In a recent tweet, U.S. president Donald Trump delved into an explosive, all-caps-loaded mini-rant about the necessity of getting “interest rates down to ZERO, or less.” The bombastic politician stressed the need for America to refinance its debt, trailing off with some superficially conservative speak about the U.S. and its “great currency, power, and balance sheet,” and calling the Fed “boneheads” for refusing to inflate credit bubbles further. Sycophantic support of the leader aside, negative interest rate policies (NIRP) are slowly but surely gaining prominence worldwide, setting everyone up for a fall that can only be solved by sound money and sound economic principle.
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As the popular idiom goes, talk is cheap and lies are expensive. When it comes to national interest rate policies worldwide, the story is the same. While slashing rates may create short-term growth in a given economy, the long-term effect is to inflate credit bubbles which ultimately have to burst if not paid for. With the U.S. national debt currently sitting at over $22.5 trillion, it’s hard to imagine anything being paid up on. Ever.
While Trump’s tweet is worded to please the ears of an openly conservative-identifying support base, the underlying implications of what is being suggested are about as “conservative” as deciding to spend one’s entire paycheck at the strip club, and then selling plasma to fund a Maoist commune of unemployed California college hippie kids, all in order to receive their moral support later for help paying one’s bills.
