http://www.theaustralian.com.au/bus...sh-pours-in-cash/story-fn91wd6x-1226108870508 Money torrent prompts US bank to charge to hold cash Talk about negative interest. What's next, banks pay you to take out a loan?
What a spectacular idea!!! We could charge the banks an establishment fee, set up fee, valuation fee, paying out the loan fee and my personal favourite - an ADMINISTRATION fee!!!!
FED board members have publicly stated this awhile ago. If they could charge interest on savings accounts they would in order to force money into markets.
This is a sure sign that investors are willing to accept a substantial loss of purchasing power over time rather than take the risk of putting the money to work in the real economy. Even official US price inflation data shows that the Treasury yield curve out to ten years is negative. Right now, that doesn't matter, especially to the big institutional investors. They are willing to accept the erosion of the purchasing power of the money because they can see no other "safe" means of preserving any purchasing power at all, especially over the "long" term and most especially in the real economy.
You hear about so much (funny) money floating around yet everyone you meet in the 'real' economy seems to have so little of it..
That's because they don't (and they don't want it). Since the banks took all the free handouts from the Fed they've been very reluctant to hand it out.
Well this goes back to money being a store of wealth and not just a medium of exchange. Just about every other store of wealth costs you for storage, be it bullion in a secure bank vault or grain in a silo, not only does it cost you but if you put your wealth into grains etc. you actually get spoilage so your store of wealth goes down in value. The fact that you can currently store something and get more of it back should be the thing that worries people, how can that be possible without something dodgy going on?
If you get rid of fractional reserve banking, I suspect that negative interest rates would become pretty common for at call accounts anyway - if the bank can't lend it out while you're not using it they're not going to give you interest on it either.
