Unleash the Kraken! (Negative IOER)

pmbug · May 6, 2013

Roughly a year ago, KWN published this:

...
As I predicted, as far back as June of 2010, the Fed will soon follow the strategy of ceasing to pay interest on excess reserves. Since October 2008, the Fed has been paying interest (25 bps) on commercial bank deposits held with the central bank. But because of Bernanke's fears of deflation, he will eventually opt to do whatever it takes to get the money supply to increase.

With rates already at zero percent and the Fed's balance sheet already at an unprecedented and intractable level, the next logical step in Bernanke’s mind is to remove the impetus on the part of banks to keep their excess reserves laying fallow at the Fed. Heck, he may even charge interest on these deposits in order to guarantee that banks will find a way to get that money out the door.
...

http://kingworldnews.com/kingworldn...Move_Is_About_To_Cause_Gold_To_Skyrocket.html

ZH posted this handy chart:

Currently, it looks like they are going to unleash the Kraken in Euroland:

The euro fell for the first time in five days against the dollar after European Central Bank President Mario Draghi said policy makers may take the unprecedented step of charging banks to hold excess reserves.
...

http://www.bloomberg.com/news/2013-...llar-on-speculation-ecb-will-lower-rates.html

ancona · May 6, 2013

Well......this should be interesting at the very least. Why the hell not? After all, I was charged $13 a month to allow Bank of America to hold 8,500 of my dollars in a fucking money market account.

DSAbug · May 6, 2013

This would greatly impact the velocity of money.

Aubuy · May 6, 2013

That will encourage banks to start buying more foreign bonds from the weaker sisters so the merry-go-round can keep turning.

bushi · May 7, 2013

DSAbug said:
This would greatly impact the velocity of money.

...but at what level? Will it prompt PEOPLE to spend more - not a chance...

I think we live in economy of the numbers, by the numbers, and for the numbers. The only positive changes that idiots in charge have impact on, happen in this numeric fantasy land.

MEANWHILE: mortgage interest rates in Ireland, whose people have already chipped in to bail out their bankrupted banks (and will repay that bailout for decades to come), are set to DOUBLE in the near future. Hell, why not shear sheep from BOTH sides, no? Ain't life a bitch, huh?

Jay · May 7, 2013

ancona said:
Well......this should be interesting at the very least. Why the hell not? After all, I was charged $13 a month to allow Bank of America to hold 8,500 of my dollars in a fucking money market account.

every three months we get a statement from Wells fucking crooked Fargo saying we have "earned" .01 penny interest on out account. I shit you not. I would be ashamed to send something like that out.

bushi · May 7, 2013

Jay said:
I shit you not. I would be ashamed to send something like that out.

...well, ask them to stop sending you this shit, and transfer postage costs into your account instead - you'd be better off

in my case, I am getting quarterly BILL from my bank, that amounts to roughly €25, for all kinds of services that I am (graciously) receiving from them - like getting MY money from ATM (ka-ching!), transferring money using online banking (ka-ching!), paying standing orders (ka-ching, ka-ching, ka-ching!), paying for goods using debit card (ka-fecking-ching!). I mean, for real?!

What is the point of a banking system - getting double, triple, and quadruple-fucked? One, I pay for bailing them out, two, I don't get ANY interest on my savings, three, now I am paying fees for EVERY kind of access to MY money, and FOUR - if I got mortgage (I don't, ATM), it's interest rate would have fucking DOUBLED???

...it is bound to end up badly.

pmbug · May 7, 2013

bushi said:
...well, ask them to stop sending you this shit, and transfer postage costs into your account instead - you'd be better off

It's all automated. There isn't any human who is even aware of the situation. MCI sent me a bill for $0.01 every month for roughly 5 years once upon a time. I could never figure out why - ie. what account the bill was for or what the charge was for. It was silly. At least I recycled the paper.

bushi said:
... What is the point of a banking system - getting double, triple, and quadruple-fucked? ...

Bankers like to fuck?

bushi · May 7, 2013

PMBug said:
It's all automated. There isn't any human who is even aware of the situation.

...I know, but even automated, it costs waaay more than a penny for every letter they send. I know, my company sends millions of paper statements every month, we are almost fully automated, yet we have moved our entire printing facility to another location - because we were able to SAVE roughly one penny per piece of mail sent, when doing it from there . If my memory serves me well, we are in the region of 17 cents/snail mail all in, ATM.

I just wanted to highlight the stupidity of the situation - the mailing costs them WAY more money, than the information inside it is worth. Of course, customers are paying these costs at the end of the day. How un-american

pmbug · May 7, 2013

Yeah I know. You'd expect smarter thinking companies would adjust the billing program to hold statements for accounts less than a certain threshold (who's going to mail a check for $0.32?).

pmbug · Nov 25, 2013

So, less than a week since the ECB started making noise about unleashing the Kraken, the Fed starts beating the drum:

The Fed's Catch 22 just got catchier. While most attention in the recently released FOMC minutes fell on the return of the taper as a possibility even as soon as December (making the November payrolls report the most important ever, ever, until the next one at least), a less discussed issue was the Fed's comment that it would consider lowering the Interest on Excess Reserves to zero as a means to offset the implied tightening that would result from the reduction in the monthly flow once QE entered its terminal phase (for however briefly before the plunge in the S&P led to the Untaper). After all, the Fed's policy book goes, if IOER is raised to tighten conditions, easing it to zero, or negative, should offset "tightening financial conditions", right? Wrong. As the FT reports leading US banks have warned the Fed that should it lower IOER, they would be forced to start charging depositors.
...

More: http://www.zerohedge.com/news/2013-11-24/banks-warn-fed-they-may-have-start-charging-depositors

ancona · Nov 25, 2013

If I am to be charged money for making what amounts to an unsecured loan to my bank, that is when I remove all of my "money" from the corrupt system and go Galt. To be as arrogant as that is to suppose that The People have no other alternatives. We The People do in fact have alternatives. We could all simply opt in to credit unions and tell the banks to take a flying leap off a tall building.

Unleash the Kraken! (Negative IOER)

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