After years of money printing, aka Quantitative Easing, it appears that banksters are taking another step to penalise savers and reward gamblers in the financial casino. Interest rates had been suppressed to zero and are now heading towards the negative territory. What does that mean? Putting money on the bank now incurs a penalty once interest rates go below the line. Not only will your money shrink, Cyrus has set precedent for financial theft – seizure of money deposited in banks. We are entering unchartered waters in the financial world. Is it time to withdraw all monies from the banking system and keep them under the pillow?
Bloomberg Quicktake – Less Than Zero, When Interest Rates Go Negative
“Imagine a bank that pays negative interest. Depositors are actually charged to keep their money in an account. Crazy as it sounds, several of Europe’s central banks have cut key interest rates below zero. For some, it’s a bid to reinvigorate an economy with other options exhausted. Others want to push foreigners to move their money somewhere else. Either way, it’s an unorthodox choice that has created distortions in financial markets. Some commercial banks have started to pass negative rates onto their customers. It’s a strategy that could ultimately backfire.
The European Central Bank chose to experiment with negative rates before turning to a bond-buying program like those used in the U.S. and Japan. It was the first major central bank to venture into negative territory and its deposit rate reached minus 0.2 percent in September, a level President Mario Draghi said was the “lower bound.” It effectively punishes banks that hoard cash at the central bank instead of extending loans to businesses or to weaker lenders. Sweden is using a similar combination of negative rates and bond-buying. Denmark pushed rates deeper into negative territory to protect its currency’s peg to the euro and Switzerland moved its deposit rate below zero for the first time since the 1970s. Since central banks provide a benchmark for all borrowing costs, negative rates spread to a range of fixed-income securities. By the end of March, more than a quarter of the debt issued by euro zone governments had negative yields. That means investors holding to maturity won’t get all their money back. While banks are reluctant to pass on negative rates for fear of losing customers, UBS has complained that its earnings are being crimped and Julius Baer began to charge large depositors for holding their cash.”
SHFTPlan.com –Expert Says “Banning Cash” The Only Solution to Negative Interest Market Problems
“As everyone knows by now, the Federal Reserve’s main tool in economic warfare has become hyper low interest rates and, thus, extremely cheap money for large institutions vis-à-vis the controversial reign of QE – quantitative easing.
Now, the how-low-can-you-go climate has created negative interest rates, meaning not only that many investments carry no return but that many deposits cost money.
Well-known Citigroup economist William Buiter says the solution to this backwards market is to reign in the appeal of normal currencies like cash – because it is “causing problems” for central bank manipulation:
Negative interest rates are rendered ineffective by the “effective lower bound” – essentially the point at which a reasonable person would stop depositing money into banks and bonds at cost and instead hold cash, which while it doesn’t produce interest, certainly remains liquid and tangible.
From an economist point of view however, it is cash holders who must be reigned in (not Wall Street or the central banks):
The solution? For these big players, it is a simple matter of banning, or at least penalizing, cash and other straight forward currencies with additional transaction fees:”
The great mattress sale in on. Stock up on mattresses and pillows to stuff your cash, if you still have any left.
Let your conversation be without covetousness; and be content with such things as ye have: for he hath said, I will never leave thee, nor forsake thee.