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It makes a lot of sense from a monetary perspective. Indicidentally, the elmination of physical cash would make this process a lot easier and is one of the main reasons that might be a good idea.
I've read about it being used if our system was entirely electronic and the theory is definitely interesting. I just seems like interest rates are nowhere close to returning. We've nearly bottomed out and ECU went even farther.
we lose more money through inflation that we gain with these interest rates
It makes a lot of sense from a monetary perspective. Indicidentally, the elmination of physical cash would make this process a lot easier and is one of the main reasons that might be a good idea.
we lose more money through inflation that we gain with these interest rates
Yeah, though given how minimally negative they are, it's not worth the hassle of converting to physical cash to avoid charges so this should be workable.Yeah, probably.
I don't understand this point. Who is "we"?
Everyone. Society. Inflation rate > interest rate = effectively negative interest rate for holding money.
Everyone. Society. Inflation rate > interest rate = effectively negative interest rate for holding money.
Everyone/society doesn't gain or lose anything from the transaction or from inflation. That's what has me confused.
The money you have in the bank loses purchasing power when inflation rate > interest rate. It encourages spending, right? That's the whole point.
I don't understand this point. Who is "we"?
Although negative v. positive is just a technicality, I have to say that it isn't exactly encouraging to see banks handing out currency as a loss-leader. It has the indicia of a baby ponzi scheme.
The money you have in the bank loses purchasing power when inflation rate > interest rate. It encourages spending, right? That's the whole point.
And so begins the most counter-intuitive monetary experiment ever. It will be interesting to see how this turns out.
So what's happening is that banks get charged a very small fee for excess reserves. I'm not sure how that relates to a Ponzi scheme. Can you elaborate? "Ponzi scheme" seems like "terrorism," "neoconservative" or "bailout"--something that used to actually mean something but now just gets tossed around to insinuate something negative about something the speaker doesn't like.