Posted on 09/04/2016 12:30:58 AM PDT by SaveFerris
Another thing is those retirement funds. It's a lot of savings, and there are rules on withdrawing it. What's to stop the gov from turning all government-insured retirement savings accounts into annuities? Except for Roth IRAs after age 65, there are rules and steep fines that stop people from withdrawing them.
Next time my CD Roth IRA matures, I'm transferring it out of the Roth. My only other IRA is very small, and in a stock account.
I can't imagine how the economy recovers in the foreseeable future. Could it be so far out of control that it has to collapse first?
At my bank, this means I have to pay them $100.00 if I fail to say hi when I walk in the door.
I mentioned that this would happen a couple of months ago on another thread and was I roundly denounced.
A number of European banks as well as the Bank of Japan do have negative interest rates. It is just a matter of time before the US has them as well if you understand just how bad the US and world economies are right now.
And those negative interest rates are not helping those who are using them
People are pulling their money out of their accounts and keeping it at home. This just accelerates the excuse for the banks to create a digital currency that can not be withdrawn.
You obviously have not heard of the term, ‘bail in’ have you?
Bingo! More than one way to skin the cat.
The bond yield curve is heading towrd an inversion.
Follow the money. If savers lose money at the bank, where will they put it? Most people will put it in stocks, corporate and government bonds, or real estate. A few will buy precious metals or collectibles.
Who makes the most off of such investments? People who already own lots of those things. This is just a way to funnel more money from small investors to the rich and the government.
Home mortgage refinance opportunity perhaps?
You’re taking me back to the early, early 70’s when as a child, I got the shock of my young life when a Snickers bar went from 10 cents to 12 cents, thinking “That’s not supposed to happen!” LMAO....
Importantly, right on the heels of negative interest rates, because they will suck the money out of banks like a sponge, with be *mandates* that banks must be used, both for automatic deposits and automatic withdrawals.
But, in the short term, banks may be drained of cash. Virtual money just exists on computers, but physical money, paper and coinage, is already in tremendous shortage, with only enough to support 4% of US daily retail trade.
And they cannot make more paper, or higher denominations. This is because the US has only two high security printing offices for currency. Most of the bills its prints are $1 denominations, with proportionately fewer $5, $10, $20, $50, and $100.
If there is a “paper run” because of negative interest rates, banks will run out of paper quickly, especially $100, $50 and $20 bills. After that, $10, $5, and $1 will just vanish, as desperate people will want to get their money in any form.
Importantly, a LOT of the economy is dependent on paper and coin. It does not do virtual money. So the *value* of paper and coin will skyrocket, because people have to have it.
If you think that even Obama is not so venal as to cause another Great Depression just as he leaves office, remember that Andrew Jackson did so, to spite. It was the worst depression the US had until the Great Depression.
And they’ve been lying about the inflation rate being as low as they say it is.
JOHN MAULDIN: The government has been dramatically understating inflation
http://www.businessinsider.com/john-mauldin-government-understating-inflation-2016-5
Very low interest rates help the fed not have to raise the rates paid for entitlements AND payments on debt.
The danger is moving into deflation, which is probably happening economically but not in day to day economics due to regulations raising the price of key items (college tuition, utilities, property taxes, food via SNAP boosting demand, childcare through extra regs)
Not Zackley.
So is it best to put savings into the stock market—those stocks paying dividends? Or Bonds?
Buy stock in shoves, too.
“...especially when you consider the yield on long bond was 15% in 1981.”
Having money in the bank back then was like having a part time job, just from the interest earnings.
It is about 10 percent a year.
if that actually happens, mattress futures would be a good investment.
Actually, i’ll do what any thinking person would do: withdraw everything in cash except what’s necessary to pay monthly bills and hide the money safely, like in a fireproof safe, buried in waterproof containers, etc. It’ll be the first time in the history of the U.S. when cash collects a better interest rate sitting at home instead of in a financial institution, well at least since FDIC insurance went into effect.
Sure, the economy would collapse if everyone did that, but then again, that’s the point of doing it in the first place.
A big bank would borrow the 100k from you and pay you back 99k a month or two later. Your borrowing rate would not be negative. But let's imagine that it could be negative:
The market would anticipate deflation and even more negative rates and buy promissory notes from the lenders in anticipation of a stream of cash from you. Those lenders would theoretically be able to offer you negative rates because you are a cash generator. But that would only happen if you provided a guaranteed stream of cash and that would not be likely in a deflationary environment.
Bumping some good advice. You can go one step further and get a token with a private key etched onto it. The private key is protected by some sort of physical seal and if the seal is broken the associated value could have been spent. But if the seal is unbroken, and you totally trust that the minter did not keep a copy of the private key, you can add however much value you want to onto the token (using the public key / address).
Then when you wan to eat, you can simply hand the token over to the new owner in exchange for some food. The token can even be made from PMs to hold that value as well. The new owner verifies the amount on the address / public key and also verifies that the seal is not broken (and you didn't x-ray it to read the private key, and they also trust the issuer, etc)
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