Posted 4 years ago on July 27, 2013, 11:04 p.m. EST by JeffSoke
from Houston, TX
This content is user submitted and not an official statement
Rumor has it Janet Yellen is Obama's favored pick to replace Ben Bernanke, Chairman of the Federal Reserve. Yellen believes negative interest rates are a viable option to get the economy going. What are negative interest rates (aka "financial repression", a government term)?
When you put $$$ into an account at the bank, the bank pays you very little interest to hold the money (currently 1% or less because of the government's ZIRP policy). With negative interest rates, the bank would pay you zero and in fact keep some of your savings for the pleasure of holding your $$$. So you would be paying the bank to hold on to your money.
The theory is less people will want to keep their money in a bank or financial institution and will spend more to help the economy because they're losing some of it in the bank. In practice, it'll probably force more $$$ overseas. Who wants to lose their money when bone heads like this are running the country?