Topic: Negative Interest Rates (Read 2403 times)

injecting money into the economy through quantitative easing and then punishing people for keeping them in bank accounts just spells doom

But also no country can afford increasing interest rates because if so they could not pay their debts back. Any way, it is a doom loop.

I heard that Japan got the same 'problem'.
If there was such a thing in my country I would make sure to turn all my money into either stocks or bitcoin.
I will not pay interest to own money.

I don't think this is very common...
I haven't heard of examples except Switzerland and Sweden, do you have more examples ?

Negative interest rates are common in developed market economy. This is real market, so negative interest rates are also everyday in a whole worldwide markets. 

I used extremely loose monetary policy as an example.  Less extreme figures would be more realistic, perhaps, but the idea is the same either way.

You forgot that I wrote "cashless".  Having no cash changes everything.

Inflation may be a capital killer in other countries, but that is no reason to have negative interest rates (no matter how low inflation is). It is best to reward savers with some real return (net of inflation). Negative interest rates punish savers.

Más:

9)  Lowering interest rates destroys capital!  Dr. Antal Fekete (look him up) writes that when interest rates go down, the "new borrower" has an advantage over the "old borrower" (those who borrowed before at higher rates).  The old borrowers are thus at a disadvantage in that they have a heavier debt burden than new borrowers.  And there are lots more old borrowers than new ones.  This destroys capital!

10)  If ZIRP and NIRP worked, Japan would be doing great after so many years of 0% rates.  Is Japan doing great?  Nope.



EDIT:  So many reasons...  That gives me plenty of material to write up a piece for my hometown paper, hah...

Right... anyway, it was said that Japan has an incredibly low inflation rate. In comparison to the US, it might be worth having that -0.1% with no inflation rather than in reality LOSING money but appearing to gain it. Remember, monetary values can decrease... but Japan is doing fine.

No inflation means that putting your money in a bank with a negative interest rate still gets you overall more money than if you were to deposit it in, let's say, the Bank of America. As previous people had already stated, this also helps to drive the economy. Don't reply without actually reading more deeply into the topic. It might be interesting to see about it. Who knows? You could learn something, instead of purely posting for a tiny amount money. Hypocritical? Sure, I'm in a signature campaign... but at least I take a few minutes (not much time, guys!) to think about what I'm posting.

Thanks.

Well a global negative interest rate is a kind of market failure, I don't think it is possible.
The world would have to be a very capital hostile place, so much that people would accept to pay so they can keep their money safe.

some affect is unstabilezed price and amount on market,but its not for long time,negative interest rate just happen on some area or exchange.

That is definitely true. There are situations when cash becomes worthless (due to hyperinflation). That is similar to a situation where cash is banned. Life definitely goes on, for beggars as well as everybody else.

I think the beggars situation is marginal, in a no-cash society people would simply trade (especially if they have an incentive to do it like the mandatory fees).
So instead of money the beggers would simply receive items (food for instance).

But I believe that even in a cashless society people would still manage to exchange an equivalent, even if it is not backed by the government. (like a kind of checks)

One more:

8:  If they ban cash, the homeless beggars would be cut to pieces if they could not panhandle in the streets or at the stoplights.

That actually would go for almost everyone who is not in a position to have a bank account.  Or anyone who IS poor, the fees would hurt them even worse than those with more wealth.  And the poor are far less likely to have Hard Assets as a defense vs. saving w/ negative rates.

Figures that TPTB are looking at screwing the poor yet again....

First, your assumption uses rates that are nowhere near reality. All CBs that have negative rates are between 0 and -1%, and at rates that low below zero, the banks are just going to eat the loss. No one is loaning money out at negative interest rates, and if rates went so negative that ever became a viable reality, the economy would be so jacked up that there likely wouldn't be any liquidity to make loans at all anyway, because the lending economy would be completely paralyzed with fear of moving money at all.

Second, if the bank is charging you -2% on the loan, that means they are paying you 2% to take out the loan. So it wouldn't matter if you had a legitimate reason to take the loan out, because you would make money for doing so, so you'd take the loan and park it in a mattress and be better off. But this is not a viable happenstance anyway because banks are not giving you interest to take out a loan, so the issue is moot.

Third, banks will continue to eat the loss because they have to be competitive. No bank can get consumers to agree to pay to deposit their money unless all banks were doing it and consumers had no choice. And even then, the consumers would have the choice not to deposit their money, and that eventuality would sap much-needed liquidity from the banks and threaten the banking system, so no CB is going to push rates so negative that passing on negative rates to consumers becomes a likely outcome.

Paying average people to take out loans is quite possible in a cashless world.  If the central bank is "giving" a rate of -8% to banks which deposit money with it, a bank can earn a profit by loaning out the money at -2% (i.e. losing 2% a year is better than losing 8% a year, for the bank.)

For you, it still doesn't make sense to accept the loan, unless you have a special reason.  If you have no compelling reason to borrow the money, the best you can do is to park it in the bank.  But the loan only pays you 2% a year, whereas the bank will charge you a likely 12% a year for that money.  So, the same principle applies as today: borrow only for special reasons.

In a cashless, negative interest world, the part of the math that matters is higher vs. lower (i.e. being less negative is higher.)  The higher-lower comparisons will remain the same.  Where the 0-mark is relative to the various rates, is irrelevant.

Just an elegant way for the elites to continue fleecing the public.

Where are these negative interest rates everybody is talking about?
I have not seen any at my local bank offering this proposed rates at negative percentage.

I ve been reading today interview with SNB president about negative interest rates,he told that it could be done just for shore time it could be very dengerous in long term,already caused some problems Looks like in March thay will change his policy

Negative interest rates don't just magically mean everything to do with banks operates like it's opposite day. Negative interest rates do not mean someone pays you to take out a loan. It only means banks pay the central bank for not making loans.

Yes, I really doubt they'll be paying people to borrow. Imagine if they did... anyone with half a brain would just max out their credit, withdraw the cash, and then rather than spending it they'd just keep it at home while being paid for holding it. All of this just encourages the hoarding of the cash and so that's why they must ban it.