So what does it mean?
It means the central banks have f*&^ed up the world economy so badly that there is no longer a time value of money.
That means there will be ongoing grotesque misallocation of capital—which will inevitably lead to a collapse of the world economy.
It is a matter of when, not if....
An analogy would be if you started to pour antifreeze into your gas tank—the car might keep coasting downhill for a while, but eventually it would seize up and die.
RE: So, what does it mean?
A negative deposit rate is intended to encourage lenders to do something more useful with their money than park it with the ECB. It’s also designed to help weaken the euro to provide some assistance to eurozone exporters, and, hopefully, spur prices at home by making imports more expensive.
Higher state spending, meanwhile, is aimed at boosting economic activity, which after a decade of only moderate growth is currently stalling or even receding.
Investors, economists and policymakers are increasingly pointing to long-term structural explanations for the shift to negative rates. They cite demographics, saying that aging developed world populations may be suppressing demand. It is also speculated that technological innovation may be dragging prices down.
I think that deflation is the hallmark of depression.
It comes here next. You’ll have to pay the bank to store your money.
If there was a demand for capital by entrepeneurs and businesses looking to expand, then the banks would accept deposits and then lend them out at a higher rate of interest. What is happening is the green new deal in action. Thr ecomomy is stalling and even contracting.
Europe is in deflation, that’s what it means. They’ve had negative interest rates for quite while, it shouldn’t be a surprise.
It means this:
“they can put that money to work somewhere else… like the stock market. That’s exactly what these low-interest-rate policies are designed to do… get folks investing.”
that is, you can expect a massive bubble of inflated prices in various “investments” ... a bubble that will eventually crash, cause a gigantic loss of peoples’ money, and cause a subsequent depression ... this is how EXCESS liquidity is ALWAYS liquidated: the little guy takes it on the chin ...
safer to stick the cash under the mattress or ride “investments” up for a SHORT while and get the hell out before everyone else does and THEN put your money under the mattress ...
AND we can expect this bubble-crash cycle here in the U.S. due to the GIGANTIC amount of money that Biden is in the process of dumping into the U.S. economy, money that will have nowhere else to go except into “investments” after everyone buys a new car, a new laptop, a new large screen TV and a new dishwasher ...
I think it means the major stock indices will continue to rise for a while.
It means that regular people will start money laundering.
So what does it mean?
————-
It means a few things, the worst is the move to a cashless digital system. Secondly, be aware negative interest rates were introduced in the EU years ago, they pulled from circulation large denomination bills so you could not easily accumulate cash ( TPTB hate cash)...put huge taxes on gold and silver.....thirdly, Bidens Fed Reserve and Treasury picks support negative interest rates but as inflation has ramped up ( it is rising rapidly) it is suicidal to push it in an inflationary environment ( we are already losing about 12 percent a year in inflation and USD index purchasing power).
So what does it mean?
A lot of things. Here’s a select few:
1) Given the choice of (Trump, Reagan) lower taxes and less regulation or monetary tomfoolery to get a moribund economy moving again, the Euroweenies have predictably chosen the latter.
2) The concept that lower interest rates will encourage economic activity has been taken to idiotic extremes where interest rates are negative. A person who has taken a mortgage actually gets paid a little each month, offsetting their monthly payment to a degree. On a 300,000 Euro, 30 year loan it’s about 45 Euro per month (as per a recent Wall Street Journal article).
3) The negative interest rate government bonds (you get back less than you put in at the end of the term) make US barely positive bonds look great in comparison. That has been holding down our interest rates on the open market.
4) This situation will not last.
Governments are printing trillions and why bother with large cash deposits when ‘free’ liquid cash can be put in to hard assets while the banks watch the money inflate to nothing with no accountability.