Trump’s Calls for Negative Interests Rates May Benefit Bitcoin, Says Analyst
The President of the United States has once again called on the Federal Reserve to significantly lower interest rates. For Dan Tapiero, of DTAP Capital, such a “debasement of the dollar” would benefit Bitcoin and other hard, store-of-value assets.
Tapiero believes that Trump hopes to drive economic activity by effectively charging customers to hold money in the relative safety of banks or in bonds prior to the 2020 Presidential Election. However, such policies may also encourage more people to look for alternate means to store their wealth.
Bitcoin Doesn’t Do Negative Interest Rates…
When growth slows in an economy, an increasingly popular method used by central banks to encourage fresh spending is to cut interest rates. Typically, banks make interest payments to those storing cash with them. A high interest rate will encourage saving and a low one should encourage spending and borrowing, driving new economic growth.
Negative interest rates were first used in the aftermath of the 2008 economic crisis in Europe. In 2014, the cut interest rates below zero for the first time.