The president of United States, Donald Trump this Wednesday has taken a shot indirectly at Jerome Powell who is the chairman of Federal Reserve when he had asked a former candidate for the job which Powell has why he did not push harder for obtaining that job.
Trump said this to Kevin Warsh when he was signing the phase one deal in a ceremony between China and United States which was attended by Kevin as Trump said that he would have been useful for trump in this situation.
Trump had then spoken about the benefits of the interest rates being negative which the European Central Bank have implemented among the other banks. The rates of interest being negative have been used for the stimulation of the economic growth however whether they achieved that particular objective has been debated till now by the experts in the field.
Trump said that it was an incredible concept as he added that though there was no awareness of where it is going to lead, there is borrowing of money and when it is time to pay back, they pay you which as per Trump was a concept he really liked.
Although the experts say that it isn’t exactly how this works. The theory may make it sound like the lenders paying the interest instead of receiving. Practically though the rates of interest being negative mean that the bank will store the money at the places such as the Federal Reserve and ECB is going to have to pay for keeping the reserves there instead of just getting the interest.
The interest rates are a lot higher for United States than they are in Europe in relative terms.
