Eurozone offically trials deflationary policy

[Cranky4u]

http://www.news.com.au/finance/european-central-bank-enters-unchartered-territory-with-negative-interest-rates/story-e6frfm1i-1226945803950

Eurozone offically trials a deflationary policy with the ECB interest rate set at 0-.1%. Effectively penalising any banks for leaving money in the banking sector rather than loaning out to companies or people.

Are they taking a leaf out of the deflationary backbone of some cryptocurrencies?

[greenlion]

No, this is the exact opposite of deflation.

Setting lower (or negative) interest rates increases the money supply.

[zimmah]

Forcing the banks to create loans will bring more debt into to economy. More debt equals more fiat, because our money is based on debt.

This will mean inflation in the short term, and more poor people in the long term (someone will need to pay their debts sometime).

That's the whole thing, all this debt based fiat currency is giving us the illusion of wealth, while in reality every dollar you own is backed by the debt of someone else. Or maybe even backed by your own debt.

[waldox]

gunna see lots of companies holding cash in their vaults

[okthen]

http://www.news.com.au/finance/european-central-bank-enters-unchartered-territory-with-negative-interest-rates/story-e6frfm1i-1226945803950

Eurozone offically trials a deflationary policy with the ECB interest rate set at 0-.1%. Effectively penalising any banks for leaving money in the banking sector rather than loaning out to companies or people.

Are they taking a leaf out of the deflationary backbone of some cryptocurrencies?

This is going against freedom and the fundaments of capitalism.
I don't think they would be able to control/apply sanctions to cryptos tho.

[ShakyhandsBTCer]

Forcing the banks to create loans will bring more debt into to economy. More debt equals more fiat, because our money is based on debt.

This will mean inflation in the short term, and more poor people in the long term (someone will need to pay their debts sometime).

That's the whole thing, all this debt based fiat currency is giving us the illusion of wealth, while in reality every dollar you own is backed by the debt of someone else. Or maybe even backed by your own debt.

If people can successfully invest the money they borrow and get a return greater then the interest rate they pay then they will profit and the economy will flourish. If they cannot make more money then what they pay in interest then their standard of living will decrease.