Trump reverses course, urges for negative interest rate as US debts pile up

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Trump reverses course, urges for negative interest rate as US debts pile up

Earlier on Wednesday, the 11th of September 2019, US President Donald Trump had called Federal Reserve to drag down interest rates into a negative territory, an unconventional move widely practiced among the export-oriented nations likes of Japan and to weather impacts of a weaker economy as a negative interest rate usually hurts savers alongside banks’ revenues in the process, unless the lenders were allowed to intervene in the currency market on a regular basis, as seen in case of Swiss Franc.

Nonetheless, in a pair of tweets on Wednesday (September 11th), US President had been quoted saying that a negative interest rate could save government’s money, as US corporate and non-corporate debts had spiked to a three and a half years high over the course of past one year following Trump’s broad-based tax-incentive package for corporates last year.

However, Trump failed to note a swath of growing risks which could be stemmed of a negative interest rate alongside financial market tensions, which European alongside Japanese lenders were battling against. Meanwhile, voicing a much-stringent tone for a negative interest rate, Trump tweeted on Wednesday (September 11th) morning, “The Federal Reserve should get our interest rates down to ZERO, or less, and we should then start to refinance our debt.

INTEREST COST COULD BE BROUGHT WAY DOWN, while at the same time substantially lengthening the term. We have the great currency, power, and balance sheet... The USA should always be paying the ... lowest rate. No Inflation! It is only the naïveté of (Fed Chairman) Jay Powell and the Federal Reserve that doesn’t allow us to do what other countries are already doing”.