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Old 06-05-2014, 01:09 PM   #1
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negative interest rates (NIRP)

I assume everyone has heard that the ECB now has negative interest rates (-0.10) for its member banks' deposits. How long before the banks do the same to their depositors?

LOL @ all the MSM talking heads out there who belittled PMs because they don't give interest.

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Old 06-05-2014, 01:21 PM   #2
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...

I saw that too. Cash at the Bank of Sealy now will earn more and be safer than at the normal banks.

And if the Chinese copper & aluminum fakery spreads to gold?

CA$H, Bitcoin and gold should all be held.



Throw in a little Pb and Pt for spice! Also:
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Old 06-09-2014, 06:32 AM   #3
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I was out of town for a few days, and it wasn't convenient to spend time on the internets, so I've been MIA from the forums. This was one news items which I did want to address though.

They finally released the Kraken (one year later).

A former Dallas Fed president wrote a piece in Forbes suggesting that the Fed might have to do the same to handle their excess reserve deposits:

http://www.forbes.com/sites/bobmctee...interest-rate/

Is the race to the bottom accelerating?
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Old 06-10-2014, 01:46 PM   #4
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Inflation bothers me.

Figure we run at 10% a year. COLAS been 2%. 5 years time is 40%. So 2014 dollar is 40% less then 2008 dollar.

People get excited of wedge issues. But this is my costs to have a roof over my head and go to the grocery store .

We have been robbed- even 40% in the past 5 years.

The movement is aimless and the goals are murky- for all practical purposes the liberty movement is dead.
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Old 06-10-2014, 04:10 PM   #5
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That's for sure. The way I see things happening now is a slow burn, then collapse of the markets. After that, the dollar. After that, some nastiness I have no desire to experience.
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Old 09-10-2014, 08:22 AM   #6
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Japan joined the NIRP parade.

Quote :
... As WSJ reports, Tuesday marked another milestone in the topsy-turvy world of monetary easing in Japan: The Bank of Japan bought short-term Japanese government debt at a negative yield for the first time. ...
http://www.zerohedge.com/news/2014-0...negative-rates
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Old 03-30-2015, 07:51 AM   #7
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Australia joining the NIRP parade.
Quote :
...
According to Australia's ABC News, the "Federal Government looks set to introduce a tax on bank deposits in the May budget."
...
http://www.zerohedge.com/news/2015-0...-bank-deposits
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Old 04-02-2015, 06:08 PM   #8
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Taxing bank deposits is a great way to insure banks become even less solvent than they currently are. I wonder if they'll start passing laws about how much and how frequently you can withdraw or deposit so that people can't pull their money out and only put it what they need to service a credit card.
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Old 04-06-2015, 06:54 AM   #9
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We're almost there on a practical level even without laws to specifically enforce that. Banks administrative policies will limit how much you can withdraw at a given time (if you want too much, they will need a few days to have cash delivered so you have to wait). If you can't explain your need for large (or frequent) withdrawals, they might report you to the Feds.
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Old 01-29-2016, 09:06 AM   #10
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Quote :
... the Bank of Japan ... unleashed the monetary neutron bomb of Negative Interest Rates in the process pulling an anti-Draghi and shocking markets, even if admitting it can no longer boost QE due to previously discussed concerns it would run out of monetizable bonds in the very near future.

The initial market reaction was one of shocked surprise, with the Yen crashing and risk soaring, subsequently followed by disappointment that QE may be now be officially over and the BOJ will be stuck with negative rates, and then euphoria once again regaining the upper hand if only for the time being as yet another central banks does all it can to levitate asset prices at all costs, even if in the long run it means even more deflationary exports from all other banks and certainly China which will now have to retaliate against the devaluation of its "basket" of currencies.

The BOJ's excuse was simple: everyone else is doing it: as Kuroda said quickly after the NIRP announcement, the BOJ’s monetary policy is “just the same as central banks in the U.S. and Europe,” and “doesn’t target currencies.” Well, it does target currencies, but he is right: it is the same as policy in Europe and the US, where as a reminder, NIRP is coming next.
...
http://www.zerohedge.com/news/2016-0...al-growth-slow
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Old 01-29-2016, 07:51 PM   #11
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Yup, it seems more and more of the world is moving to NIRP territory, and even considering upping the ante in the "War on Cash".

Ugh. I just cannot see how this ends well.
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Old 01-09-2019, 08:14 AM   #12
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* bump *

Quote :
The world’s longest experiment with negative interest rates may end up lasting an entire decade.

Not until 2021 at the earliest will Danes have a chance to see positive rates again, according to Danske Bank. The country’s policy rate first dropped below zero in 2012.

Danske Bank senior analyst Jens Naervig Pedersen says last year’s pattern of krone depreciation, which had some economists predicting rate hikes, won’t continue. In fact, he expects the Danish currency to appreciate in 2019. And with the central bank’s sole purpose being to defend the krone’s peg to the euro, a stronger exchange rate makes monetary tightening in Denmark less likely.

Nowhere else have people lived with negative interest rates as long as in AAA-rated Denmark. The policy has protected the currency peg, but it’s also turbo-charged the mortgage market and pushed those trying to save money into riskier assets. Meanwhile banks have done a bit less traditional lending and a lot more wealth management.

The jury is still out on the extent to which negative rates are a useful policy, especially in economies in which the central bank targets stable prices rather than fixed exchange rates. This week, former U.S. Treasury Secretary Lawrence Summers threw his hat into the ring, criticizing the policy because of its apparent failure to stimulate bank lending “due to a negative effect on bank profits.”
...
https://www.bloomberg.com/news/artic...irst-to-try-it

Quote :
Former U.S. Treasury Secretary Lawrence Summers has jumped into the debate about negative interest rates, signing onto a paper that gives the policy -- adopted in Europe and Japan as an emergency tool during the financial crisis -- a damning review.

Negative central bank rates have not been transmitted to overall deposit rates, and a model suggests that tiptoeing into negative territory in a world with such a disconnect is “at best irrelevant, but could potentially be contractionary due to a negative effect on bank profits,” Summers writes with Brown University’s Gauti Eggertsson and Ella Getz Wold and Norges Bank’s Ragnar Juelsrud.
...
While Eggertsson and his co-authors have released prior iterations of this research, Summers is newly appearing as a co-author. That’s relevant, because the Harvard economist is an influential voice in monetary policy circles and has a track record of urging the policy makers to contend with a low-growth, low-interest rate future.

The commentary on negative rates could be well-timed for impact: while the policy has never been used in the U.S., the Federal Reserve is embarking upon a yearlong conversation about its monetary policy framework.

Because research from Fed Board economists shows that America’s policy rate could be around zero about a third of the time going forward, unconventional monetary policies are almost sure to factor prominently in the central bank’s future toolkit. That said, Fed staff looked at negative rates back in 2010 and were unsure if the central bank had the legal authority to impose them.

Summers and his co-authors point to quantitative easing, forward guidance, and credit subsidies as potential alternatives to negative rates as better solutions to fighting a recession with interest rates near zero.

“Our findings suggest that negative interest rates are not a substitute for regular interest rate cuts in positive territory, at least to the extent that these cuts are expected to work via the bank lending channel,” the economists write. “While the existing literature has made progress in evaluating these measures, the question of how monetary policy should optimally be implemented in a low interest rate environment remains a question which should be high on the research agenda.”
https://www.bloomberg.com/news/artic...-fighting-tool
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Old 02-19-2019, 09:51 AM   #13
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Quote :
Swedish inflation unexpectedly slowed in January, adding to speculation that the central bank may struggle to end four years of negative interest rates as planned this year.
...
https://www.bloomberg.com/news/artic...d=fixed-income
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