Galt's Gulch

Negative interest rates

Posted by Robbie53024 10 years, 6 months ago to Economics
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Now the EU banks have to pay to hold money.
SOURCE URL: http://www.bbc.com/news/business-27717594

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  • Posted by $ jbrenner 10 years, 6 months ago
    I didn't even think this was possible. Negative interest rates?!?!
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    • Posted by Robbie53024 10 years, 6 months ago
      Sure. Banks have been doing it to customers for a long time - just didn't call it that. Any fee that you've paid to a bank that held your money was in effect a negative interest rate (just doesn't vary based on amount, like this does).
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      • Posted by scojohnson 10 years, 6 months ago
        We pretty much have that here... interest rate on a simple savings account is something like 0.10% and they hand a $5 / month fee or something with it. There isn't any incentive to keep money in a bank account.. you are better off spending or investing, or mattressing the money.
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        • Posted by Robbie53024 10 years, 6 months ago
          Right now "mattressing" your money is OK, but soon we'll have significant inflation when you'll either want that money earning something to prevent erosion, or you'll want to purchase assets that don't depreciate very fast (and ideally Appreciate) as a means of storing your wealth.

          It seems to me that the "powers that be" have been depressing precious metals prices. This appears to have caused them to take on a negative aura - but I see this as the perfect time to stock up, slowly and unobtrusively. It's a crime that any capital gains on these stores of value will be taxed and subsequently a portion stolen by the very government that caused the erosion of the money that the precious metals guard against.
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  • Posted by j_IR1776wg 10 years, 6 months ago
    In 2011, I wrote in part "The fiscal insanity of the 20th and 21st centuries lies in the belief that, somehow, creating money will create wealth. It never has worked and never will work." The central banks cannot escape this insanity - If they stop creating money, the resulting depression will make the 1930s seem like a picnic. Negative interest rates remind me of the scene in the movie Gone With The Wind where Scarlett O'Hara whips the dying horse one more time and it collapses - so will the world economy.
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  • Posted by $ MikeMarotta 10 years, 6 months ago
    I met a woman who works for a foundation. By law, they must spend (give away) 5% of their holdings each year. But they cannot make 5% on their assets. So, this "free money" (zero interest; negative interest) is a constant drain with no inputs.

    If the central banks just gave everyone on Earth a billion dollars, the 8 quadrillion in new money would stimulate the world economy. You have to wonder what's holding them back...

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    • Posted by Robbie53024 10 years, 6 months ago
      Nope - would just create instant inflation, at which point things would go back to stability just with higher prices. No nation has ever printed it's way to prosperity - in fact, the only result has been ruination, eventually.
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      • Posted by $ MikeMarotta 10 years, 6 months ago
        The "sar-chasm" is the gulf between the writer's intent and the reader's perception. We disagree here in the Gulch - you and I; and conservative and objectivists, in general - but we have always accepted that conservatives know their economic principles.
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        • Posted by Robbie53024 10 years, 6 months ago
          Well, in this case, the "chasm" was on the verge of what some might actually advocate, so wasn't sufficiently absurd to be obviously sarcastic.

          I certainly don't give R's credit of having proper economic principles, and there are many C's whom I would question as well. The problem really is that they are politicians. Very few of them do what is right, but nearly all of them do what will get them re-elected.
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  • Posted by $ jbrenner 10 years, 6 months ago
    The ridiculously low positive (and now negative!) interest rates show you how seriously the looters take debt. We need an a series of ads for objectivist candidates that show our candidates cutting up the government credit cards.
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  • Posted by johnpe1 10 years, 6 months ago
    hey Rob! I'm being paid by 3 outfits NOT to come
    to work. and it's because I was Virtuous! it's like
    the time I paid a woman, in Cicero (southwest chicago)
    Illinois, to get off of my lap. I told her that I was
    married. she replied, "Oh, can't get it up?" no
    offense meant;; none taken. professional
    agreement. it was 1976. she got $5. I got a
    "free" drink, mostly ice. -- j

    p.s. the "quantitative easing" process is our gov'ts
    way of doing this -- making all $$ cheaper, even
    the ones in the bank, and especially those under
    the mattress! that's why those on a "fixed income"
    find that it is not fixed, but decreasing.
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    • Posted by Robbie53024 10 years, 6 months ago
      Hmmm. I thought that was called a pension - and technically, that would have been part of the compensation paid to you while you worked, but deferred to delivery after you were no longer working.

      I've heard of those places where you pay a pretty girl to get off your lap. Does that mean that if you let her stay it's free? ;-)
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  • Posted by $ Abaco 10 years, 6 months ago
    They are trying to stave off a deflationary recession (depression). Meanwhile, the fiscal side of government is putting a shotgun in the mouth of the economy. I speak about this on occassion in my work...minus the shotgun analogy.
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  • Posted by richrobinson 10 years, 6 months ago
    This is just a bad idea. Micro managing an economy never works.
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    • Posted by Robbie53024 10 years, 6 months ago
      Actually, micro-managing is the only thing that does work (and by that I mean no regulation, each individual making their own decisions). What we currently have is Macro managing - the gov't making sweeping rules that prohibit/encourage various actions instead of individual action.
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      • Posted by $ blarman 10 years, 6 months ago
        And this is because government busy-bodies think they can do a better job managing the economy than the billions of people making individual transactions in their own self-interest.
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        • Posted by scojohnson 10 years, 6 months ago
          Ever noticed how we (as a population) turn over "managing" the economy to people that have really no idea what they are doing with it... none, if any, in government have ever signed the front of a payroll check before.
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