Negative interest rates?

Discussion in 'Markets & Economies' started by stackmans, Mar 19, 2020.

  1. spannermonkey

    spannermonkey Well-Known Member Silver Stacker

    Joined:
    Jun 5, 2010
    Messages:
    15,528
    Likes Received:
    1,750
    Trophy Points:
    113
    Location:
    here there everywhere
    I'll give you the $ back
    Less processing fees.
    You should see my banking hours.
    10am- 10:15am
    Tea break/smoko from 10am till 10:15am
    :D
     
    Oddjob, mmm....shiney! and leo25 like this.
  2. alor

    alor Well-Known Member Silver Stacker

    Joined:
    Jun 16, 2011
    Messages:
    11,601
    Likes Received:
    3,539
    Trophy Points:
    113
    Location:
    Pulau Alor ;)
    set a GIANT FIRE PLACE with the bank in the centre of landmark
    see if the dust can be auctioned off
     
  3. leo25

    leo25 Well-Known Member Silver Stacker

    Joined:
    Jun 8, 2010
    Messages:
    3,794
    Likes Received:
    2,069
    Trophy Points:
    113
  4. madaw1

    madaw1 Well-Known Member

    Joined:
    Dec 5, 2011
    Messages:
    1,995
    Likes Received:
    2,738
    Trophy Points:
    113
    Location:
    Great Western Country
    leo25 likes this.
  5. leo25

    leo25 Well-Known Member Silver Stacker

    Joined:
    Jun 8, 2010
    Messages:
    3,794
    Likes Received:
    2,069
    Trophy Points:
    113
    Also something worth a thought. If inflation is running at say -1.5% and a bank charges you -0.5%. Are you getting a negative rate or positive 1%? o_O
     
    66rounds likes this.
  6. mmm....shiney!

    mmm....shiney! Administrator Staff Member Silver Stacker

    Joined:
    Nov 15, 2010
    Messages:
    22,199
    Likes Received:
    5,016
    Trophy Points:
    113
    Location:
    昆士蘭
    Meine Deutsche ist scheisse. But this bit talks about "custody charges" on amounts over 100 000 EUR for a deposit account and 250 000 Euro for something else I don't understand.

    Screen Shot 2020-10-21 at 8.23.09 pm.png

    Seems that they're passing on the cost of holding deposits in the coffers of the ECB to customers, in fact some banks have been charging customers since 2014, long before the EU introduced a negative cash rate.

    https://www.reuters.com/article/us-germany-banks-idUSKCN10N0WV
     
  7. mmm....shiney!

    mmm....shiney! Administrator Staff Member Silver Stacker

    Joined:
    Nov 15, 2010
    Messages:
    22,199
    Likes Received:
    5,016
    Trophy Points:
    113
    Location:
    昆士蘭
    Yeh sounds like the Reserve Vault, but they let you get all of your stuff back (as long as you pay your safety deposit box fees) and you ring in advance and request a time to visit.

    And you're accompanied by two burly bald headed ex-biker types (could be ex-roadies) dressed in black to ensure the integrity of the facility remains in place. I've never met you but I reckon you'd fit the bill. :p
     
  8. BuggedOut

    BuggedOut Well-Known Member Silver Stacker

    Joined:
    Jul 21, 2015
    Messages:
    2,651
    Likes Received:
    952
    Trophy Points:
    113
    Location:
    New South Wales
    The intelligent thing to do would be to apply some critical thinking yourself.

    These guys are bankers, not rocket scientists and they are working from the same playbook. It is not difficult to extrapolate from policy that we have seen come from that playbook elsewhere.

    Australia is not special and it's not that different to other places. Our debt is a bit lower and our economy is a bit stronger and we have handled Covid a bit better too....so we are lagging the global policy trend, that is all.
     
  9. mmm....shiney!

    mmm....shiney! Administrator Staff Member Silver Stacker

    Joined:
    Nov 15, 2010
    Messages:
    22,199
    Likes Received:
    5,016
    Trophy Points:
    113
    Location:
    昆士蘭
    Lol.


    Now that sounds like the same argument I heard on this forum around 10 years ago when members were echoing the views of their favourite hand-wringing "experts", you know the ones - paranoid survivalists or the self-serving precious metals pushers, predicting the crash of the Australian property market because property markets in the US, Ireland, the UK, Belgium etc etc etc etc etc etc in fact across most of the world crashed and we're not that different to those countries are we?

    Now how did that turn out?

    Let me think......

    Mmmmmm.......

    Oh that's right!

    It was a shite call.

    Screen Shot 2020-10-21 at 9.19.55 pm.png

    Forum members who believed the "hand wringers" who were waiting to enter the market delayed their purchase, whilst those who held RE sold and piled their wealth into silver, with both then watching the market run away from them, experiencing what we call in economics, a real-life lesson on opportunity cost.

    Exactly. ;)
     
  10. BuggedOut

    BuggedOut Well-Known Member Silver Stacker

    Joined:
    Jul 21, 2015
    Messages:
    2,651
    Likes Received:
    952
    Trophy Points:
    113
    Location:
    New South Wales
    Nice one.

    Your counter-argument is to equate my comment with something other people said 10 years ago, before I even joined the forum. You even have a graph! How could I possibly argue with that :rolleyes:
     
  11. mmm....shiney!

    mmm....shiney! Administrator Staff Member Silver Stacker

    Joined:
    Nov 15, 2010
    Messages:
    22,199
    Likes Received:
    5,016
    Trophy Points:
    113
    Location:
    昆士蘭
    @BuggedOut, I guess it could be like the old saying about the cause of the American Civil War - which I couldn't be bothered repeating, you can research that one yourself.

    We won't get negative rates just because other countries have negative rates, we'll get negative rates because other countries have negative rates.
     
  12. mmm....shiney!

    mmm....shiney! Administrator Staff Member Silver Stacker

    Joined:
    Nov 15, 2010
    Messages:
    22,199
    Likes Received:
    5,016
    Trophy Points:
    113
    Location:
    昆士蘭
    I did!! And you avoided the charge.

    As Einstein explained, time is relative.

    And yep, you're argument is not that different. :p
     
  13. mmm....shiney!

    mmm....shiney! Administrator Staff Member Silver Stacker

    Joined:
    Nov 15, 2010
    Messages:
    22,199
    Likes Received:
    5,016
    Trophy Points:
    113
    Location:
    昆士蘭
    Screen Shot 2020-10-21 at 9.47.45 pm.png

    You're boring me, I've even reverted to making memes.
     
  14. jultorsk

    jultorsk Well-Known Member Silver Stacker

    Joined:
    Oct 17, 2016
    Messages:
    1,385
    Likes Received:
    2,260
    Trophy Points:
    113
    Location:
    Australia
    https://www.reuters.com/article/australia-economy-rates-int-idUSKBN27J0AQ

    Australia central bank cuts rates to near zero, ramps up bond buying

    SYDNEY (Reuters) - Australia’s central bank trimmed interest rates to near zero on Tuesday and ramped up its bond-buying plans in a much-needed salve to aid economic recovery from the country’s worst downturn in a generation.

    The Reserve Bank of Australia (RBA) said it would buy A$100 billion ($70.4 billion) of government bonds with maturities of around five to 10 years over the next six months, a more aggressive pace than some had expected.

    The RBA also cut its target for three-year bond yields to 0.1%, from 0.25%, to align with the cash rate, which, it pledged will remain unchanged for at least three years.

    --
    With Tuesday’s easing, the RBA was also now running low on rate ammunition.

    Lowe emphasised the RBA could and would buy more bonds if needed, though he argued a move to negative interest rates was “extraordinarily unlikely”.

    “The RBA has now hit the bottom of the barrel in terms of conventional interest rate cuts, but as other major central banks have shown, there is still plenty it can do in terms of ongoing quantitative easing,” said AMP Chief Economist Shane Oliver.

    ------
    https://www.theguardian.com/austral...shes-cash-rate-historic-low-australia-economy

    Lowe said the dire state of the Australian economy meant people should not expect the cash rate to go up again for three years. He committed the RBA to the “national priority” of growing jobs and wages, promising to wade into the bond market at an even larger scale if necessary.

    “The reserve bank is not out of firepower,” he said. “If we need to do more, we can and we will.”
    --
    Lowe said by the end of the buying program the RBA would own about 15% of government bonds on issue but, he noted, other central banks owned far more.

    He said “the proper functioning” of the bond market was the only constraint on the RBA’s ability to buy bonds.

    We can effectively create money by crediting the bank accounts they have with us, and we can effectively do that without limit,” he said. Lowe said the bank board “views addressing the high rate of unemployment as an important national priority”.

    Children playing with stacks of hyperinflated currency during the Weimar Republic, 1922.jpg
     
    madaw1 and 66rounds like this.
  15. leo25

    leo25 Well-Known Member Silver Stacker

    Joined:
    Jun 8, 2010
    Messages:
    3,794
    Likes Received:
    2,069
    Trophy Points:
    113
    lol Lowe is an idiot. Their understand of the words "functioning" & "constraint" is inconsistent with every dictionary.
     
    Last edited: Nov 3, 2020
  16. BuggedOut

    BuggedOut Well-Known Member Silver Stacker

    Joined:
    Jul 21, 2015
    Messages:
    2,651
    Likes Received:
    952
    Trophy Points:
    113
    Location:
    New South Wales
    He doesn't really have any choice but to follow the playbook.

    [​IMG]
     
    leo25 and 66rounds like this.
  17. alor

    alor Well-Known Member Silver Stacker

    Joined:
    Jun 16, 2011
    Messages:
    11,601
    Likes Received:
    3,539
    Trophy Points:
    113
    Location:
    Pulau Alor ;)
    Norwegians got paid to use electricity as prices fall below zero
     
  18. bubblebobble2

    bubblebobble2 Well-Known Member Silver Stacker

    Joined:
    Feb 6, 2012
    Messages:
    4,111
    Likes Received:
    2,164
    Trophy Points:
    113
    Location:
    P!MP land-Seedeneey
  19. mmm....shiney!

    mmm....shiney! Administrator Staff Member Silver Stacker

    Joined:
    Nov 15, 2010
    Messages:
    22,199
    Likes Received:
    5,016
    Trophy Points:
    113
    Location:
    昆士蘭
    Lol.
     
  20. mmm....shiney!

    mmm....shiney! Administrator Staff Member Silver Stacker

    Joined:
    Nov 15, 2010
    Messages:
    22,199
    Likes Received:
    5,016
    Trophy Points:
    113
    Location:
    昆士蘭
    Apparently the cash rate and bond markets are meant to "function" in a manner that "constrains" interest rate volatility.

    The bond market is also a nice little gravy train for banks. :p
     

Share This Page