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Negative interest rates are coming! You want to know more about them!

 
niphtrique
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08/14/2019 11:45 AM

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Negative interest rates are coming! You want to know more about them!
Negative interest rates are coming! And they may be here to stay. To explain the situation I make use of simplification for clarity's sake. Basically this is the tale of two opposing economic forces: capitalist spirit versus time preference. And basically, there are two types of people: ordinary people and capitalists(1).

Ordinary people suffer from a condition called 'time preference'. It makes them spend their money on frivolous items sooner rather than later. Ordinary people will only forego stuff in the present if they can get more stuff in the future. Hence, interest rates need to be positive to make them save.

Capitalists on the other hand are special people. They suffer from a condition called 'capitalist spirit'. They believe that money spent of frivolous items is money wasted because if you invest instead, you end up with more money in the future that you can invest again. They keep on saving and investing, even when interest rates are low.

What's the point of that? The capitalists invest in the corporations that make the frivolous items ordinary people buy. And because ordinary people would have spent their money on frivolous items, these items wouldn't have been produced in the first place. And so capitalists can be very useful.

But there is a problem. For most of history, returns on capital were higher than the economic growth rate.(2) This can't continue forever because returns on capital would take a growing portion of national income. In the past this issue was often resolved by economic depressions and wars that destroyed a lot of capital.

... more at link

(1). Sapiens: A Brief History Of Humankind. Yuval Noah Harari (2014). Harvil Secker.
(2). Capital in the Twenty-First Century. Thomas Piketty (2013). Belknap Press.

Short introduction:

[link to www.naturalmoney.org]
Further reading on why interest rate go negative and how the future financial system might look like:

[link to www.naturalmoney.org]
[link to www.naturalmoney.org]

Last Edited by LJS on 08/14/2019 03:53 PM
Anonymous Coward
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08/14/2019 11:50 AM
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Re: Negative interest rates are coming! You want to know more about them!
The Federal Reserve will be dismantled long before we see negative interest rates.
Anonymous Coward
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08/14/2019 11:58 AM
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Re: Negative interest rates are coming! You want to know more about them!
Interest is the vig charged for the debt based notes people use to transact their needs. The private company that runs the note system needs scarcity to create value. Thus taxes and spending.
Anonymous Coward
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08/14/2019 12:00 PM
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Re: Negative interest rates are coming! You want to know more about them!
Does that mean the bank will owe me money on my mortgage?
Anonymous Coward
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08/14/2019 12:09 PM
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Re: Negative interest rates are coming! You want to know more about them!
Does that mean the bank will owe me money on my mortgage?
 Quoting: Mother Shipton


cruise
Anonymous Coward
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08/14/2019 12:18 PM
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Re: Negative interest rates are coming! You want to know more about them!
Does that mean the bank will owe me money on my mortgage?
 Quoting: Mother Shipton


That means no business would be dumb enough to give loans.

Negative interest rates are sure way to devalue most things that are inflated due to the availability of financing. This would never happen. It would be worse than letting the economy go into a recession.
niphtrique  (OP)

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08/14/2019 12:35 PM

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Re: Negative interest rates are coming! You want to know more about them!
Does that mean the bank will owe me money on my mortgage?
 Quoting: Mother Shipton


As bizarre as it may seem, this is already happening in Europe...

[link to www.theguardian.com (secure)]

And the super rich may end up paying for it...

[link to www.theguardian.com (secure)]
niphtrique  (OP)

User ID: 77025818
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08/14/2019 12:38 PM

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Re: Negative interest rates are coming! You want to know more about them!
There are 15 trillion worth of bonds already yielding negative.

[link to www.cnbc.com (secure)]

This is epic. The economy will not collapse if there is no floor on interest rates.

Last Edited by niphtrique on 08/14/2019 12:39 PM
jj johns
J to the 3rd

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08/14/2019 12:45 PM

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Re: Negative interest rates are coming! You want to know more about them!
so, essentially, the bank is going to charge us more for using our money. i hate banks. they are all crooks.
.
.
No clotshot, NEVER!
.
Mad as hell!

.
Anonymous Coward
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08/14/2019 12:49 PM
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Re: Negative interest rates are coming! You want to know more about them!
should I wait to refinance my home equity loan,will they go down also?
Anonymous Coward
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08/14/2019 12:49 PM
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Re: Negative interest rates are coming! You want to know more about them!
Does that mean the bank will owe me money on my mortgage?
 Quoting: Mother Shipton


As bizarre as it may seem, this is already happening in Europe...

[link to www.theguardian.com (secure)]

 Quoting: niphtrique


Wow


"In Switzerland, the bank UBS last week told its wealthy clients that it would introduce a charge of 0.6% a year if they deposited more than €500,000."
Anonymous Coward
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08/14/2019 12:53 PM
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Re: Negative interest rates are coming! You want to know more about them!
we have had negative real interest rates since 2008
[link to www.valuepenguin.com (secure)]


Negative real interest rates
If there is a negative real interest rate, it means that the inflation rate is greater than the nominal interest rate. If the Federal funds rate is 2% and the inflation rate is 10%, then the borrower would gain 7.27% of every dollar borrowed per year.

Real interest rate - Wikipedia

[link to en.wikipedia.org (secure)]
Anonymous Coward
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08/14/2019 12:54 PM
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Re: Negative interest rates are coming! You want to know more about them!
we have had negative real interest rates since 2008.


Negative real interest rates
If there is a negative real interest rate, it means that the inflation rate is greater than the nominal interest rate. If the Federal funds rate is 2% and the inflation rate is 10%, then the borrower would gain 7.27% of every dollar borrowed per year.
Real interest rate - Wikipedia

[link to en.wikipedia.org (secure)]




[link to www.valuepenguin.com (secure)]
Anonymous Coward
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08/14/2019 01:01 PM
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Re: Negative interest rates are coming! You want to know more about them!
My uneducated opinion is to hold precious metals preferably minted by the government that you live in as they are usually valued at face.

Might come in handy with da taxes.
Anonymous Coward
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08/14/2019 01:06 PM
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Re: Negative interest rates are coming! You want to know more about them!
we've actually had this in a partial form ever since the banks invented "service charges"

you pay service charges to spend your money:
- fee for a money order
- fee for a bank draft
- fee for a wire transfer
- over the monthly transaction limit transaction fees
- you pay a service charge to use the "wrong" ATM
- most bank accounts have a monthly fee for having the account
- etc.
Anonymous Coward
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08/14/2019 01:10 PM
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Re: Negative interest rates are coming! You want to know more about them!
OP, it's not choice. TPTB always go for Derepession then War. It's the way to take away power from the people.

No way they would decide to step aside and let people decide the market/ their lives. It's all about the control.
SilverCyprus

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08/14/2019 01:13 PM

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Re: Negative interest rates are coming! You want to know more about them!
This is like having a bail-in.

It will cause a bank run when savings accounts start earning negative interest.
Anonymous Coward
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08/14/2019 01:14 PM
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Re: Negative interest rates are coming! You want to know more about them!
My uneducated opinion is to hold precious metals preferably minted by the government that you live in as they are usually valued at face.

Might come in handy with da taxes.
 Quoting: Anonymous Coward 77919545


Where would store them? Do you have the securities to protect your asset or in the end, under such such policy the government would require you to turn them in for their protection. I don't mean in a nice way.
Anonymous Coward
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08/14/2019 01:15 PM
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Re: Negative interest rates are coming! You want to know more about them!
And how can the average joe use these negative rates to their advantage?
Any financial wiz out there???
Anonymous Coward
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08/14/2019 01:22 PM
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Re: Negative interest rates are coming! You want to know more about them!
And how can the average joe use these negative rates to their advantage?
Any financial wiz out there???
 Quoting: Anonymous Coward 75801884


Have no answer for a whole lifestyle, but key points are:

1. Cash, physical gold... is the way to save as bank would charge fee for you to use your money.

2. The down side is you can only spend what you have. Your credit is useless, as bank, bussinesses ain't very happy to loan their money out. Negative interest means distrust in credit system.
Anonymous Coward
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08/14/2019 01:24 PM
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Re: Negative interest rates are coming! You want to know more about them!
And how can the average joe use these negative rates to their advantage?
Any financial wiz out there???
 Quoting: Anonymous Coward 75801884


Borrow as much as possible and spend it NOW on investments that will return more than inflation steals. And make minimum payments or defer for as long as possible.

the longer you wait to pay the less value that money will have.
Anonymous Coward
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08/14/2019 01:28 PM
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Re: Negative interest rates are coming! You want to know more about them!
And how can the average joe use these negative rates to their advantage?
Any financial wiz out there???
 Quoting: Anonymous Coward 75801884

3. These in turn means people should live within their mean (what they can produce and possess). Only the thing that they need. Theoreticallly, it's a healthy lifestyle. Unfortunately, sound like a red flag for something big and sinister incoming as TPTB ain't going to allow that.
Anonymous Coward
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08/14/2019 01:30 PM
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Re: Negative interest rates are coming! You want to know more about them!
The Federal Reserve will be dismantled long before we see negative interest rates.
 Quoting: Anonymous Coward 66619947


WRONG
Anonymous Coward
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08/14/2019 01:32 PM
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Re: Negative interest rates are coming! You want to know more about them!
Ur a retard!
Ordinary people spend on gas, food, bills!
Caps WASTE money chasing profits!
They charge extra to ordinaries to fuel their chase.
What u call ordinary are military and overpaid IT and medical sectors.
All Capitalists think about is getting these overpaids money!
This game is to the detriment of TRUE ordinaries!
We eek by on 50k hoping and praying for a CRASH!
Rosicrucian1
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08/14/2019 01:32 PM
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Re: Negative interest rates are coming! You want to know more about them!
so can we assume that high value items, collectibles, cash, and gold and silver will increase in value?
Anonymous Coward
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Ireland
08/14/2019 01:35 PM
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Re: Negative interest rates are coming! You want to know more about them!
Does that mean the bank will owe me money on my mortgage?
 Quoting: Mother Shipton


As bizarre as it may seem, this is already happening in Europe...

[link to www.theguardian.com (secure)]

And the super rich may end up paying for it...

[link to www.theguardian.com (secure)]
 Quoting: niphtrique


That sounds good - and I've got a tracker mortgage, which they've stopped doing now. This means my rate is tied to the ECB (European Central Bank) rate.

cool2
Anonymous Coward
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08/14/2019 01:35 PM
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Re: Negative interest rates are coming! You want to know more about them!
Maybe a way to force people into a new digital reserve currency such as Bitcoin?
Anonymous Coward
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08/14/2019 01:50 PM
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Re: Negative interest rates are coming! You want to know more about them!
70 year global ban on pregnancy is the answer
Anonymous Coward
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08/14/2019 01:53 PM
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Re: Negative interest rates are coming! You want to know more about them!
70 year global ban on pregnancy is the answer
 Quoting: Anonymous Coward 77919662


Little prick loser^^^^
Explain ur demented theory boomer!
Anonymous Coward
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08/14/2019 01:56 PM
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Re: Negative interest rates are coming! You want to know more about them!
wow this is very interesting- i need to come back and finish reading this
Anonymous Coward
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08/14/2019 01:59 PM
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Re: Negative interest rates are coming! You want to know more about them!
The Federal Reserve isn't going to pay us!





GLP