06-13-2022, 08:36 AM
What happens when we've gone to basically the lowest negative interest rates possibl
<!-- SC_OFF --><div class="md"><p>Hi guys,</p> <p>Let me expand, say we hike inflation cools, then there's another recession prompting a cut in rates into negative territory. Yes I know other countries have done this, but I'm talking a little more, like bottom bottom bottom of the negative pit to the point where any further and banks would lose money lending out at that rate so it's in real terms the bottom.</p> <p>Say in that case they gradually start hiking up but after first hike, there's another huge multi-factor catalyst causing another recession and the central bank wants to lower again.</p> <p><em>However,</em> because it's so low in negative territory already, they simply cannot go lower; well they could go back down to before that one hike they did, so assume they want back down one bump, <em>then what</em>.</p> <p>Let me summarize my question:</p> <p><strong>What happens when the central bank has gone into negative interest rates so low - some countries are negative already, but there's a tiny bit more space I've ready in theory they could go down so this is a scenario where they're essentially there - but it's not enough to act as a cushion that prevents said recession. What happens next?</strong></p> <p>I would think a hyper-deflationary spiral is what comes next... and a great depression that comes with it. Then what, how do we get out?</p> <p>Thanks</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/JusticeForSimpleRick"> /u/JusticeForSimpleRick </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/vanhbl/what_happens_when_weve_gone_to_basically_the/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/vanhbl/what_happens_when_weve_gone_to_basically_the/">[comments]</a></span>
<!-- SC_OFF --><div class="md"><p>Hi guys,</p> <p>Let me expand, say we hike inflation cools, then there's another recession prompting a cut in rates into negative territory. Yes I know other countries have done this, but I'm talking a little more, like bottom bottom bottom of the negative pit to the point where any further and banks would lose money lending out at that rate so it's in real terms the bottom.</p> <p>Say in that case they gradually start hiking up but after first hike, there's another huge multi-factor catalyst causing another recession and the central bank wants to lower again.</p> <p><em>However,</em> because it's so low in negative territory already, they simply cannot go lower; well they could go back down to before that one hike they did, so assume they want back down one bump, <em>then what</em>.</p> <p>Let me summarize my question:</p> <p><strong>What happens when the central bank has gone into negative interest rates so low - some countries are negative already, but there's a tiny bit more space I've ready in theory they could go down so this is a scenario where they're essentially there - but it's not enough to act as a cushion that prevents said recession. What happens next?</strong></p> <p>I would think a hyper-deflationary spiral is what comes next... and a great depression that comes with it. Then what, how do we get out?</p> <p>Thanks</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/JusticeForSimpleRick"> /u/JusticeForSimpleRick </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/vanhbl/what_happens_when_weve_gone_to_basically_the/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/vanhbl/what_happens_when_weve_gone_to_basically_the/">[comments]</a></span>