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Thread: Negative interest rates

  1. #1

    Default Negative interest rates

    I was listening to the radio on my way home and heard that Yellen is thinking about moving the US Prime Lending Rate into negative territory.

    http://www.businessinsider.com/janet...t-rates-2016-2

    http://money.cnn.com/2016/02/11/news...len/index.html

    This doesn't sound good for the economy. If I understand the articles correctly, it is a dangerous move by any money manager, because it is far more likely to create unintended consequences than produce a healthy economy.

    I am also hearing that countries have been dumping gold on the market to artificially lower it's value. This sounds counter to any plan of sub zero interest rates. The intrest rates will de-value currency, and when that happens, people want to have things of real value, not paper.

    What is the end game here?
    "You can't get rich in politics, unless you are a crook." H.S.Truman

  2. #2
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    So they are going to pay me to take a loan.....that makes sense
    Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety.

  3. #3
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    The end game for the Fed and Central Banks around the globe is to prolong the cycle time between recessions, or at the very least, give the political machine tI me to right itself and start making policy th a ton promotes growth.

    I do agree that negative interest rates are not the correct solution for the US at this time.

    Joe - NY

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    Sounds like another little alarm should be going off letting us know things are about to get closer to the edge of the cliff. They have tried all their tricks, even changing the way things are calculated to "prove to the free cheesers things are just peachy under the leadership on the idiot in charge. When they start passing out free Happy meals and starbucks, it's time to hit the dusty trail ! Next time I make someone a loan I guess I'll just do prime + 6 1/2 %.
    Last edited by jnr0104; 02-15-2016 at 01:13 PM.

  5. #5
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    Quote Originally Posted by Tdale View Post
    So they are going to pay me to take a loan.....that makes sense
    I think it means we have to pay them to keep our money in the bank.

  6. #6
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    The reason for Negative interest rates is rather obvious. The world economies are about to crash and central banks everywhere are doing everything possible in their power to push that collapse off for another day or month or year.
    It is like building a dam to totally stop a river. The dam must be built higher and higher and higher but eventually the river will break through.

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    Quote Originally Posted by bambam View Post
    I think it means we have to pay them to keep our money in the bank.
    Ding, ding, ding, we have a winner!

    But seriously though, why would they do that? Wouldn't that just mean massive bank runs, or they think people would just go along with it and lose money? Isn't the goal a cashless society? Or at least that's what I've heard. Or will this be a catalyst to push for something else, like a central bank* or something? I'm asking seriously, I really don't know, I'm hoping someone more knowledgeable about banking than myself could answer.

    *Edited to say by "Central Bank" I don't mean like the Fed, I mean like all citizens have to keep their money in one central system. So unlike now, where I use a local credit union, I'd be forced to use some government controlled bank to keep my money. That way the government can keep tabs on where everyone's money is going.
    Last edited by Frankie_G; 02-15-2016 at 02:18 PM. Reason: Clarify

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    Quote Originally Posted by Frankie_G View Post
    I'm asking seriously, I really don't know, I'm hoping someone more knowledgeable about banking than myself could answer.
    Majored in double-naught spying, with double minors in brain surgery and federal reserve policy analysis...

    Think the reasoning is that you'll spend the money since saving it causes a loss. Spending money generates sales, improves the economy. This (in the Fed's eyes) is better than allowing deflation, where falling prices leads people to hold their money and wait for a lower price (which hurts the economy/company profits).
    Everything marked, everything 'membered. You wait, you'll see.

  9. #9
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    Quote Originally Posted by marked View Post
    Majored in double-naught spying, with double minors in brain surgery and federal reserve policy analysis...

    Think the reasoning is that you'll spend the money since saving it causes a loss. Spending money generates sales, improves the economy. This (in the Fed's eyes) is better than allowing deflation, where falling prices leads people to hold their money and wait for a lower price (which hurts the economy/company profits).
    That makes sense then. Kinda like the Obama stimulus plan idea, get people to go spend money to make it look like things are going better. But what about people who just take their money out of the bank and don't spend?

    And also, I'd love to know what college you attended, that sounds like an awesome program, sign me up!

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    Quote Originally Posted by Frankie_G View Post
    That makes sense then. Kinda like the Obama stimulus plan idea, get people to go spend money to make it look like things are going better. But what about people who just take their money out of the bank and don't spend?
    That's what I'd do, stuff the mattress with it. With all the recent changes in cash withdraws (and deposits) wonder if we'll be able to get it out in cash?

    Quote Originally Posted by Frankie_G View Post
    And also, I'd love to know what college you attended, that sounds like an awesome program, sign me up!
    College? Learned that in elementary skool
    Everything marked, everything 'membered. You wait, you'll see.

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