The Fed may be preparing for the unthinkable — negative interest rates in America

Yahooooo ^ | 12 hours ago | John Mauldin, Yahoo Finance Contributor

[PGR88]

You really have no clue of what modern central banks do if you continue to insist that they merely “dictate the overnight rate.” That is just utterly ridiculous. They intervene far more than that, and foreign central banks do it even more than our own Federal Reserve

Since QE started in 2008, the Fed has monetized nearly $5 Trillion in US Government debt (bonds and agency debt like Fanny and Freddie). Foreign central banks and wealth funds sit on another $5 Trillion.

[Toddsterpatriot]

if you continue to insist that they merely “dictate the overnight rate.”

Which other rates do they dictate?

Since QE started in 2008, the Fed has monetized nearly $5 Trillion in US Government debt (bonds and agency debt like Fanny and Freddie).

Closer to a $3.5 trillion increase since before the crisis.

[Zeneta]

I said;

They don’t have any political motivations or any “One world Government” desires.

You replied;

I’m honestly confused by your post. Are you being facetious?

---

No, I’m not being facetious.

I don’t believe for a minute that anyone working at the FED is politically motivated towards a “One World Government”. Not anyone from the top to the bottom.

I’ve talked to many people that work at the FED in a variety of functions. For the most part, they gather data, crunch numbers, run “models” and send their work up the food chain WITHOUT OPINION.

The Folks at the top of this decision making tree digest their findings and seek ways to fulfill their mandates within a very narrow framework of tools available to them.

There’s a small part of Keynes that works, but what is required on the “Business” end has been eroded by the uncertainty of endless regulations.

The FED has boxed themselves into a corner with their ZIRP, near ZIRP, QE**** etc, and have run out of tools.

There is no Conspiracy.

They are only doing what they know using the tools they have.

Which is stupid. I grant you.

Let me ask you.

What would you do?

The FEDS “Mandate” is to “Stimulate” economic growth and (a new one) attain full employment.

You can either raise overnight lending rates or lower them for the Banks in hopes that that will find its way to main street. When lowering rates to virtually zero fails to stimulate economic activity because the banks are sucking up any and all excess because they are increasingly burdened by regulations that their margins are destroyed for all but a small number of borrowers. Granted, the FED does participate in a number of regulatory decisions but most are driven by a political class that consists of people and other Government agencies that are trying to protect consumers from their own ignorance.

So the FED finds a new thing, QE**.

Quantitative Easing. In other words, we can’t lower rates anymore and the economy still sucks but we need to pay our bills so we, the FED, will print more money until we can get a handle on this mess.

The FED has been simply trying to “Buy Time” until the next great “Bubble”.

I can’t fault the FED or their decisions since they are mandated to “Do Something” but are only provided with limited tools.

IMHO, the FED is not in control of this mess.

Everyone is on “Auto-pilot” trying to do “What is Best” with absolutely no clue of the bigger picture.

God help us all.

[Garth Tater]

Let me ask you.

What would you do?

Hard to answer that without knowing what's going on at the Fed and by that I mean what's on the books. When was the last time a complete and public audit of the Fed was conducted? Oh, never? Really? No one knows what transactions the Fed has engaged in. Rumors of multi-trillion dollar currency swaps but with who? For how much? Under what terms? Who the hell benefits? We don't know because we aren't allowed to know what transactions were made. We aren't even allowed to know who owns the Fed.

But, but, they return all but a small percentage of their profits to the Treasury, right? Really? How do we know this? Take their word for it? Sure. Debase our currency by 99% over the last one hundred years and tell me no one benefited from that... trust me... yeah right (extreme sarcasm) The Fed has (had) a mandate to maintain a stable money supply which they somehow re-interpreted to be a 2% annual growth in the money supply. 2% ain't stable and they are violating their mandate.

Audit the Fed. Publish the results. Tell us who owns the Fed and THEN I might be able to suggest a course of action to you that benefits us as a nation. Until then you can take it on faith that they are working towards our best interest but that's all you have - FAITH IN A BUNCH OF BANKERS THAT HIDE THEIR VERY NAMES FROM US.

ps. I think you are right about one thing, they are smart. I wouldn't want my name getting out either if I was raping the country.

[Garth Tater]

The FED has boxed themselves into a corner with their ZIRP, near ZIRP, QE**** etc, and have run out of tools.

They have used these tools (ZIRP and near ZIRP) to rape the savers and small businesses of our country. Their Zero Interest Rate Policy has benefited no one but the big banks.

It's hard to save for your old age when for every dollar you save during your working life you have LESS THAN A DOLLAR to spend in your retirement. Yeah, they sure are working hard to achieve their mandates with the limited tools provided to them. They have debased our currency by 99% in the last one hundred years and you think they are working in our best interest. Seriously? I still think you are pulling my leg here.

Return to sound money and Constitutional governance.

[Zeneta]

A part of me agrees that the FED must be audited.

Another part is afraid what will happen as a result.

There’s another firm that falls into this category as well.

The DTCC.

Depository Trust & Clearing Corporation.

https://en.wikipedia.org/wiki/Depository_Trust_%26_Clearing_Corporation

They are just another player that maintains this house of cards.

[Zeneta]

Return to sound money and Constitutional governance.

---

Of course I agree with that and the rest of your post.

It’s just not going to happen anytime soon and in the meantime the FEDS are doing the only things they can.

And, it’s not going to be up the FED to make those changes.

What I am saying is that “It’s not their fault”, “It’s not some conspiracy”, they don’t know anything other than the rules and tools they must follow.

[Garth Tater]

What I am saying is that“It’s not their fault”, “It’s not some conspiracy”, they don’t know anything other than the rules and tools they must follow.

If it's not their fault and they are not actively conspiring against us, why don't they just open their books and let us see what they've been doing? A simple thing really, and yet they fight tooth and nail to prevent it.

It’s just not going to happen anytime soon and in the meantime the FEDS are doing the only things they can.

They will never willingly give up their grip on our money supply. No group of men can be tempted by that much wealth and power and not give in. Our only way to get out of this mess without blood in the streets (theirs and ours) is to return to sound money and return the issuance of currency to the federal government. God, I hate the sound of that because you just know they'll screw it up and drive us into hyper-inflation or sell off the right to issue the currency to a bunch of bankers again like they did back in 1913 but, damn it, if we don't follow the Constitution we really have no future other than debt slavery. At least with the federal government in charge of our currency we'll be able to see that we've done it to ourselves (again) and not have the inevitable collapse be a mystery to be repeated over and over again. I think this is the third time the national bank has been sold off to private entities... for some reason we never learn.

------------------------------------------------------------
Some of my favorite quotes on the history of private banking:

“If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks…will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.
The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”
– Thomas Jefferson in the debate over the Re-charter of the Bank Bill (1809)

“The few who understand the system will either be so interested in its profits or be so dependent upon its favours that there will be no opposition from that class, while on the other hand, the great body of people, mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests.”
- The Rothschild brothers of London writing to associates in New York, 1863

"The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks."
- John Dalberg Acton (Lord Acton)

------------------------------------------------------------

I've enjoyed talking to you Zeneta. I hope I haven't come off as a strident ass but I consider this to be the root of our biggest problem, namely: Who controls our government, we the people, or them - the big money interests.

[citizen]

How would CDs function in a negative interest rate world?

Would the banks confiscate slightly less of my money if I put it in CDs than they take if I leave it in savings and MM accounts??

[SaveFerris]

Maybe we’ll find out after the next meeting.

[PGR88]

Here is this...

http://www.marketoracle.co.uk/Article56463.html

[Toddsterpatriot]

https://www.federalreserve.gov/releases/h41/current/h41.htm

[Toddsterpatriot]

To prevent another Great Depression, central bankers desperately tried to revive economic demand and growth by increasing the monetary base to increase the amounts of loans banks could make.....But instead of loaning the money, banks redeposited the excess reserves (AMBSL) with central banks

Ummmm.....banks could have lent every single dollar of added monetary base and the money still would have been "redeposited with central banks".

Loans do not reduce or "use up" the reserves of the banking system. They do not reduce the monetary base.

[PGR88]

Ummmm.....banks could have lent every single dollar of added monetary base and the money still would have been "redeposited with central banks".

Your statement is a contradiction. they either lend it, or they don't. If they lent it to businesses buying equipment, starting new projects, or to consumers buying goods, etc... it would NOT have been redeposited with Central Banks. It has not stimulated the economy - it has only led to specific bubbles in property, stocks, and above all - front-running speculative bond purchases, particularly in Europe and Japan, but also in the USA, as interest rates are driven down.

And as this discussion started out, this ultimately benefits and supports our massive Federal bureaucracy.

[Toddsterpatriot]

Your statement is a contradiction. they either lend it, or they don't.

And if they lend it, it ends up on the balance sheet of another bank. It doesn't get used up. It ends up deposited at the Central Bank.

it would NOT have been redeposited with Central Banks.

Bzzzt.....wrong.

It has not stimulated the economy - it has only led to specific bubbles in property, stocks,

How could it lead to bubbles if it was not lent?

this ultimately benefits and supports our massive Federal bureaucracy.

Eliminate the Fed tomorrow, now show me how that shrinks the Federal bureaucracy.