.”

Sorry, wrong forum. Spin Room please.