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Related: About this forumEllen Brown: Hang On to Your Wallet: Negative Interest, the War on Cash and the $10 Trillion Bail-I
http://www.truthdig.com/report/page2/hang_onto_your_wallets_negative_interest_the_war_on_cash_20151121Four European central banks the European Central Bank, the Swiss National Bank, Swedens Riksbank, and Denmarks Nationalbank have now imposed negative interest rates on the reserves they hold for commercial banks; and discussion has turned to whether its time to pass those costs on to consumers. The Bank of Japan and the Federal Reserve are still at ZIRP (Zero Interest Rate Policy), but several Fed officials have also begun calling for NIRP (negative rates).
The stated justification for this move is to stimulate demand by forcing consumers to withdraw their money and go shopping with it. When an economy is struggling, it is standard practice for a central bank to cut interest rates, making saving less attractive. This is supposed to boost spending and kick-start an economic recovery.
That is the theory, but central banks have already pushed the prime rate to zero, and still their economies are languishing. To the uninitiated observer, that means the theory is wrong and needs to be scrapped. But not to our intrepid central bankers, who are now experimenting with pushing rates below zero.
Consumers today already have very little discretionary money. Imposing negative interest without first adding new money into the economy means they will have even less money to spend. This would be more likely to prompt them to save their scarce funds than to go on a shopping spree.
People are not keeping their money in the bank today for the interest (which is already nearly non-existent). It is for the convenience of writing checks, issuing bank cards, and storing their money in a safe place. They would no doubt be willing to pay a modest negative interest for that convenience; but if the fee got too high, they might pull their money out and save it elsewhere. The fee itself, however, would not drive them to buy things they did not otherwise need.
The scheme to impose negative interest and eliminate cash seems so unlikely to stimulate the economy that one wonders if that is the real motive. Stopping tax evaders and terrorists (real or presumed) are other proposed justifications for going cashless. Economist Martin Armstrong goes further and suggests that the goal is to gain totalitarian control over our money. In a cashless society, our savings can be taxed away by the banks; the threat of bank runs by worried savers can be eliminated; and the too-big-to-fail banks can be assured that ample deposits will be there when they need to confiscate them through bail-ins to stay afloat.
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Ellen Brown: Hang On to Your Wallet: Negative Interest, the War on Cash and the $10 Trillion Bail-I (Original Post)
eridani
Nov 2015
OP
no_hypocrisy
(46,202 posts)1. Wouldn't negative interest drive away savings and
savings is the capital/life blood of banks? They depend on the deposits to have something to lend and make profits.
Art_from_Ark
(27,247 posts)5. Lots of banks don't want small savers
They will tack on maintenance fees to discourage small accounts.
msongs
(67,453 posts)2. sounds like something the TPP crowd can get behind nt
pansypoo53219
(20,997 posts)3. MORE screw the ants/savers. YOU CAN'T stimulate this way.
Hotler
(11,445 posts)4. Rat fuckers......n/t
snot
(10,538 posts)6. They already looted 1/4 of my savings in the 2008 crash;
they've paid squat on the remains despite their record profits; and now they want me to pay them for the privilege of letting them use my money to make yet more profits for themselves?!?
Meanwhile pensions across the land have also been looted, and they're cutting Social Security.
What is it going to take for the 99% to wake up?