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Bosonic

(3,746 posts)
Thu Jun 5, 2014, 08:03 AM Jun 2014

ECB slashes interest rate to 0.15%

Source: BBC

The European Central Bank (ECB) has lowered its benchmark interest rate to 0.15% from 0.25% in an effort to stimulate economic growth and avoid deflation in the eurozone.

It has also reduced its deposit rate below zero, to -0.1%, which means commercial banks will have to pay to lodge their money with the central bank, rather than receive interest.

The idea is to incentivise the banks to lend to businesses, thereby stimulating growth.

The ECB is the first of the "Big Four" central banks (the ECB, The US Federal Reserve, The Bank of Japan and the Bank of England) to do this.

Read more: http://www.bbc.co.uk/news/business-27717594

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Nye Bevan

(25,406 posts)
5. How are banks "saved" by forcing them to pay to deposit money in the central bank
Thu Jun 5, 2014, 03:01 PM
Jun 2014

instead of being paid to do so?

 

fasttense

(17,301 posts)
2. What an absolutely horrible mess capitalism has made of economies throughout the world.
Thu Jun 5, 2014, 09:54 AM
Jun 2014

Maybe it's time to change to a new type of economy? Feudalism and slavery also created messes like this.

Negative interest rates, huge unemployment, deflation, inflation, overpriced commodities causing famine, oil corporations destroying the earth with carbon, pretend democracies bought off by the wealthy, it just gets worse and worse.

 

fasttense

(17,301 posts)
10. Only workers can own a corporation
Thu Jun 5, 2014, 05:08 PM
Jun 2014

No absentee stock holders or boards are allowed to run a business. Only workers who work at the factory can own it.

Co-ops with the workers owning the means of production. The rich will have to use their money to buy up other crap. Or just not allow the uber rich to accumulate in excess of a million dollars.

Nye Bevan

(25,406 posts)
6. Capitalist countries such as Denmark have low unemployment, universal health care,
Thu Jun 5, 2014, 03:02 PM
Jun 2014

and generous social benefits.

What non-capitalist country would you hold up as a model?

Nye Bevan

(25,406 posts)
7. You're not familiar with the concept of raising interest rates to dampen an overheating economy,
Thu Jun 5, 2014, 03:05 PM
Jun 2014

and conversely, lowering interest rates to stimulate an economy?

TygrBright

(20,733 posts)
9. Absolutely. But "stimulate" and "dampen" an economy are different concepts than...
Thu Jun 5, 2014, 04:13 PM
Jun 2014

...inflation and deflation, which are merely descriptions of value fluctuation.

It may well be that a touch of inflation-- particularly on the wages end-- could stimulate the economy. Or not.

However, LOWERING interest rates is definitely (last time I looked ) a DEFLATIONARY strategy. This, too, may stimulate the economy. Or not.

But I don't think that lowering interest rates will "avoid deflation."

confusedly,
Bright

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