Topic: Fed Implies Possible Negative Interest Rates (Read 1604 times)

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.

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

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?

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.

i am pretty sure a bank would rather garnish people's savings than loan out cash and pay you to borrow it.

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.

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.

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.

Or they might just stuff it under their pillow.
The decision on where to invest depends on the risk appetite of a person.

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.

Agree.
Their decision cause many currency of other country suffer nowadays.

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

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!

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.

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?

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

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

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.

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. 

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

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


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.  


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