Sweden cuts rates below zero as global currency wars spread

Sweden has cut interest rates below zero and launched quantitative easing to fight deflation, becoming the latest Scandinavian state to join Europe’s escalating currency wars.

The Riksbank caught markets by surprise, reducing the benchmark lending rate to minus 0.10pc and unveiled its first asset purchases, vowing to take further action at any time to stop the country falling into a deflationary trap. The bank presented the move as precautionary step due to rising risks of a “poorer outcome abroad” and the crisis in Greece.

Janet Henry from HSBC said the measures are clearly a “beggar-thy neighbour” manoeuvre to weaken the krone, the latest such action in a global currency war that does little to tackle the deeper problem of deficient world demand.

Any freepers here ever own any gold or silver bars?
How easy are they to ‘cash out’

I bought 20 ounces of gold in the immediate aftermath of 9/11, American Eagle coins. In the Great Recession I was forced to sell them off a few at a time in order to survive. I had no difficulty selling them at pawn shops and coin stores and jewelry stores, always for a little bit over the day's spot price.

I always phoned first and said, "What are you paying for gold today?"

They looked at the coins briefly and pulled wads of hundreds out of their pants pockets and peeled off enough to buy the coins.

Only one guy tried to cheat me--gave me one price on the phone, then when I showed up at his store, he said the spot price had plunged. But guess what, I had an iPhone and I checked the spot price and it was still the same. I shrugged and walked away and went to another place. Today the shop where they tried to cheat me is gone.

anybody have a simple explanation of negative interest rates?

Central bankers move rates to “zero or negative” in order to fight “Deflation” with “inflation”.

They are trying to provide an incentive for people to spend their money instead of saving it.

In the US, the FED only controls “overnight” interest rates via FED Funds (the rate in which banks borrow from each other) and the Discount rate (the rate in which banks borrow from the FED, which rarely happens).

All other rates both charged and paid are set by market participants and ultimately the level of economic activity.

Negative rates have the secondary effect or pass-through effect in which banks may and have charged people for holding their money.

So people take their money out of the banks and the Central bankers expect them to spend it.

This is the theory.

The theory is to “create” economic activity by penalizing those that save. This activity is inflationary since your purchasing power is decreasing over time. People should buy that toaster today since they will have less money if they wait until tomorrow.

Deflation is a Bitch.

If your purchasing power is increasing, people tend to wait to purchase things because they will be less expensive tomorrow.

Virtually the entire world has been caught in a deflationary cycle since 2008. There has been a so-called “race to the bottom” with rate cuts and QE*’s in a desperate effort to stimulate economic activity.

To date, all of these efforts have failed to stop the deflationary cycle. They have only paused them artificially.

IMHO, it’s going to get really ugly.

This is not a scenario in which you want to rush out and buy gold. Cash will be king.

All: Russia started this.

Russia doesn’t have nearly the amount of influence as some here seem to think.

Russia is desperate.

China is becoming desperate as well.

We buy their crap, they work for US !!!!

I posted this before.

IMHO, OPEC is maintaining production levels and driving down oil prices to “Punish Russia” for their support of IRAN !!!

OK, so.

The next “Black Swan” event, IMHO, will be China breaking the so-called “dirty-peg” to the US Dollar.

This will send huge shock waves throughout to system.

The Chinese Yuan will get destroyed overnight.

Wal-Mart stock should go up accordingly.

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.