Posted on 10/24/2015 5:12:37 PM PDT by SeekAndFind
The concept of earning interest on money in the bank is so deeply ingrained into economic life that few people even know that the opposite can happen too: Banks can take a percentage of cash from your account in the form of negative interest rates, under certain conditions.
Normally, this doesn't happen. Banks want your cash, and pay you interest on it, because the more deposits they have, the more they can lend it to others who pay them even more on their investments.
But interest rates in Europe are so close to zero and economic activity is so sluggish that some central bankers are seriously discussing whether they should drive interest rates into negative territory in the future, as a sort of economic punishment for not spending money. The theory is that if you are deterred from keeping cash in the bank you'll withdraw it and spend some of it, thus creating economic growth.
Europe's central banks and the US Federal Reserve have kept interest rates near zero for years now in the hopes of making money cheap to borrow. The intent is that because it costs next to nothing to borrow money, you'll take advantage of that and invest it in anything that pays more than a 0% return. That usually creates inflation too, as the influx of cheap, new cash devalues the existing stock.
But inflation is nowhere to be seen. The price of oil has fallen dramatically, making anything that requires fuel cheaper. And with prices falling, people hold off on spending today because they know their money will be worth more tomorrow. That lack of economic activity despite the cheapness of lending is exactly what is holding the economy back.
(Excerpt) Read more at businessinsider.com ...
And do we believe that a GOP Adminustration will be any different? Really, do we?
I think Chase recently changed their policy and doesn’t allow you to store cash in safe deposit boxes. Other banks may have similar policies.
20 years from now, the law will forbid that.
I think Chase recently changed their policy and doesnt allow you to store cash in safe deposit boxes. Other banks may have similar policies.
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I have a box, they don’t ask what’s in it. It takes two keys to open it, they use their key, I use mine, then they immediately take their key and leave the room. There are no cameras.
Banks quit paying anything but a pittance on interest on any type account or investment the day 0 was elected.
Annuities pay way more than banks ever did. And they are backed well. Mine will see 7% over 10 yrs, that goes for the IRA too. Which I can’t even begin to draw out for another 5 yrs anyway. Which I will turn around and put into paying off our downsized house. VA loan 3.5%.
Banks quit paying anything but a pittance on interest on any type account or investment the day 0 was elected.
Annuities pay way more than banks ever did. And they are backed well. Mine will see 7% over 10 yrs, that goes for the IRA too. Which I can’t even begin to draw out for another 5 yrs anyway. Which I will turn around and put into paying off our downsized house. VA loan 3.5%.
I pay $3 per month for my checking account, that is all the checks I want to write and a $10 K accidental death insurance policy that will even cover my grandson until he is 18. Since I rarely write a check, it’s just a cheap insurance policy.
The day that a**hole was elected I vowed right there and then that I wasn't buying anything new (except for clothes, shoes) for as long as he was in office.
With the exception of clothes, shoes and vehicle repairs (which required new parts) and appliance repairs (which required new parts) I haven't purchased ANYTHING new that I did not need. The fact that I learned how to repair my own appliances (washer, dryer, dishwasher, TV, other miscellaneous repairs) rather than outright replace them I thought was pretty damn' good.
My vehicle is 13 years old and despite having to put new tires on it a few weeks ago, all other repairs I've done myself. Nothing major wrong with it (thankfully) and I'm gonna keep driving it. Wife's vehicle is from 2007. I'm not buying a new vehicle (or even a used vehicle) until that a**hole Obama's out of office.
I'm so glad you posted, FINALLY I found someone who thinks the way I do.
Makes three of us then. ;-)
The problem is less the big banks, and more the over-burdensome regulation that Bawney Fwank and Chriss Dodd wrote and got passed on their way out of Congress back in 2010.
It's the compliance cost of that specific regulation that's killing the small/community banks. By design, I might add. Can't blame the big banks for that, they hate it as much as you do.
AWESOME! I'm just glad to know I'm not alone on this one. Really appreciate your response.
Aren’t you better off keeping the 7% tax-deferred income from your IRA, since your VA loan is only 3.5% and tax-deductible?
I’ve learned a lot, and sure you all have as well. No new vehicles since ‘08 and part of the mad dash out of the money market awhile back. ;-)
This is bad. Run on the bank anyone?
No inflation? Bernanke and Yellen have flooded our economy with cash
Anybody been grocery shopping lately?
Now for a short public service announcement to all on FR:
I prefer Cruz and my money goes to his campaign, hence the Cruz link. If you like someone else, donate to him/her (find your own link to do it) and if you use FR and don't donate, then please don't complain about the welfare leeches or those who have Obama Phones because, functionally, you are no different.....
GO CRUZ!! Keep it up Trump!!
The institutional lying we’ve been seeing from the entrenched bureaucracies transcends issues of political party.
Well when that happens I`ll no longer have a bank account.
Utilities, as well, are higher due to eco-friendly mandates - and if you conserve more, they charge higher base rates to make up for the decreased revenue.
Banks used to charge a fee for holding a lot of cash, because their service was preventing the money from being stolen.
They can’t make that claim now when nearly any federal entity that wants to could seize it, freeze it or debit it.
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