E Swedish Cashless Negative Rate Ponzi Real Estate Society-Still A Good Investment

What could possibly go wrong in a cashless, negative interest rate, ponzi real estate society? We can use Sweden as a potential example since Sweden is closest to a cashless society. Is this a conspiracy by the elite? Finance economist Kevin Erdmann says the economy and real estate are randomly determined. See his quote at the end of this article.

It seems that not much has gone wrong in Sweden, except that household debt is out of control. Real estate is massively overvalued, but there has not been a crash.

Well, that is what economists want, the management of bubbles to limit crashes. Negative interest rates will give the government a tool for making money available in the society, and for getting people to spend money.

Author: Oskar Anlend

Negative rates may, the economists hope, force people to spend more and save less, or just lose the money to the banks. Of course, people could start saving more to make up for the negative rates. That would cause a decrease in economic activity and would befuddle the economists.

What happens with negative rates and bank reserves is that banks are then charged interest on the excess reserves they store at the central bank, rather than receiving payments on those reserves as is currently happening in the USA.

So, that negative rate to park money with central banks should motivate the banks to lend, the economists say. They want to make money rather than pay the central banks to hold their money. So, they lend, and lend and lend. And household debt goes through the roof. And Sweden is a nation that gives children money until they are 16. Wages are generous as well.

To see how Sweden's negative rates and the stipends and good wages are working, we can see that Stockholm is more expensive than San Francisco. A city with beautiful weather, great economic power, Silicon Valley, and expensive real estate is still cheaper than Stockholm! Stockholm had bidding wars and the prices are continuing to soar.

Certainly, negative rates could likely keep this massive stockholm bubble, from crashing. But again, household debt is through the roof. You know that Sweden is trying to keep house prices stable without a crash. That is a balancing act.

But Sweden has interest only loans, no money down loans, etc. 70 percent of Swedes have interest only loans! And they are not just interest only loans. They are perpetual loans.

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Disclosure: I am not an investment counselor nor am I an attorney so my views are not to be considered investment advice.

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