Negative interest rates?

Smaller bank’s capital ratios are lower, hence they are more willing to lend to riskier borrowers, hence they charge more.
 
It's been over 12 months since the huge amount of speculation that we'll see negative interest rates, now everyone is speculating on interest rate rises.

It's from one FUD episode to another another FUD episode.

Whatever happened to Greta or ISIS? :p
 
So by negative rates, what the RBA is really saying is for the banks to lower their lending standards. People/companies that currently can't get banks to lend to them should have no issue in the future?

Atm banks rather hold onto their reserves then lend to deadbeats, but when they are faced with a negative rate they might change their mind.

They are better off just doing a Rudd++, give every person $20k and they will get their beloved inflation.
 
mmm....shiney! said:
It's been over 12 months since the huge amount of speculation that we'll see negative interest rates, now everyone is speculating on interest rate rises.

It's from one FUD episode to another another FUD episode.

Whatever happened to Greta or ISIS? :p
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We will definitely see negative rates soon, no way can global economy recover post covid if FED or ECB or JCB start tapering, stock markets would almost immediately correct. The recent new covid vax resistant strain is just a trigger, FED has already begun tapering mid Nov by 15billion a month. Dont think they can even do any rate rises without crashing all the bubbly markets
 
No, we won’t, if we see negative rates it’ll only be the cash rate not the retail rate.

This narrative has been played for years and its sole function is to pump precious metals prices.

Any talk of tapering will be temporary because it’s the only game in town. QE to infinity until wage growth exceeds the inflation rate.

Which it won’t.
 
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mmm....shiney! said:
No, we won’t, if we see negative rates it’ll only be the cash rate not the retail rate.

This narrative has been played for years and its sole function is to pump precious metals prices.

Any talk of tapering will be temporary because it’s the only game in town. QE to infinity until wage growth exceeds the inflation rate.

Which it won’t.
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I personally think that higher rates will help silver prices by curbing real estate and base metal production. Silver is more affected by secondary supply than interest rates.
 
leo25 said:
They are better off just doing a Rudd++, give every person $20k and they will get their beloved inflation.
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Alternatively, raise the tax-free threshold to $53000 per annum, which will see the lower 2 quintiles of households paying no income tax. My back of the envelope calculations estimate that on a working population of 12.88 million people, that would see an extra $32billion of money injected into the real economy on an annual basis. This would greatly enhance the living standards of those people as they'd have an increase of about 25% and 15% in disposable income without making much of a difference to the wealthiest.
 
mmm....shiney! said:
Alternatively, raise the tax-free threshold to $53000 per annum, which will see the lower 2 quintiles of households paying no income tax. My back of the envelope calculations estimate that on a working population of 12.88 million people, that would see an extra $32billion of money injected into the real economy on an annual basis. This would greatly enhance the living standards of those people as they'd have an increase of about 25% and 15% in disposable income without making much of a difference to the wealthiest.
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Government keep harping on about increasing the minimum wage, yet the quickest, simplest and most effective way to do that would be just raise the tax-free threshold as you said. Just one more example of the useless government saying one thing yet doing another.
 
leo25 said:
Government keep harping on about increasing the minimum wage, yet the quickest, simplest and most effective way to do that would be just raise the tax-free threshold as you said. Just one more example of the useless government saying one thing yet doing another.
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Can't do that , gov needs tax revenue to plug an ever growing black hole of spending.
 
mmm....shiney! said:
Gov doesn’t need taxes to provide revenue, they issue debt for that purpose. Taxes are used to force people to use government issued fiat and to control the amount of money in the real economy.
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Not completely true, what you are talking about are gov's that dont care too much about the budget (which is pretty much most big central banks/govs. nowadays)

However if you dont balance the budget with increased tax revenue, and just depend on debt issuance for spending, the currency gets progressively devalued and value gets inflated away.

There are still many countries with proper fiscal discipline like Singapore / Taiwan / Norway / Denmark / Netherlands / MIddle east (Qatar/Kuwait/etc) that balance their books and regularly have budget surplus every year without needing to issue much debt to fund their gov.

It was not too long ago that we had budget surpluses to boast about.

You can read the treasury website for more info on how they get their revenue, its not just from debt issuance though that part of the equation has ballooned out of control in recent years.
https://treasury.gov.au/review/tax-white-paper/at-a-glance
"Individuals’ income tax is the single most important source of government revenue. Since the mid 1970s it has consistently raised around half of the Australian Government’s tax receipts and continues to be a stable and predictable source of revenue."

I am all for a gold backed currency, like the utah goldbacks they have in USA. but the world unfortunately has gone mostly digital, taxes or not you will have no choice but to transact digitally if you wanna buy anything. it will be fiat CBDCs vs Cryptos next 5-10years, i wonder what will prevail.

Keep on stacking! :D
 
KangaBanga said:
There are still many countries with proper fiscal discipline like Singapore / Taiwan / Norway / Denmark / Netherlands / MIddle east (Qatar/Kuwait/etc) that balance their books and regularly have budget surplus every year without needing to issue much debt to fund their gov.
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No government that has sovereignty over the issuance of currency needs to tax to get revenue. They just choose to.

If they’re running a surplus and gdp is growing then there is no requirement on their part to fund growth with debt.

Proper fiscal policy is ensuring that there is enough currency circulating in the real economy to generate growth, it’s not about balancing budgets. That concept is reserved for those who can’t print money.
 
KangaBanga said:
You can read the treasury website for more info on how they get their revenue, its not just from debt issuance though that part of the equation has ballooned out of control in recent years.
https://treasury.gov.au/review/tax-white-paper/at-a-glance
"Individuals’ income tax is the single most important source of government revenue. Since the mid 1970s it has consistently raised around half of the Australian Government’s tax receipts and continues to be a stable and predictable source of revenue."
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Treasury hasn’t worked out how the system operates yet. They’re still operating in the 60’s. ;)
 
mmm....shiney! said:
Banks raising savings rates. So much for going into negative territory.
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I think the purpose of their lockdowns was to sabotage production and bring about price inflation that has been largely absent the past decade because people were not willing to pay more and the corona lockdowns panic made them willing.
With a rising inflation, back into controlled territory, the zero problem went.
It's quite likely that central planning will do some steeper rate hikes, in order to bring a stock and other market crisis, it's over 10 years ago now, so it's time to edit some savings, stored in a variety of speculative assets, to a much lower amount.
Because, in order to control (both directions) price inflation, new money has to be created, AND existing money has to be wiped, at desired rates, to end up with a desired difference, being the devaluation of existing money, their end goal.
 
Good analysis. Probably one of your posts where I can really understand what you write. :D

See this -> https://www.silverstackers.com/foru...raise-q1-next-year.102731/page-2#post-1230634

Congrats on cashing out of your silver at the top, by the way. o_O

Stock market aside, what do you think of real estate? From my impression, real estate in the EU is doing very well.

Pirocco said:
I think the purpose of their lockdowns was to sabotage production and bring about price inflation that has been largely absent the past decade because people were not willing to pay more and the corona lockdowns panic made them willing.
With a rising inflation, back into controlled territory, the zero problem went.
It's quite likely that central planning will do some steeper rate hikes, in order to bring a stock and other market crisis, it's over 10 years ago now, so it's time to edit some savings, stored in a variety of speculative assets, to a much lower amount.
Because, in order to control (both directions) price inflation, new money has to be created, AND existing money has to be wiped, at desired rates, to end up with a desired difference, being the devaluation of existing money, their end goal.
Click to expand...
 
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