EUR negative interest incoming - BTC panic buys ahead?

[leopard2]

Good day ladies and gentlemen,

ECB President Supermario Draghi has just announced that zero or even negative interest rates are incoming, maybe in June already.

http://www.businessweek.com/articles/2013-05-02/are-negative-interest-rates-in-europes-future

http://www.economist.com/blogs/freeexchange/2014/05/draghis-heavy-hint

There’s a precedent. Denmark, which has its own currency, has kept overnight interest rates negative for some time to discourage an influx of hot money that would drive up the value of the krone and make Danish goods and services uncompetitive in world markets. As reported by Bloomberg News, the Danish central bank’s deposit rate has been below zero since last July. It’s currently a negative 0.1 percent.

What willl happen if people get zero or negative interest on their balances? Cash? Not possible in large quantities, due to legal restrictions.

BTC is well known now, due to all the negative news. THere is no such thing as negative publicity. Panic buys into BTC could happen this year, when the torrent of liquidity seeks escape routes.

Forget China, consider billions of SEPA transfers :-) EUR dump incoming ...............

Cheers
Leo

[1715058911]

1715058911

[DeathAndTaxes]

People won't get negative interest on their checking account balances.   Short term bonds may have negative interest rate.  Still nominal interest rates are meaningless, what really matters is real (adjusted for inflation) interest rates and they have been solidly negative in many countries for some time now.  Anyone in control of the kind of funds necessary to be affected already knows this.  It makes a headline but they have been losing purchasing power on their cash for the better part of a decade now.  I don't see it driving bitcoin adoption.  It won't affect the Dane on the street and large corporations, banks, and other major holders of cash are holding billions of Krone.  They couldn't move that kind of money into Bitcoin without massively driving up the exchange rate.

[E-C.Guru]

I'm just waiting for the stockmarket to CRASH violently, until that happens all economic news are peanuts. Salty and good, at best, but always very small and insignificant.

[Lethn]

I'm just waiting for the stockmarket to CRASH violently, until that happens all economic news are peanuts. Salty and good, at best, but always very small and insignificant.

It always amazes me how the news organisations jump up and down about a 0.4% rise in the global markets, yet Bitcoin and even altcoins get more than 50% on a weekly basis, adding to the embarassment that these 'global' economies should be feeling Hobonickels now officially is probably one of the best places to have some money in if you're looking for a decent interest payment and it pays it on a 10 day basis as well.

I really believe with steps I'm seeing being taken that we could easily see another collapse by the end of this year or sometime next year, they're getting more desperate now even though they're hiding it well, not surprised to see this kind of panic from the ECB.

[counter]

I for one won't rule out the chance of panic buys but at this time I suspect it is to hard to tell what may happen.  Who know what other bad economic news could arise? 
It is always astonishing watching the talking heads on the media put a spin on certain stories in regards to Bitcoins or the stock markets.

[Beliathon]

I really believe with steps I'm seeing being taken that we could easily see another collapse by the end of this year or sometime next year, they're getting more desperate now even though they're hiding it well, not surprised to see this kind of panic from the ECB.

Things get real interesting when you're trying to keep a zombie walking.

Yeah, I'm talking about capitalism.

[Lethn]

lol do people really believe this is capitalism with all the stuff that is going on? It isn't, if it's anything it's corporatism, Bitcoin is capitalism and so are most cryptocurrencies.

[acoindr]

Banker 1: We're inflating as fast as we can! It's not helping the poor.

Banker 2: Kick the machine into reverse also known as inflation warp speed! It will make the rich richer faster and drive up prices. That's sure to help.

[FeedbackLoop]

lol do people really believe this is capitalism with all the stuff that is going on? It isn't, if it's anything it's corporatism, Bitcoin is capitalism and so are most cryptocurrencies.

I prefer "Crony-Creditism" where credit for some is cheaper (negative even) than for others (not to mention multipliable to infinity, via fractional reserve, by some and not by others).  Also, since credit=fiat it can never go down so make sure to pump that bubble ad infinitum and make sure the fiat gets to your buddies (cronies) first!

[Lauda]

I for one won't rule out the chance of panic buys but at this time I suspect it is to hard to tell what may happen.  Who know what other bad economic news could arise? 
It is always astonishing watching the talking heads on the media put a spin on certain stories in regards to Bitcoins or the stock markets.

We can't really know. The event needed for the next spike in the price of Bitcoin could happen any day. I'm not saying that this will get the panic buys into BTC, but it could. Keeping cash is not good anymore, as you can read in that article.

[DeathAndTaxes]

Banker 1: We're inflating as fast as we can! It's not helping the poor.

Banker 2: Kick the machine into reverse also known as inflation warp speed! It will make the rich richer faster and drive up prices. That's sure to help.

On which planet did this conversation happen?  On Earth I have never known a central banker making policies to help the poor.  I am not sure they even know the poors exist.  If they don't want to be poor they should just get more capital like banks do.

[acoindr]

If they don't want to be poor they should just get more capital like banks do.

Good point 

[leopard2]

People won't get negative interest on their checking account balances.   Short term bonds may have negative interest rate.  Still nominal interest rates are meaningless, what really matters is real (adjusted for inflation) interest rates and they have been solidly negative in many countries for some time now.  Anyone in control of the kind of funds necessary to be affected already knows this.  It makes a headline but they have been losing purchasing power on their cash for the better part of a decade now.  I don't see it driving bitcoin adoption.  It won't affect the Dane on the street and large corporations, banks, and other major holders of cash are holding billions of Krone. They couldn't move that kind of money into Bitcoin without massively driving up the exchange rate.

a) you have an IQ of 160+ but most people don't. Most people are too dumb to clean their ass properly. I thus believe it will make all the difference in the world when the nominal interest rate on savings accounts and such, becomes negative. Adjusted for inflation? Most people don't even know what that means. If people see the negative interest deductions on their account, no matter how small, the stampede will start. When Joe and Jane Doe see a -0.01 EUR interest payment in their account it will commence.

b) Danes are not an issue - it is only a small country and this was only done to protect the Krone from EUR inflow. If negative interest is implemented  EUR wide, it will be a whole different ballgame. And your last sentence is what I wanted to imply  

Perhaps todays $400 will be the new $50, what will the new $1200 be? 24x400=9600?

[leopard2]

Proper sequence is always deflationary collapse, followed by hyperinflation

Trouble is you don't know when the collapse starts - gold went from 300 to 1000, then def. collapse to 700 (in 2008) then inflated to 1900

If you stayed in cash waiting for the collapse from 300 to 1000, the collapse to 700 did not do you any good

----> Strategy must be physical investments, hedge against collapse. Are there any options on BTC?

[Biodom]

Banker 1: We're inflating as fast as we can! It's not helping the poor.

Banker 2: Kick the machine into reverse also known as inflation warp speed! It will make the rich richer faster and drive up prices. That's sure to help.

On which planet did this conversation happen?  On Earth I have never known a central banker making policies to help the poor.  I am not sure they even know the poors exist.  If they don't want to be poor they should just get more capital like banks do.

Poor? Overall, I am afraid that we will resemble Elysium (sc-fi flick) at some point.
Bitcoin can democratize the capital movement, but will it cause even higher wealth accumulation in smaller % of the population at the same time?
This is unclear.

[knarzo]

Proper sequence is always deflationary collapse, followed by hyperinflation

Trouble is you don't know when the collapse starts - gold went from 300 to 1000, then def. collapse to 700 (in 2008) then inflated to 1900

If you stayed in cash waiting for the collapse from 300 to 1000, the collapse to 700 did not do you any good

----> Strategy must be physical investments, hedge against collapse. Are there any options on BTC?

Maybe quite soon?

Tax to rise unless HMRC can raid accounts says PM: Cameron insists taxman must be given new powers to seize money

http://www.dailymail.co.uk/news/article-2624775/Tax-rise-unless-HMRC-raid-accounts-says-PM-David-Cameron-insists-taxman-given-new-powers-seize-money.html

[zimmah]

People won't get negative interest on their checking account balances.   Short term bonds may have negative interest rate.  Still nominal interest rates are meaningless, what really matters is real (adjusted for inflation) interest rates and they have been solidly negative in many countries for some time now.  Anyone in control of the kind of funds necessary to be affected already knows this.  It makes a headline but they have been losing purchasing power on their cash for the better part of a decade now.  I don't see it driving bitcoin adoption.  It won't affect the Dane on the street and large corporations, banks, and other major holders of cash are holding billions of Krone. They couldn't move that kind of money into Bitcoin without massively driving up the exchange rate.

a) you have an IQ of 160+ but most people don't. Most people are too dumb to clean their ass properly. I thus believe it will make all the difference in the world when the nominal interest rate on savings accounts and such, becomes negative. Adjusted for inflation? Most people don't even know what that means. If people see the negative interest deductions on their account, no matter how small, the stampede will start. When Joe and Jane Doe see a -0.01 EUR interest payment in their account it will commence.

b) Danes are not an issue - it is only a small country and this was only done to protect the Krone from EUR inflow. If negative interest is implemented  EUR wide, it will be a whole different ballgame. And your last sentence is what I wanted to imply  

Perhaps todays $400 will be the new $50, what will the new $1200 be? 24x400=9600?

most say about 5000~7000.

[zimmah]

Banker 1: We're inflating as fast as we can! It's not helping the poor.

Banker 2: Kick the machine into reverse also known as inflation warp speed! It will make the rich richer faster and drive up prices. That's sure to help.

On which planet did this conversation happen?  On Earth I have never known a central banker making policies to help the poor.  I am not sure they even know the poors exist.  If they don't want to be poor they should just get more capital like banks do.

Poor? Overall, I am afraid that we will resemble Elysium (sc-fi flick) at some point.
Bitcoin can democratize the capital movement, but will it cause even higher wealth accumulation in smaller % of the population at the same time?
This is unclear.

even if it does, the wealth will not stay in the hands of the wealthy like it does now.

Right now the 'game' is rigged because only the rich are allowed to print even more money, while if the poor do it they'll end up in jail.

The game is rigged even more because the poor have to pay a lot of taxes and get almost no support from the government, while the rich are getting tax cuts and all kinds of fancy ways to avoid paying taxes. In fact, most of the tax money goes directly to the rich in the first place, because the 'debt' the nation owes to the rich (since nations 'borrow' money from the rich, whom created the money from thin air, this is the reason why taxes keep increasing while at the same time they give less and less back to the people). In essence the poor pay tax to the rich, while taxes are supposed to do just the opposite! (The rich should pay more so that the poor have at least a decent standard of living).

With bitcoins, such scams will become much harder to pull of, if not impossible.

[cryptnutter]

I'm just waiting for the stockmarket to CRASH violently, until that happens all economic news are peanuts. Salty and good, at best, but always very small and insignificant.

I see the crash coming as well, but there is no telling what that will do to the BTC price. Could go either way really.

[Lauda]

most say about 5000~7000.

Possibly even higher, this might happen if the negative interest comes in a number of countries. This might be the news that Bitcoin has been waiting for. This is why you shouldn't sell your coins. 

[serenitys]

Are you referring to the crash of the us economy or elsewhere?

In any event, using US as an example, if our economy started its free fall nosedive, the value of the usd would drop rapidly. Those who jumped to "cash out" so to speak and trade for bitcoin, would obviously be getting less since the purchase power still applies in the exchange.

It's boggling sometimes to look at all these factors - the economic instability vs all the new innovations and all these people investing in bitcoin technologies and new breakthroughs in science and medicine - like we're all building and growing while almost oblivious it seems to the foundation crumbling beneath our feet.

Who survives an economic crash where the currency's value has imploded?

[Lauda]

Are you referring to the crash of the us economy or elsewhere?

In any event, using US as an example, if our economy started its free fall nosedive, the value of the usd would drop rapidly. Those who jumped to "cash out" so to speak and trade for bitcoin, would obviously be getting less since the purchase power still applies in the exchange.

It's boggling sometimes to look at all these factors - the economic instability vs all the new innovations and all these people investing in bitcoin technologies and new breakthroughs in science and medicine - like we're all building and growing while almost oblivious it seems to the foundation crumbling beneath our feet.

Who survives an economic crash where the currency's value has imploded?

Maybe once the USD crashes, Bitcoin and the likes of it will replace it? Imagine after a crash, the whole world relying on cryptocurrencies.

[serenitys]

Are you referring to the crash of the us economy or elsewhere?

In any event, using US as an example, if our economy started its free fall nosedive, the value of the usd would drop rapidly. Those who jumped to "cash out" so to speak and trade for bitcoin, would obviously be getting less since the purchase power still applies in the exchange.

It's boggling sometimes to look at all these factors - the economic instability vs all the new innovations and all these people investing in bitcoin technologies and new breakthroughs in science and medicine - like we're all building and growing while almost oblivious it seems to the foundation crumbling beneath our feet.

Who survives an economic crash where the currency's value has imploded?

Maybe once the USD crashes, Bitcoin and the likes of it will replace it? Imagine after a crash, the whole world relying on cryptocurrencies.

OMG I do already! I'm kinda rooting for it actually, if I was to be truly honest. I would love to see bitcoin/crypto become the world currency. It would be a game changer and topple all the wrong empires. Dismantling old school government is one of my fondest dreams.

To the future 

[hd060053]

it wont happen until 25.5  (eu elections).

After that, i am really interested what will happen. I think at least the € will drop significantly.



Anyway, normal people will act only when its already too late - like when there is a 100€ bank withdrawal restriction.

[DeathAndTaxes]

a) you have an IQ of 160+ but most people don't. Most people are too dumb to clean their ass properly. I thus believe it will make all the difference in the world when the nominal interest rate on savings accounts and such, becomes negative. Adjusted for inflation? Most people don't even know what that means. If people see the negative interest deductions on their account, no matter how small, the stampede will start. When Joe and Jane Doe see a -0.01 EUR interest payment in their account it will commence.

Nominal interest rates on checking accounts won't be negative.  People would simply take the money out of the bank.  Until you can enforce negative interest rates of cash (physical paper currency) that will remain an option.  Banks will simply absorb the impact by other means.  They could raise the fees on checking accounts by 1 euro per year as an example, or lower the interest charged on debt products to grow their balance sheet that way and eliminate or reduce the amount of funds they need to transfer to the ECB.

The only people who will see negative interest rates ARE SOPHISTICATED financial types (bond purchasers, pension funds, accountants for major corporations, etc) who already understand the concept of real returns.

[leopard2]

Maybe quite soon?

Tax to rise unless HMRC can raid accounts says PM: Cameron insists taxman must be given new powers to seize money

http://www.dailymail.co.uk/news/article-2624775/Tax-rise-unless-HMRC-raid-accounts-says-PM-David-Cameron-insists-taxman-given-new-powers-seize-money.html

Ohhhh. Does he own Bitcoins and is trying to pump them with this idea? 

[leopard2]

a) you have an IQ of 160+ but most people don't. Most people are too dumb to clean their ass properly. I thus believe it will make all the difference in the world when the nominal interest rate on savings accounts and such, becomes negative. Adjusted for inflation? Most people don't even know what that means. If people see the negative interest deductions on their account, no matter how small, the stampede will start. When Joe and Jane Doe see a -0.01 EUR interest payment in their account it will commence.

Nominal interest rates on checking accounts won't be negative.  People would simply take the money out of the bank.  Until you can enforce negative interest rates of cash (physical paper currency) that will remain an option.  Banks will simply absorb the impact by other means.  They could raise the fees on checking accounts by 1 euro per year as an example, or lower the interest charged on debt products to grow their balance sheet that way and eliminate or reduce the amount of funds they need to transfer to the ECB.

The only people who will see negative interest rates ARE SOPHISTICATED financial types (bond purchasers, pension funds, accountants for major corporations, etc) who already understand the concept of real returns.

Are you the same D&T who elaborated about money laundering implications awhile ago?  Yet don't realize that cash withdrawals are not practically possible due to regulations? In most countries on this planet amounts over 1000-5000 get you in hot water, with deposits being even worse. And deposits you need to do, because cash payments are also not accepted for most transactions.

So no, people cannot have most of their money in cash outside of bank accounts, unter their mattress or whatever.

True, they will absorb if for awhile but not forever, if primerate is -1% you will have a deduction on your checking account for sure.

[DeathAndTaxes]

True, they will absorb if for awhile but not forever, if primerate is -1% you will have a deduction on your checking account for sure.

Tell you what, how about we each put 1 BTC into escrow and if a major bank in the EU charges negative interest on a personal checking account you win.  If they don't by the end of 2014 I win and if you lose you can double or nothing for 2015 and 2016 by doubling the escrowed amount.  Sound good?

There are SO many ways banks can raise revenue that they aren't going to do something as stupid as charge negative interest on depositors.   I mean the CFO would have to be a brain dead chimp to do that.  The negative PR alone would cost them 10x whatever token revenue that raised.  In the US banks pay about 0.2% insurance premium on deposits to FDIC.  There is nothing that prevents them from billing consumers 0.2% of the amount of their deposits but it would be an equally horrible business decision to do so.

[mikis]

I see some confusion going on here, the negative interest rate would be on deposits at the ECB made by private banks in order to stimulate other kinds of investments, private deposits will yield at whatever interest rate your bank applies. Close to 0 anyway in most cases.

The euro is on a negative trend over the dollar since a few days, so buying T Bills would have been a good idea and probably still is. I think that they'll do "whatever it takes" to push it close to 1.20 or so. Otherwise it will blow for the joy of bitcoiners all over the world 

Half Europe is deflating, we will know in early june if the ECB is doing something against it, there's also some talking about a QE or some other sort of assets buying. European elections results may be crucial.

Definitely not the best time to hold euros IMHO