Blog/Armstrong Economics 101
Posted Feb 19, 2016 by Martin Armstrong
The insanity of NEGATIVE INTEREST RATES, instigated by Larry Summers, is based upon the stupid idea that lowering interest rates will stimulate borrowing and thus spending. The idea is that penalizing people by moving negative will FORCE them to spend their money and revitalize the economy. But what happens if they invest the money in equities and do not spend it on junk? The whole theory will meltdown.
A reader sent in a newsletter from Netherlands of a big Dutch insurance company informing all clients about the possibility of negative interest rates on savings. These people are out of their minds with NEGATIVE INTEREST RATES for they are wiping out pension funds and the elderly. Just what are they trying to do? Intentionally create revolution? Sometimes there is just no explanation for what they do other than pure stupidity, which has no limit or boundary, whereas genius certainly has its limitations.