Negative Rates: Coming Soon to a Bank Near You
Last week saw an unprecedented market freakout, as markets began pricing in the likelihood of negative interest rates in the future. Futures markets anticipated negative rates as soon as November, which sent bond yields plummeting. While Fed Chairman Jay Powell has long stated that the Fed won’t take interest rates negative, if markets continue to expect negative interest rates and even price them in, his hand may be forced at some point in the future if he wants the Fed to maintain control over interest rates and markets. And that could be very bad for your savings.
We’ve seen the results of negative interest rates in Europe and Japan, and they’re not pretty. Rather than being inflationary, as central bankers had hoped, they’ve been ineffective at best, and could even become deflationary. And if interest rates get pushed down any further, they could collapse the banking system entirely.
Commercial banks in Europe have already started to pass on negative interest rates to depositors, unwilling to continue eating the mandatory losses of negative interest rates themselves. And if interest rates drop too far into negative territory, depositors will start withdrawing funds, judging it cheaper to store money themselves rather than continue paying banks for the privilege.
Where that inflection point lies is currently unknown, but no one wants to reach it. The effects of forcing depositors out of the banking system are understandably negative, and quite dire. But there’s every reason to believe that central bankers might very well stumble themselves into a situation in which they hit that inflection point and collapse the banking system.
Remember, central bankers and their money creation have caused the booms and busts of the business cycle for decades, yet they’ve never taken responsibility for their actions. Their pride won’t allow them to admit fault or to acknowledge that printing more money won’t actually help the economy. They’ll just keep doing what they always do, printing money and lowering interest rates, until the entire system comes crashing down.
The idea that the Fed might push interest rates into negative territory was once far-fetched, but institutional investors now think not only that it might happen, but that it will happen in a matter of months or even weeks. Events are occurring at breakneck pace, and it’s incumbent upon investors to protect their hard-earned savings now before it’s too late.
If you’re worried about the effects of negative interest rates on your retirement savings, and you’re convinced that you need to take action to protect them, now’s the time to do it. With markets expecting negative interest rates this year, you can’t afford to wait any longer.
With a gold IRA, you can take advantage of the protection gold offers in safeguarding your investment portfolio by rolling over existing retirement savings from a 401(k), 403(b), TSP, IRA, or similar retirement account into a gold IRA. Gold has protected investor assets for centuries against inflation, deflation, and all sorts of financial turmoil. At a time of unprecedented money creation, not to mention unprecedented uncertainty about the future, more investors than ever are turning to gold to safeguard their retirement savings. Will you be one of them?