U.S. President Donald Trump has been talking about the idea of setting negative interest rates for a while now. When people make cash deposits into their savings accounts at banks, they normally earn monthly interest payments from the banks on their savings balance. Just like when people borrow money from a bank, they must pay interest on the money borrowed. That would all get reversed if negative interest rates existed.

If Congress were to approve President Trump’s demands for setting a negative interest rate on federally insured bank deposits and central bank-backed loans, then savings accountholders would essentially be paying banks to store their money instead of the other way around. Not only that, but banks would make interest payments to borrowers who take out loans and spend their money. As for investors of bonds and treasury bills, they would essentially be forced to pay money for loaning money to the government.

Therefore, you have a situation where people get charged interest to save money and loan money while getting paid to borrow money. The borrowers would still need to get approved for the loan by having the necessary credit rating and other qualifications. Also, this wouldn’t apply to cash advance loans from third-party lenders like OpenCashAdvance . This would only apply federal financial institutions where the money is stored by a central banking system.

Jerome Powell, the Chairman of the United States Federal Reserve , recently stated at a hearing in front of the Joint Economic Committee that negative interest rates are not necessary because the U.S. economy and labor market are both strong while inflation remains steady. He claimed that countries with large economies only use negative interest rates if they have low inflation and low economic growth. That is not the current situation of the United States, according to Powell.

The congresspeople on the committee tried to make it political by asking questions related to the upcoming presidential election season and the various policy proposals of some of the major Democratic candidates. Powell successfully evaded those attempts to drag him into the political mess of the country and just stuck to the economic facts that were available. He even said that the Fed continues to see the potential for further economic growth in the United States, despite some market analysts claiming that another recession is imminent.

What Does This All Mean for You?

Three interest rate cuts have already been made this year. Spending from businesses and households continues to be strong. Powell stated the central bank doesn’t need to cut the rates any further unless the economic outlook starts to show a recession is imminent. Right now, it does not show that based on the economic numbers and the state of the national economy.

Despite all this good news, President Trump and Jerome Powell continue to be at odds over the interest rates. Powell believes they should stay where they are right now while President Trump continues to want to lower them. Currently, there is no threat to Powell’s job as Federal Reserve Chairman because the economy is doing so great. Why would any president want to fire their federal chairman for sustaining such a great economy?

Overall, the outlook of the U.S. economy is moderate growth, stable inflation and a low unemployment rate. Since Powell seems confident that this trend will continue into 2020, there is no reason to believe that your wallet will be in jeopardy anytime soon. The economy should continue to expand as more jobs are created, and more people spend money at businesses. As businesses make more money, they have more of an incentive to create more jobs. It all comes full circle.

The only way the economic outlook could change is if President Trump’s trade policies and tariffs start to have a negative effect on American businesses . These policies are a big reason why market analysts believed that a recession was imminent in the first place. Even though no signs of a recession exist right now, anything could happen in the future. If President Trump continues to put pressure on Powell to lower the interest rates, then it may become counterproductive to the efforts of growing the economy.