Will we see negative deposit rates at the ECB next month?

I just noticed this comment in Reuters a article:

"Other steps included extending the duration of unlimited cheap liquidity for euro zone banks, injecting about 170 billion euros by stopping tenders that withdrew funds spent on past government bond purchases, and preparing for possible future purchases of asset-backed securities to support small business."

Trying to prevent a run on the Government bond market. Obviously the various Government budget books aren't getting better fast enough (despite all of the promises) and the existing debt needs to be rolled over and over while still accumulating more. You're right OC - they are trying to manufacture 5-10% inflation like what happened after WW2. A more "subtle" form of financial repression that makes the past debt manageable without resorting to outright defaults. But in a world of an ageing already indebted population methinks they've got buckley's.

 

if I was forced to give a figure I would think they, ALL of them now drowning in red ink, would like an inflation rate of well over 10%. More like 25% or even 30%.

That will wipe out (inflate away) the debts in a year or three. The trouble with generating inflation is that it is very easy to start, and extremely difficult to stop. It usually ends in totally destroying the currency, and starting again with a new currency.

Again in my never humble opinion, they will ALL print, and it will be in the trillions if not Quadrillions, eventually. The middle class is doomed!


OC

 

They'll just "revalue" the debt in the new currency after destroying what credibility is left in the current one. Of course by then the wealth of average joe will be completely destroyed.

 

Yes!

 

Mario can sit there and say look there is no deflation, we are at 0.5% growth never mind the last 6 years? of FED easing programs. The US will taper and hand over the money printing baton to europe and the americans will be able to say look we did it theres no deflation....

 

Probably ruthless thinking about this now, but does this mean there could be good buying opportunities ahead in Europe? If the AUD holds it's ground of course...

 

Yes, with a global economy, they are just tag-teaming to share the load, and ultimately the wrath.

 

This is not looking good SS......How long until the entire system blows up? Are you saying the 'illuminati' are actually real? What about all these 'derivatives' they are apparently running/using won't that be enough to keep them ahead of the game???

 

http://www.ecb.europa.eu/stats/monetary/rates/html/index.en.html#data
Negative rate is only on the central banks Deposit Facility.
Basically the Deposit Facility holds the excess reserves of the member banks of the central bank.
Now look at the balance over the years:

Conclusion: this rate is on an amount euro's that sits close to zero on the multiyear term judgement.
To take current data as example:
Intrest rate -0.1%
Balance total 39.91 billion euro.
Amount to pay 39.91 million euro.

What's that, on an global EU scale? Nothing?
See, how misleading it is to select one element out of a whole?
So think twice before making decisions based on woohoo articles about it.