Monday, April 12, 2010

National Bureau of Economic Research Says Recession Ain't Over...

Is NIRP on the horizon (Negative Interest Rate Policy)?

The NBER statement premeditatively provides justification for the continuation of Bernake's zero interest rate policy, flooding of bank reserves with easy cash and continued Treasury expansion of entitlement programs for BOTH the unemployed and the big banks. Here's the link: NBER Says Premature to Declare End of U.S. Recession

It will be interesting indeed to see if the Fed implements a negative interest rate policy once Janet Yellen is firmly in place as the Vice Idiot of the FOMC. Here is a quote from her on February 22:  "If it were possible to take interest rates into negative territory I would be voting for that." Well, it is possible to take interest rates negative. We've seen negative interest rates in short term Treasury paper a few times in the last two years.

Negative interest policy would send the long end of the yield curve AND gold to the moon.

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