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

To: yefragetuwrabrumuy

“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.”

This is an incorrect statement. When Jackson was attempting to kill the Central Bank (2nd Bank of the US), the Bank recalled the loan (shrank the money supply) and caused a massive depression. They then blamed Jackson for the mess. Nichols Biddle (Head of the Bank) bragged about what he was doing.

If anything it is a great illustration of what Bankers will do to retain power and the power they have today is much much greater.

81 posted on 09/04/2016 9:33:59 AM PDT by crusher2013

What is happening and what we are observing is the end of the middle class saver. The people who saved each month for a down payment for a house or a car, who saved for a vacation and so forth. They did so because they could earn about a 2 to 3% return on their savings after taxes and inflation.
What economists call the after tax real interest rate.

That rate is going negative by the way because the national debt has doubled. To service the debt interest rates must be kept very low.

Excellent post by the way.

82 posted on 09/04/2016 9:49:06 AM PDT by Maine Mariner

Is there any safe place for money now? Utility stocks?

83 posted on 09/04/2016 10:12:38 AM PDT by rdl6989

You keep voting for it America.

What do you want me to say?

84 posted on 09/04/2016 11:44:10 AM PDT by Tzimisce

Great, now let’s just talk China into depositing all their hard currency reserves with us...

85 posted on 09/04/2016 11:47:34 AM PDT by grey_whiskers (The opinions are solely those of the author and are subject to change without notice.)

It's called "a falling standard of living"...in some respects. Screw hedonics, screw like-product substitution, screw increasing house sizes...

What matters is two fold:

1) Can you support a family on the wages of a single blue-collar breadwinner anymore? No.

2) What kind of taxes are you paying?

3) Who sent all the jobs overseas and imported millions of Third Worlders?

86 posted on 09/04/2016 11:51:22 AM PDT by grey_whiskers (The opinions are solely those of the author and are subject to change without notice.)

To: grey_whiskers

Yes, I had three bullet points when saying I’d have only two. See what inflation is like?

87 posted on 09/04/2016 11:52:27 AM PDT by grey_whiskers (The opinions are solely those of the author and are subject to change without notice.)

The only solution is for the global economy to collapse. It won't be pretty when it does.

The other solution would be for the terrorists to nuke the next Davos and Bilderberg Conferences, and then for President Trump to nuke the terrorists into oblivion.

88 posted on 09/04/2016 12:04:24 PM PDT by grey_whiskers (The opinions are solely those of the author and are subject to change without notice.)

There is plenty of other money to lend. They don’t want deposits, obviously.

Money no longer comes from depositors, simple as that. Why should they pay interest when they have all the money they need?

89 posted on 09/04/2016 12:25:37 PM PDT by ecomcon

Why negative interest rates? Because they have to.

When money (actually currency) is created out of thin air at a positive interest rate it has to be paid back in full AND the interest has to be paid back too. Where does this addition money (the interest) come from? More money has to be created out of thin air to cover this amount of interest.

So for every dollar created more than a dollar has to be paid back. This is an exponential function and will continually grow and continually pick up speed, so every year more money has to be created out of thin air than the year before. Now, as we all know, money (as created by the Fed) is not money (traditional definition) anymore, it is debt. When you take out a mortgage at the bank they simply create an entry in your account for the amount of the mortgage (yep, they created money out of your debt.) They didn't take any money from their pile of money and put it in your pile, they simply CREATED IT OUT OF THIN AIR. And they created it with a positive interest rate meaning they are going to have to create more and more every year to cover these interest payments or else the economy is going to be sucked dry as these interest payments are made.

This need to create ever more debt sucks for them in the long run - it can't go on forever (infinite debt ain't possible) but it's great for them in the long run (they get all that interest on the money they CREATED OUT OF THIN AIR.) So what are they to do?

In the short run (decades) they create more and more debt. Remember in 2005 when they made it impossible to bankrupt credit card debt? Suddenly every deadbeat Tom-Dick-and-Harry could get a credit card or three - 'cuz he was now a good credit risk 'cuz he could never write off his debt and for the rest of his life anytime he made some money THEY got it. Remember the housing loan fiasco? Sub-prime mortgages? Just more and more debt to people with no credit? They all became good credit risks with the addition of just a few percentage points of interest (houses never go down in value, right?) Note: this explains the great lengths they went to to maintain the value of housing.

Remember the great increase in student loan DEBT? Yep, can't bankrupt that stuff, so now everybody can get a student loan. Trillions and trillions of debt created with that one. Sub-prime auto loans, govt deficit (adds to the debt every year), etc., etc., etc. Endless debt, growing bigger and bigger and faster and faster every year. Exponential functions work that way.

So what do they do in the long run? Collapse, of course. Or CREATE DEBT WITH A NEGATIVE INTEREST RATE. Now for every dollar created out of thin air LESS money has to be paid back and the problem is solved. The thing is... there are really two kinds of debt. Yours and theirs. Yours (the money you borrow for your house, car, education, etc.) will come with a POSITIVE interest rate (of course) and theirs, the money you put in their banks (yep, your bank deposits are now actually you loaning them money - see bank bail-ins) which will, of course, be at a negative interest rate. Ta-da! Problem solved.

Oops. One more problem to solve. See, once the banks start charging negative interest rates people will pull their money out of the banks and keep it at home (better idea might be to buy guns, ammo and tools, but I digress.)

So what to do? OUTLAW CASH. Gotta do it. It's the only way. Outlaw cash so they can implement their negative interest rates or else suffer the inevitable collapse brought on by the exponentially growing pile of debt needed to pay back the interest on the money (currency actually) CREATED OUT OF THIN AIR.

So that's it in a nutshell. Cash has got to go.

Note: I went in to Nationwide to pay my quarterly insurance payment on the house and vehicles last week (in cash like I always do) and guess what? They don't accept that stuff anymore. hmmmm...

90 posted on 09/04/2016 12:31:29 PM PDT by Garth Tater (What's mine is mine.)

To: grey_whiskers

3) Who sent all the jobs overseas and imported millions of Third Worlders?

Yeah. Who did that?

91 posted on 09/04/2016 12:31:29 PM PDT by Garth Tater (What's mine is mine.)