WallStForMainSt: How Negative Interest Rate Policy (NIRP) Can Make Things A Lot Worse In The Private Sector Than Now
President Trump has been Tweeting about Negative Interest Rate Policy (NIRP) a lot and also mentioning it in speeches and interviews how he really wants the US to go to implement negative interest rates.
Federal Reserve united against Trump’s demand for negative interest rates https://www.housingwire.com/articles/federal-reserve-is-unified-trump-negative-interest-rates/
Trump Has 'Good & Cordial' Meeting With Fed's Powell https://www.newsmax.com/politics/Trump-Powell/2019/11/18/id/942169/
Trump meets with Fed boss Powell to talk economy after months of tension https://www.marketwatch.com/story/trump-meets-with-fed-boss-powell-to-discuss-economy-in-wake-of-criticism-2019-11-18?siteid=yhoof2&yptr=yahoo
Jason talks about how if NIRP is implemented in the US, like in Japan and the EU now, that it would help big government and zombie corporations while further distorting and breaking the private sector's ability to do economic calculations for business deals, acquisitions or long term investments with Capital Asset Pricing Model (CAPM), discounted cash flows (DCF) and net present value (NPV) because all of those formulas assume a risk free return to coordinate time value of money. And NIRP would mean that there is no more positive number to enter for a risk free rate into the formula.
Investopedia Definitions:
1) What is discounted cash flow (DCF)? https://www.investopedia.com/terms/d/dcf.asp
2) What is risk free return? https://www.investopedia.com/terms/r/risk-freerate.asp
3) What is Capital Asset Pricing Model (CAPM)? https://www.investopedia.com/terms/c/capm.asp
Daniel LaCalle has been tracking and writing articles for over a year all of the damage that NIRP is doing in the EU. Read his article here: https://mises.org/profile/daniel-lacalle
Buy Mark Spitznagel's book, The Dao of Capital: Austrian Investing in a Distorted World, here: https://www.amazon.com/Dao-Capital-Austrian-Investing-Distorted/dp/111834703X
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