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Author Topic: Fed Implies Possible Negative Interest Rates  (Read 1503 times)
smoothie
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September 19, 2015, 11:05:29 PM
 #1

Link:http://www.infowars.com/fed-opens-negative-interest-rate-pandoras-box/

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But what may be missed between the lines is the Fed’s explicit observation that in a world of NIRP, cash will reign supreme, as everyone rushes to withdraw their “taxed” bank deposits and keep the funds in the form of paper cash, hidden safely somewhere where the bank has no access, and where no bank can collect an interest rate for the “privilege” of being funded with a negative rate liability.

Furthermore, as the Fed correctly observes, “the usual rejoinder to a proposal for negative interest rates is that negative rates are impossible; market participants will simply choose to hold cash. But cash is not a realistic alternative for corporations and state and local governments, or for wealthy individuals.”

Interesting take. If interest rates go below 0 and into NEGATIVE territory then that implies that if you put any cash into a bank account, over time they will eat away a portion of your deposit as a fee for holding your money.

LOL omg the fucked up world we live in.  Cheesy


BITCOIN throughout the article link above, also mentioned in the article at the bottom:

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And, before you ask, will there be substantial – and violent – opposition to the Fed’s mandatory conversion of cash to bitcoin? Of course. But that too certainly not stop the Fed, which fighting for the survival of trillions in legacy “wealth” would simply steamroll over anyone and anything courtesy of the US government’s armed backing (which has conclusively proven in recent years its function has metastasized to serve only the wealthiest corporations and Wall Street interests) to preserve such wealth, if only for a little longer.

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September 20, 2015, 01:00:13 AM
 #2

I don't think they will do it even if they can. Fact is the talk about increasing back the interest rates has been going on for some time now and it didn't happen during the last meeting. I think at this stage the economy is still too fragile

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September 20, 2015, 01:17:45 AM
 #3

There's a precedent for this in Switzerland. A few months ago a pension fund calculated it was cheaper to withdraw their cash and pay for it to be guarded in a vault than pay negative interest rates. When one of the funds tried to withdraw said money, their bank flat out denied them the possibility.

It's a classic Zero Hedge type of story and maybe it was resolved but it's not very reassuring. 

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September 20, 2015, 09:52:19 PM
 #4

Negative interest rates are functionnaly identical to inflation: your money lose its purchasing power over time, it's better to spend it than to keep it and it's lower the debt burden of borrowers (so it's good for the states).

Since what they are trying to do since 2008 is to prevent deflation and they haven't managed to create inflation, negative rates actually make a lot of sense.

And it may very well trigger a rush toward BTC, the same sort of rush people expected when they thought QE would lead to hyperinflation.

Their big problem is cash (for them it's a way bigger problem than BTC). But for instance in France the problem is pretty much solved because since the beginning of September we can no longer pay for more than 1 000 € in cash. I bet in one year or two this threshold will be lowered.

Pay attention to what country will be next to pass such a law enforcing a threshold for cash payments, this might confirm the negative rates trend.
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September 20, 2015, 10:57:58 PM
 #5

They will keep printing and buying lands and houses with printed money until they become the biggest landlord  Grin

As a normal people, the only way to fight against this robbery is to raise the price of your products/services, but unless everyone is aware of this, raising your price will put you in a disadvantage in market competition. But land owners will be very easy to be united to raise their price due to limited supply

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September 21, 2015, 09:24:07 PM
 #6

They are doing this already in Germany and Switzerland. Negative interest rates is some banks are 0.1%. This is not much but don't think that the trend won't continue.

Their excuse is that the economy is stagnating and they have too much cash laying around anyways so they don't need people's cash and to give interest rates for it.

Really f**ked up world this is becoming, isn't it?
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September 22, 2015, 03:00:17 PM
 #7

Lol when interest rates are at 0 and you can't raise them because the economy is fucked, the only way to go is negative. If they don't go negative the fed is just admitting that they are a completely pointless institution that can't do a damn thing to influence the economy. Maybe they'll just leave rates at 0 forever, promising an imminent recovery and rate-hike. They've been singing that tune for awhile now. If the economy gets worse they'll have to choose between going negative or just throwing up their hands and saying there's nothing they can do. Except more QE of course.

This, more money printing or negative rates.  We've hit the end game of the debt system, probably could hold out another 20 years but it's game over for the debt system.
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September 22, 2015, 03:15:28 PM
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Lol when interest rates are at 0 and you can't raise them because the economy is fucked, the only way to go is negative. If they don't go negative the fed is just admitting that they are a completely pointless institution that can't do a damn thing to influence the economy. Maybe they'll just leave rates at 0 forever, promising an imminent recovery and rate-hike. They've been singing that tune for awhile now. If the economy gets worse they'll have to choose between going negative or just throwing up their hands and saying there's nothing they can do. Except more QE of course.

This, more money printing or negative rates.  We've hit the end game of the debt system, probably could hold out another 20 years but it's game over for the debt system.

Hopefully not 20 years... I don't want to be old an frail when this happens, because I intend to party like hell. Cheesy

Like others have mentioned: Negative interest rates imposed by commercial banks are already a reality in a few countries, but currently limited to high fortunes. Implicit negative interest rates exist in more cases; which means that banks increase their service fees to a point where it becomes impossible to get a positive return on one's deposits.

However we do not have a precedence for a central bank imposing negative interest rates. In my opinion it is likely that before this extreme measure is implemented, the war on cash will be greatly intensified to prevent people from withdrawing their deposits.

ya.ya.yo!
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September 24, 2015, 09:35:03 AM
 #9

I don't think they will do it even if they can. Fact is the talk about increasing back the interest rates has been going on for some time now and it didn't happen during the last meeting. I think at this stage the economy is still too fragile

Agree.
Their decision cause many currency of other country suffer nowadays.
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September 24, 2015, 10:03:32 AM
 #10

Negative interest rates are very good symptoms for bitcoin growth. People will not save their money in bank deposits and in saving accounts. Instead they will look for alternate investment opportunities like gold, blond or obviously bitcoin. Bitcoin may attract many investors because of higher returns.

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September 25, 2015, 01:30:44 AM
 #11

Negative interest rates are very good symptoms for bitcoin growth. People will not save their money in bank deposits and in saving accounts. Instead they will look for alternate investment opportunities like gold, blond or obviously bitcoin. Bitcoin may attract many investors because of higher returns.

Or they might just stuff it under their pillow. Smiley
The decision on where to invest depends on the risk appetite of a person.
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September 25, 2015, 03:41:41 AM
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Interesting take. If interest rates go below 0 and into NEGATIVE territory then that implies that if you put any cash into a bank account, over time they will eat away a portion of your deposit as a fee for holding your money.

LOL omg the fucked up world we live in.  Cheesy

BITCOIN throughout the article link above, also mentioned in the article at the bottom:


It actually means that the banks would pay you to borrow money - they wouldn't actually take a fee for your savings. If they did they'd have no money to lend and then have no hope of producing an income on their business of being a bank.

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September 26, 2015, 01:35:31 AM
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Interesting take. If interest rates go below 0 and into NEGATIVE territory then that implies that if you put any cash into a bank account, over time they will eat away a portion of your deposit as a fee for holding your money.

LOL omg the fucked up world we live in.  Cheesy

BITCOIN throughout the article link above, also mentioned in the article at the bottom:


It actually means that the banks would pay you to borrow money - they wouldn't actually take a fee for your savings. If they did they'd have no money to lend and then have no hope of producing an income on their business of being a bank.

Nope, it doesn't mean that. Banks won't pay you to borrow money, unless they get some incentive from that.
There are some corporates who wouldn't mind paying a small fee on their deposits.
Think of it as "safe-keeping charges" rather than negative interest rates.
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September 26, 2015, 09:49:09 AM
 #14

They will keep printing and buying lands and houses with printed money until they become the biggest landlord  Grin

As a normal people, the only way to fight against this robbery is to raise the price of your products/services, but unless everyone is aware of this, raising your price will put you in a disadvantage in market competition. But land owners will be very easy to be united to raise their price due to limited supply

Well if the Fed owns all the land we got a few movies ready for that scenario lol.
Or I guess a war against the land owner ^^

That said the fed would be treading dangerous ground if they planned on going negative.
But Default would be oh so much faster lol.
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September 26, 2015, 07:23:00 PM
 #15


Interesting take. If interest rates go below 0 and into NEGATIVE territory then that implies that if you put any cash into a bank account, over time they will eat away a portion of your deposit as a fee for holding your money.

LOL omg the fucked up world we live in.  Cheesy

BITCOIN throughout the article link above, also mentioned in the article at the bottom:


It actually means that the banks would pay you to borrow money - they wouldn't actually take a fee for your savings. If they did they'd have no money to lend and then have no hope of producing an income on their business of being a bank.
i am pretty sure a bank would rather garnish people's savings than loan out cash and pay you to borrow it.

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September 27, 2015, 01:14:21 AM
 #16


Interesting take. If interest rates go below 0 and into NEGATIVE territory then that implies that if you put any cash into a bank account, over time they will eat away a portion of your deposit as a fee for holding your money.

LOL omg the fucked up world we live in.  Cheesy

BITCOIN throughout the article link above, also mentioned in the article at the bottom:


It actually means that the banks would pay you to borrow money - they wouldn't actually take a fee for your savings. If they did they'd have no money to lend and then have no hope of producing an income on their business of being a bank.
i am pretty sure a bank would rather garnish people's savings than loan out cash and pay you to borrow it.

Nah, they would first rob your bank account, then loan out the robbed money to you.

That is a classical tactic used for hundreds of years.

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September 27, 2015, 09:29:53 AM
 #17

And everybody thought bitcoin was 'bad' due to the fact that you could not earn interest on it while it was lying in your wallet. At least it does not decrease like your fiat would with negative rates.

There are plenty of talk going on about the 'lift-off' in December i.e. US rates being lifted but I seriously doubt we will see this. The underlying fundamentals are just not there and some are still heading in the opposite direction. If there is any kind of increase it is going to be short lived as the Fed will have to back pedal again early in 2016.

One of the biggest factors that I can see leading to negative rates will be the value of the US Dollar. If the markets, in general, really do go tits up, which I'm expecting it will, the dollar is going to go through the roof. Most of your paper money, derivatives etc.. has to be cashed out in dollars leading to a very large demand for the currency as the ***** hits the fan and this will push the dollar through the proverbial roof. Many are expecting the dollar to collapse but it will go the opposite way due to this.

The Fed is already painted into a corner and one of the few things they could do to negate this increased in the dollar's value is to make it as unattractive as they can and this would be done through negative rates just like the Swiss did with their rates.

The smart money in my opinion is already out of the markets. Have anybody tried buying gold coins lately? Most places are out of stock and waiting for their next orders to come in. What does this tell you? Is the smart money already heading into possible safe havens?
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September 27, 2015, 09:50:18 AM
 #18

Normally is talked about negative rates for the Central Banks and not for the commercial banks. The lasts have no sense to give negative rates because with the rates those assure their existence.

There are two levels of banks in one democratic country. The first level is the Central Bank which is responsible for the monetary policies, for the economic growth and to maintain under control the inflation. Then are the banks of the second level which are named commercial banks and are like a normal other business. They work with the money and take profit from those like every other business.

In the news of OP I have the impression that is talked about the rates of FED which is a Central Bank (play that role in USA). The negative rates are not a unknown phenomenon even in other Central Banks in other countries. Who want to know more I suggest to read this very good article made from BBC:

http://www.bbc.com/news/business-32284393
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September 27, 2015, 02:57:08 PM
 #19


It actually means that the banks would pay you to borrow money - they wouldn't actually take a fee for your savings. If they did they'd have no money to lend and then have no hope of producing an income on their business of being a bank.

Where I am the average savings rate is now well under 1%. Can I get a loan of any type for less than 5%? Hell no. That's not changing if rates go negative. People will always need loans and banks will always need to make money from them.


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