Back when the great Phil Knight was building Nike from the ground up, liquidity was a persistent worry for him. More realistically a nightly one. Blue Ribbon's (the original name for Nike) bank didn't trust its sales, so it kept a tight credit leash on Knight. On the other hand, the same bank that viewed Knight's entrepreneurial endeavor as a very risky loan was more than willing to lend to Knight the individual when he sought a home loan.
Knight's dealings with banks rate consideration in light of efforts by central bankers in Europe to boost economic growth with “negative interest rates.” Those central bankers are an odd bunch. They're convinced that “low interest rates” at banks will power economic activity, but low interest rates paid on deposits signal low-risk lending. Think about it. If banks were truly seeking higher return loans they would be paying more for deposits. They also probably wouldn't be banks, but that's a digression.
Read Full Article »