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Related: About this forumNegative Interest Rates Already in Fed’s Official Scenario
Negative Interest Rates Already in Feds Official Scenario
by Wolf Richter February 2, 2016
[font color="blue"]But forget QE-4.[/font]
The Germans, with Teutonic precision, call them Punishment Interest. Negative interest rates are spreading from the ECBs negative deposit rate across the bond market and to some savings accounts in the Eurozone. The idea is to enrich existing bond holders and flog savers until their mood improves. Stock prices are allowed to get crushed by reality.
Negative interest rates destroy one of the most essential mechanisms in an economy: the pricing of risk. Investors end up taking huge risks with no reward. Many of them will get cleaned out down the road.
In Switzerland, punishment interest already causes perverse unpredictable effects, as mortgage rates have started to soar. Its wreaking havoc in Denmark and Sweden. Bank of Canada Governor Stephen Poloz let the idea float that hed unleash punishment interest to destroy the Canadian dollar. The Bank of Japan announced Friday morning timed for maximum market effect that it too would inflict negative interest rates on its subjects.
In the US, Ben Bernanke has been out there preaching to the choir about them. Over-indebted corporate America, except for the banks, would love this absurdity; it would allow them to actually make money off their mountain of debt.
Potentially anything including negative interest rates would be on the table, Fed Chair Janet Yellen told a House of Representatives committee in early November. ..................(more)
http://wolfstreet.com/2016/02/02/negative-interest-rates-already-in-feds-official-scenario/
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Negative Interest Rates Already in Fed’s Official Scenario (Original Post)
marmar
Feb 2016
OP
you wonder what the threshold is for people just withdrawing their savings
phantom power
Feb 2016
#1
phantom power
(25,966 posts)1. you wonder what the threshold is for people just withdrawing their savings
Seriously, what's the point of putting money in a bank these days? 😕
phantom power
(25,966 posts)3. well, there is the security and service aspect of it....
Avoiding the lifestyle of carrying around rolls of bills and hoping nobody breaks into your house and steals your life's savings is worth something.
But if you're literally losing money to keep it in a bank...
speaktruthtopower
(800 posts)5. That's a real issue...
there would be significant cash withdrawal limitations immediately, or there would be bank runs.
jomin41
(559 posts)4. There is so much money floating around that
it's not worth anything. You have to pay me to loan me money. Yeah, that's my life.