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Trump's Call For Negative Interest Rates Could Boost Bitcoin

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September 12, 2019 | 

Darryn Pollock |  0 Comments| 

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The President of the USA, Donald Trump, has taken to Twitter to demand that the Federal Reserve continue in its quest to drive economic growth. The Federal Reserve recently cut interest rates in an attempt to stave off sluggish economic activity. 

Now, the president is demanding that the Reserve make a bold step and cut interest rates down to zero, or even below. This s a big call from the president as it would be only the second time that this has been seen - the first time was in Europe following the 2008 financial crisis. 

If interest rates go to zero, or below, then putting money in the bank for people looking to keep savings becomes either pointless, or starts costing money, should the interest rates go negative. Thus, investors and those looking to grow their savings would likely look elsewhere, and that could include Bitcoin and Gold - according to Dan Tapiero, of DTAP Capital.

Tapiero believes that this quest to drive economic activity and spending will not discourage the saving of money, rather it will lead to a diversifying of investable assets. Gold has always been a popular choice but with Bitcoin’s emergance as a potential hedge in uncertain financial times, the digital coin could also benefit. 

What negative interest rates would do

Interest rates are usually cut in times of a stagnating economy. They were recently cut by the Federal Reserve this year in order to try and stave off an impending financial downturn, with the European Central Bank also taking steps in this time of uncertainty. 

When this was happening Bitcoin did see a boost almost instantly as many started viewing the digital coin as an alternative to the financial system, and a potential safe haven investment - something that would never have been considered a few years ago.

If the interest rates go to zero, and below, then storing money in a bank will return with no money, or even worse, it will actually cost to keep money safe in a bank. The idea behind this is to encourage people to spend, as there is also a lessening of interest on buying, but those who want to save will be forced to go elsewhere. 

Taperio sees boom for Bitcoin and gold

Traditionally, as a real safe haven a store of value, gold has long been a preferred method of keeping money safe. However, the emergence go Bitcoin, it normalizing and its legitimacy have been on the rise and people are viewing it as a potential way to invest their money. 

For Tapiero, he tweeted in response to Trump's tweet, that both Gold and Bitcoin would benefit from Trump's calls. 

“First President to call for negative interest rates. Medium term this is direct call for a debasement of the US dollar in an attempt to create excess growth into 2020 election. Federal Reserve "boneheads." Gold and Btc should benefit as alternative stores of value,” Taperio said.

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