Economy ECB gets negative interest rates

[Lead]

There's an element of desperation that you project when you go to negative interest rates. "We'll pay you to take and use our money." Why? Because we have faith that things will turn around ...

Now that's to some extent artificial, and you can't say that -0.1% is really that much different than 0%, but the willingness to ignore the message and say yes, we literally will loan our currency out at nominal negative interest rates suggests extreme desperation. It's the monetary policy equivalent of this:

And then you'll have it...

 

[Zankou]

I don't know if I really understand this, but European banks aren't lending enough even with a low required reserve ratio so the ECB made it so that it will cost banks to hold excess reserves in the hopes that this will provide an incentive to them to lend more?

I'm not sure why a bank deposits its reserves at the ECB, or why the ECB would want to discourage maintaining the reserves there versus the economy more broadly. Seems like you might be effectively softening reserve requirements by encouraging the reserves to be held in more risky fashion? I would be surprised if banks park deposits with the ECB that in the aggregate exceed their required reserve levels. But I don't know either. Don't know much about reserves, except that IDL tells me that in fractional form they are the tools of our Reptilian Rothschildian Overlords.

 

[IDL]

I'm not sure why a bank deposits its reserves at the ECB, or why the ECB would want to discourage maintaining the reserves there versus the economy more broadly. Seems like you might be effectively softening reserve requirements by encouraging the reserves to be held in more risky fashion? I would be surprised if banks park deposits with the ECB that in the aggregate exceed their required reserve levels. But I don't know either. Don't know much about reserves, except that IDL tells me that in fractional form they are the tools of our Reptilian Rothschildian Overlords.

Just for the record, the real power comes from the creation of the currency by the privately owned central banks. Fractional reserve is a separate thing.

As to ridiculing people who look into who those people are, and how much power they wield, that is Pavlovian programming. Don't look behind the curtain.

 

[Uchi Mata]

Just for the record, the real power comes from the creation of the currency by the privately owned central banks. Fractional reserve is a separate thing.

As to ridiculing people who look into who those people are, and how much power they wield, that is Pavlovian programming. Don't look behind the curtain.

I bet I could program an IDL post generator in about a day at most. Just put in basic grammar and tell it to liberally sprinkle in 'Banker', 'Elite', 'Pavlovian', 'Globalist' and a few other words. Hell, I could probably just text mine an Alex Jones transcript and we'd be set.

 

[IDL]

I bet I could program an IDL post generator in about a day at most. Just put in basic grammar and tell it to liberally sprinkle in 'Banker', 'Elite', 'Pavlovian', 'Globalist' and a few other words. Hell, I could probably just text mine an Alex Jones transcript and we'd be set.

Sure.

 

[Seriously-Dead]

It's not counter-intuitive at all. The idea that that's what's needed is pretty basic. The problem has always been that the existence of physical cash sets a zero limit on how low rates can be because banks can always just keep their reserves in cash. But as noted earlier in this thread, preventing that hassle is worth an extremely low negative rate.

I understand why it's being done, but you have to realize that ideas like the Gessell tax were absolutely fringe ideas for a very long time, Gessell only being recognized as influential by a few prominent economists like Keynes. It's only in the last decade or so that these ideas have been taken seriously by large organizations.

And in terms of a layman, it's extremely counter-intuitive. Being punished for holding money (reserves/savings) has historically been very irregular, and your average joe will probably scratch his head at the thought of it. There is an intuitive idea of risk minimization through savings that many people hold - you are inherently more fragile when exposing yourself to financial risks by liquidating your funds, as opposed to stuffing cash under your mattress indefinitely for use during a rough patch (that is, if the money doesn't drastically depreciate via inflation). I mean a -0.1% rate isn't much of a "punishment" for regular folk, but whatever, it's probably just the beginning.