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European Central Bank adopts negative interest rates

DA60

DA60

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'The European Central Bank on Thursday cut interest rates and took a raft of unconventional steps to prevent the 18-country eurozone from sliding into a bout of deflation that could kill off a muted economic recovery.

The ECB's steps aimed to raise inflation and push more credit into an economy where lending is weak. The steps include cheap, long term loans to banks, tied to the understanding banks would loan the money to businesses, boosting growth.

The ECB also took the unorthodox and untested step of imposing a negative interest rate on money banks deposit with it, an attempt to push them to lend that money, not hoard it.

The actions contributed to a rally in European stock markets and a further fall in the value of the euro.

The ECB took the conventional step of cutting its main interest rate, the refinancing rate, from a record low of 0.25 per cent to 0.15 per cent. It went well beyond that, however, reducing the rate it pays on money deposited by banks from zero to minus 0.1 per cent.'

European Central Bank adopts negative interest rates - Business - CBC News
 
DA60 said:
'The European Central Bank on Thursday cut interest rates and took a raft of unconventional steps to prevent the 18-country eurozone from sliding into a bout of deflation that could kill off a muted economic recovery.

The ECB's steps aimed to raise inflation and push more credit into an economy where lending is weak. The steps include cheap, long term loans to banks, tied to the understanding banks would loan the money to businesses, boosting growth.

The ECB also took the unorthodox and untested step of imposing a negative interest rate on money banks deposit with it, an attempt to push them to lend that money, not hoard it.

The actions contributed to a rally in European stock markets and a further fall in the value of the euro.

The ECB took the conventional step of cutting its main interest rate, the refinancing rate, from a record low of 0.25 per cent to 0.15 per cent. It went well beyond that, however, reducing the rate it pays on money deposited by banks from zero to minus 0.1 per cent.'

European Central Bank adopts negative interest rates - Business - CBC News
Click to expand...

I guess we will have to wait and see how it plays out. If the USA Banking program is any example, then it's just another screw job and the "rich get richer," Bank monies from gov't should be tied to entreprenureal endeavors and targetted loans that really make "labor" jobs. Renewable energy, new products, credits for small family farms, anything except MIC. Everybody goes broke with deflation, especially the banks. "Mark to Market" should be law everywhere.
 
DA60 said:
'The European Central Bank on Thursday cut interest rates and took a raft of unconventional steps to prevent the 18-country eurozone from sliding into a bout of deflation that could kill off a muted economic recovery.

The ECB's steps aimed to raise inflation and push more credit into an economy where lending is weak. The steps include cheap, long term loans to banks, tied to the understanding banks would loan the money to businesses, boosting growth.

The ECB also took the unorthodox and untested step of imposing a negative interest rate on money banks deposit with it, an attempt to push them to lend that money, not hoard it.

The actions contributed to a rally in European stock markets and a further fall in the value of the euro.

The ECB took the conventional step of cutting its main interest rate, the refinancing rate, from a record low of 0.25 per cent to 0.15 per cent. It went well beyond that, however, reducing the rate it pays on money deposited by banks from zero to minus 0.1 per cent.'

European Central Bank adopts negative interest rates - Business - CBC News
Click to expand...

The people i listen to have been warning of this for over a year now, saw this coming from a mile off. Feels good to know the people i listen to are often correct on their calls.
 
DaveFagan said:
I guess we will have to wait and see how it plays out. If the USA Banking program is any example, then it's just another screw job and the "rich get richer," Bank monies from gov't should be tied to entreprenureal endeavors and targetted loans that really make "labor" jobs. Renewable energy, new products, credits for small family farms, anything except MIC. Everybody goes broke with deflation, especially the banks. "Mark to Market" should be law everywhere.
Click to expand...


Unlike what they tell us, the banks are insolvent and have been for many years now. Yes they are still insolvent enjoy.
 
DA60 said:
'The European Central Bank on Thursday cut interest rates and took a raft of unconventional steps to prevent the 18-country eurozone from sliding into a bout of deflation that could kill off a muted economic recovery.

The ECB's steps aimed to raise inflation and push more credit into an economy where lending is weak. The steps include cheap, long term loans to banks, tied to the understanding banks would loan the money to businesses, boosting growth.

The ECB also took the unorthodox and untested step of imposing a negative interest rate on money banks deposit with it, an attempt to push them to lend that money, not hoard it.

The actions contributed to a rally in European stock markets and a further fall in the value of the euro.

The ECB took the conventional step of cutting its main interest rate, the refinancing rate, from a record low of 0.25 per cent to 0.15 per cent. It went well beyond that, however, reducing the rate it pays on money deposited by banks from zero to minus 0.1 per cent.'

European Central Bank adopts negative interest rates - Business - CBC News
Click to expand...

You are getting charged to put your money in a bank? 100 dollars deposited means you can take 99 out. Start stuffing the mattresses!
 
DA60 said:
'The European Central Bank on Thursday cut interest rates and took a raft of unconventional steps to prevent the 18-country eurozone from sliding into a bout of deflation that could kill off a muted economic recovery.

The ECB's steps aimed to raise inflation and push more credit into an economy where lending is weak. The steps include cheap, long term loans to banks, tied to the understanding banks would loan the money to businesses, boosting growth.

The ECB also took the unorthodox and untested step of imposing a negative interest rate on money banks deposit with it, an attempt to push them to lend that money, not hoard it.

The actions contributed to a rally in European stock markets and a further fall in the value of the euro.

The ECB took the conventional step of cutting its main interest rate, the refinancing rate, from a record low of 0.25 per cent to 0.15 per cent. It went well beyond that, however, reducing the rate it pays on money deposited by banks from zero to minus 0.1 per cent.'

European Central Bank adopts negative interest rates - Business - CBC News
Click to expand...

The Swiss did something similar once or twice. But their reason to do so was quite different. They wanted to stop money poring into the Franc.
In this case it is to force lending into bad risky countries and companies.
 
DaveFagan said:
I guess we will have to wait and see how it plays out. If the USA Banking program is any example, then it's just another screw job and the "rich get richer," Bank monies from gov't should be tied to entreprenureal endeavors and targetted loans that really make "labor" jobs. Renewable energy, new products, credits for small family farms, anything except MIC. Everybody goes broke with deflation, especially the banks. "Mark to Market" should be law everywhere.
Click to expand...

It's basically nothing more than forced lending and forced spending.

I'll say this much tho - I have never heard of a "negative interest rate."

It appears what the EU is attempting to do is force an "economic boom" with this nonsense policy.

I wonder how they're handling investments???

And as far as the "rich getting richer" I don't see how that is even remotely possible considering the government(s) are basically forcing people to spend and not save - which is the entire point of this nonsense in the first place.
 
joG said:
The Swiss did something similar once or twice. But their reason to do so was quite different. They wanted to stop money poring into the Franc.
In this case it is to force lending into bad risky countries and companies.
Click to expand...

The entire problem starts and ends with the Euro. That was one of the worst economic ideas ever.
 
Want to see how fast a bank can lose my account, start charging me interest to lend my cash to others.
 
grip said:
Want to see how fast a bank can lose my account, start charging me interest to lend my cash to others.
Click to expand...

That's not what this is about.
 
Mr.Nick said:
The entire problem starts and ends with the Euro. That was one of the worst economic ideas ever.
Click to expand...

The execution was certainly miserable and probably it was illegal as well.
 
Rainman05 said:
That's not what this is about.
Click to expand...

To a certain extent I am afraid it is. This is an obvious manipulation of the exchange rate and aimed in good part towards improving Euroland's competitiveness. I am not sure that it is allowed under WTO regulation.
 
joG said:
The execution was certainly miserable and probably it was illegal as well.
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I agree 100% and I have absolutely no idea how they got away with that scam.

It's quite clear economists had no say in any of it and the Euro was just a fantasy of European politicians who wanted to "spread the wealth."

Now they're trying to force spending and lending with this new nonsense plan - presumably to collect taxes via transactions.

In a shade, it reminds me of Clintons community reinvestment act - just not as severe and twisted.
 
Blue_State said:
You are getting charged to put your money in a bank? 100 dollars deposited means you can take 99 out. Start stuffing the mattresses!
Click to expand...

Start? LOL been stuffing it for years now! screw the banksters.
 
Also, I bet Europeans will start hoarding money themselves like people did in the US back around the turn of the 20th century or around the Great Depression.

I don't know what the hell these European idiots are thinking?

If I had investments in European stock or the Euro I would pull out immediately...

Also, given these new policies what's to stop another country (say the Saudi's) from literally buying the European economy then holding it hostage?
 
Blue_State said:
You are getting charged to put your money in a bank? 100 dollars deposited means you can take 99 out. Start stuffing the mattresses!
Click to expand...

That's exactly what I was thinking lol.

It seems they're trying to destroy the entire concept of the bank. They're forcing them to lend then giving no one any incentive to save with a bank...

So what the hell happens to the banks when they all shut their doors and everyone is storing their money in coffee cans in their backyards?
 
Mr.Nick said:
That's exactly what I was thinking lol.

It seems they're trying to destroy the entire concept of the bank. They're forcing them to lend then giving no one any incentive to save with a bank...

So what the hell happens to the banks when they all shut their doors and everyone is storing their money in coffee cans in their backyards?
Click to expand...

It will kill growth.
 
Blue_State said:
It will kill growth.
Click to expand...

Of course it will, but it will spur a lot of taxation hence grow the government.

I mean they're basically destroying banks or the concept of a bank..
 
grip said:
It is too me.
Click to expand...

No, it's not to you, it's to banks.
You will still get the same interest you did on your savings account.

By offering negative interest rates to bank you are encouraging banks to offer loans at low rates.

So when I, the ECB, give you, the bank, a loan at NO INTEREST, I'm giving you a chance to make money on my terms. So I'll give you 10mil euros with no interest means that 10 years from now, you'll still have to pay me back just the 10mil euros. You can do nothing with that money and you'd lose or win nothing over those 10 years. Ofc, I, the ECB, tell you to loan those 10mil euros at low interest to people who wanna... I don't know, buy cars. It's basically a stimulus to the car industry. So I tell you to loan all that 10mil euros at 1% interest to people who wanna buy cars. At the end of the day, you make money and when you have to pay me back, you'll have earned something. Better than earning nothing because when you try and give loans to people who wanna buy cars are 5% interest, they don't take them. In reality, it's a stimulus to the car industry, a subsidy basically and a way to make some of my banker friends richer.

But when I give you negative interests, I, the ECB, will tell you : take 10mil euros, loan it the way I tell you to loan it (say, for start-up businesses and the interest at 0.5%) and I'll pay you a 0.1% of the value of the loan for 5 years. So you'll be making money from the 0.5% interest that you get from people who wanna do start-ups and the 0.1% from me and 10 years from now when you give me back the 10mil euros, you'll have made a bunch of money.

Now ofc, I, the ECB, in order to give you the 0.1% of the total value in negative interest, I have to print out money. Which means deflation. which means the euro goes down in value. Because the euro is a strong currency and has just 0.5% inflation as opposed to say, the dollar which has a 2% inflation rate .
Current US Inflation Rates: 2004-2014 | US Inflation Calculator
I will effectively make the euro less valuable in contrast to other currencies. Which is both good and very, very bad. It's going to be a kick in the nuts to heavily indebted countries that owe debt to non-EU countries. Why non-EU countries? Because as it's been seen, with countries like Greece and Portugal, it's been something called "restructuring of debt" in the EU which basically was an adjusting of the debt levels of the EU to not be ****ed by rate of the euro.

So what the ECB is trying to do get the euro at a 0.7% inflation rate. Which again, it's good and bad. Most countries agree on a 1.5-2.5% inflation rate to be optimal.
 
Mr.Nick said:
Also, I bet Europeans will start hoarding money themselves like people did in the US back around the turn of the 20th century or around the Great Depression.

I don't know what the hell these European idiots are thinking?

If I had investments in European stock or the Euro I would pull out immediately...

Also, given these new policies what's to stop another country (say the Saudi's) from literally buying the European economy then holding it hostage?
Click to expand...

You are incompetent in such discussions.
I made a post, #20, read it, understand it and become enlightened.

Blue_State said:
It will kill growth.
Click to expand...

No, it won't.

You too are incompetent in such discussions. Same advice, read post #20
 
Not gonna work guys, its not going to work.

Hell, why dont we just start up the Subprime market again ?
 
Rainman05 said:
You are incompetent in such discussions.
I made a post, #20, read it, understand it and become enlightened.



No, it won't.

You too are incompetent in such discussions. Same advice, read post #20
Click to expand...

What a joke.... The only incompetent person here is you.

What do you think will happen with forced lending and "negative interest rates?"

All that does is force spending and without interest rates an economy cannot grow" - "free for all spending" doesn't grow an economy.

Oh not to mention it makes banks obsolete if they're charging you to hold your money....

This is nothing more than a state sponsored armed robbery...

This will not grow an economy - this will just invite people to start hording money - which they will begin doing.

The funniest part or ironic part about this idea was the Euro.... The European market is crashing because of the Euro, and these ****heads solution is to kill the banks and force lending/spending.

The way they handled this situation is the same way a 12-year old would handle the situation (and I might be too generous there)...

I understand economics - maybe not the pseudo-economics that the EU has created which is fantasy land economics which make Keynesian economics look like true capitalism (which is part of the problem) but I do know this - this idea will financially CRUSH the EU and create economic chaos...
 
Mr.Nick said:
What a joke.... The only incompetent person here is you.

What do you think will happen with forced lending and "negative interest rates?"

All that does is force spending and without interest rates an economy cannot grow" - "free for all spending" doesn't grow an economy.

Oh not to mention it makes banks obsolete if they're charging you to hold your money....

This is nothing more than a state sponsored armed robbery...

This will not grow an economy - this will just invite people to start hording money - which they will begin doing.

The funniest part or ironic part about this idea was the Euro.... The European market is crashing because of the Euro, and these ****heads solution is to kill the banks and force lending/spending.

The way they handled this situation is the same way a 12-year old would handle the situation (and I might be too generous there)...

I understand economics - maybe not the pseudo-economics that the EU has created which is fantasy land economics which make Keynesian economics look like true capitalism (which is part of the problem) but I do know this - this idea will financially CRUSH the EU and create economic chaos...
Click to expand...

Sure you do.

This proves just how incompetent you are.

if you hoard money, what happens when money becomes subjected to inflation? It becomes devalued. that's right, so hoarding money means that tomorrow your money is worth less. SO why would people hoard money? No they won't, they would spend money and maybe invest money so that if you invest it you get something out of it that is greater than the value you get from hoarding it which is negative value due to inflation. So now that we have the principles settled in, why don't you gracefully tug your tail between your legs and recognize that you know nothing, Jon Snuuuh.
 
Fenton said:
Not gonna work guys, its not going to work.
Click to expand...

Why?
Go on, daze me with your unmatched insight. I'm sure it's more insightful than that of Mr.Nick.

EDIT: Also, Europe doesn't have subprimes. European banks however did buy toxic US subprimes like all the US banks did and that was a big mistake.
 
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