What if people, those with the ability to see through BS, the illusion of infinite economic prosperity, park in safe havens rather than spend? What would this look like? Declining retail sales, private consumption, despite the penalty for holding cash (1,2).
Headline: Negative interest rates are a ‘dangerous experiment’, warns Morgan Stanley
After European Central Bank Mario Draghi on Monday hinted more economic stimulus could be coming in March, expectations have risen that deposit rates will be pushed further into negative territory in a bid to fend off the impact from lower oil prices and world-wide economic jitters.
While rate cuts usually are seen as a way to stimulate economic growth and weaken the currency, analysts at Morgan Stanley on Wednesday raised concerns that exactly the opposite would happen were the ECB to take rates even lower. Part of this is because investors already have rejigged their portfolios to account for the policy, they explained.
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