From the FED: Monetary Policy in a Zero-Interest-Rate Economy

This doc is from 2003 and reads more like an econ class. It covers the real intrest rate and how that deals with and predicts depressions. There were a list of ways to correct this and it was one of the solutions. Not something I would be worried about right now.

What I would be worried about is the Auto industry bail out.

Originally posted by Zepherian
Negative interest... that's hilarious. Now money really does burn a hole in your pocket!

All these clowns want is to use money as a mechanism to apropriate actual wealth, and they will do anything, apparently, to make it so. Even charging the people money for having money.

Now I can see why some people are saying capitalism is dead. Braindead.

Capitalism isn't dead, it just is no longer in practice. I don't even know what to call this load of horse manure. But it sure as # ain't capitalism. If this goes into effect, I'm moving into the cash business.

Originally posted by Vodo34861
This doc is from 2003 and reads more like an econ class. It covers the real intrest rate and how that deals with and predicts depressions. There were a list of ways to correct this and it was one of the solutions. Not something I would be worried about right now.

Ah yes..that would explain why I couldn't find anything in their recent press releases on the Federal Reserve website pertaining to this...

- Carrot

Originally posted by Darthorious

No we wouldn't keep our money in the banks and the banks would have less than even now realistically speaking.

You must live in a strange area I guarantee where I live this would never happen. If it did can you say no such thing as a bank due to my above comment or complete revolt chances are both. I have no idea where you live so I assume it must be in a rich neighborhood cause here this would not happen and they would not get away with it 100% fact.

People could pull all of their money out now. You dont have to use banks you know. We could all do it in protest. It would be a little more work for us but it would send a message. We dont do it though why? Because we are lazy. I dont used banks anymore really. I use it to cash a check so I dont have to pay a fee thats really the only reason I have accounts open. People wont live like that though. People are to lazy to put a stamp on an envelope and send out their bills.

As far as the revolt if you think people are lazy when it comes to sending a bill you think they will fight a bloody revolt to take our country back from the international banksters? Ha people have had their chance. Most are to stupid to realize that their rights have been swindled and the small few of us who do understand only a small % of those people are the ones who show up to rallys. Our country is doomed. I have no faith in the people of America anymore. Im thinking about myself and my family. If a revolt does happen I will be there.

reply to post by redhatty



Actually I love this negative interest rates would be great.

They will pay us on money we borrow. lol

Unfortunately drastic times require drastic measures. A depression is not something I want, nor do any of you want. The Fed caused this mess...yes they should be abolished. Right now, they need to fix it though. And if it means CAUSING inflation...then so be it.

Please join the movement at www.endthefed.us. I went to the Chicago rally and there will be more to come. But you dont have to wait, protest and inform now. I actually had a conversation with my bank teller about how bad the FED is for the US today.

reply to post by redhatty
Does that mean that the mortgage and credit card companies would have to pay US interest forthe loans that the we have ?Im sure the proverbial door wont swing that way in our favor.

Negative interest rate is a very good idea

But only if you get the same thing when taking a loan!

Think about it...

(sorry, didn't see the previous similar post, but the thought occured to me a couple of weeks ago, while watching news on economy...)

[edit on 8-12-2008 by DangerDeath]

Fabulous!

Ok, lot's of you people know I'm no economist, and many also dread to hear my rant on this; but dammit I have to say it:

By this policy (from what I have understood thus far) it now will cost money to have (as in possess) money. Now, they're not calling this a 'tax' (although it could be said to be one) it has the effect of negating the benefit of 'saving' as opposed to 'investing.'

Now I'm sure the 'investment' group will benefit, as will the 'owners', but the economy will simply die at the first crisis. You can't horde cash - because they will simply print more - reducing the value of the cash you have. Again - a negative pressure to bank under your mattress.

Either way, spend or bank at a financial institution, you will 'lose' money. At least, a portion of that money, (which is on loan to you and I via the Fed) is also garnering interest for the ruling bank cartel. But what they give you will have a shelf-life. Use it or lose it.

What, about this policy reeks of another scam marginalizing the collective wealth of the 'little people' and going to .... where exactly?

[/rant]

But isn't credit card policy of allowing users to go into the minus exactly the same as negative interest rate on borrowing money, which in the end brought this recession?

I am already at a point in time where I look around and I wonder why we are not storming the parliament buildings across our fine countries.

It is time for a revolution.

How long can people sit back and take it.

I don't understand this economy.

I don't understand our politics (Canada) Didn't we just have an election? Shouldn't it be over?

Everything is screwed up.

Well it's time to put the money in the ole safe at home or spend it all........

Originally posted by behindthescenes
What I think may be misinterpreted here is who that borrower is: I don't think they're saying that consumers will be charged to literally save money, but that banks which borrow money from the Fed will be charged, thereby incentivized to actually make loans in a deflationary environment, thereby (smartly?) giving companies the cheap capital needed to fuel expansion and what not.

Nice catch. Looks like we weren't reading it in context.

But the point still remains... why can't we let the free market determine the interest rates? We are essentially entrusting the health of our entire economy to one man, giving him absolute control. Rather, we should eliminate the Fed and allow the People, who actually keep our economy running, to determine what rates are appropriate.

I mean, there is something totally wrong with a system where a few men sit around waiting for official word of a recession before they will even acknowledge there is serious trouble with the economy. All the while, lenders and borrowers, and anyone else driving the economy, are actually feeling the strain. But they are forced to just sludge through and wait for the almighty, trusty Fed to start fumbling around and begin making drastic interest rate cuts.

Why not let the banks negotiate rates directly with the TREASURY. Instead of waiting for "official word" that there is trouble, banks could constantly be negotiating rates with the Treasury, much like the way the stock market works with bid/ask pricing. It's just supply and demand. I mean who would know better than local banks (and the people using them) what rate can be maintained in a particular market at any given time? And why have a middle man handle the business that was supposed to be the duty of our Treasury? How could that possibly be in Our best interest?

You guys do realize that Money DON'T Exist ... right ?

And that money is created by the FED which is a private company not owned by the USA government right ?



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Funny how the secure message word is Bilderberg

reply to post by Pinktip


Henry Ford said something to the effect in the Twenties that if the people really knew how the banks operate they would not be open tomorrow morning.....HENRY FORD!!!! 90 years ago.......WAKE UP PEOPLE!!!!!!!!

In general the Bernanke Fed has been too slow to react to the deflationary spiral that we are currently in.

Creating negative return on savings is not necessarily a bad idea conceptually, but it most certainly is not the most effective policy option that could be pursued by the Fed. The single most effective thing that the Fed could do is apply the "bill pass" aspect of open market operations directly into consumer balance sheets.

You might ask what a "bill pass" is? One of the ways in which the Fed creates liquidity in the Fed Funds market is by actually purchasing Treasury Bills. Since the money used to make such purchases is created by the Fed and since T-Bills can easily add up to material $$, the bill pass is the most aggressive Fed policy instrument--in normal times that is. Now, the Fed has been pumping in liquidity to the Fed Funds market very aggressively (on most days holding the Fed Funds rate well below its official target level and actually near zero). However, in a disfunctional credit market such as now, this flow of liquidity is about as effective as trying to fill up a swimming pool by forcing water through a straw. You can keep applying all the pressure you want, but only so much water can flow through a straw.

On the other hand, the Fed could have a very significant impact on consumer sentiment and purchasing power while at the same time perhaps creating less aggregate liquidity if the liquidity was targeted where it could and would be used. Namely, the Fed could do a tax pass instead of a bill pass. A tax pass? Yes, instead of using created liquidity to purchase T-Bills, the Fed would create liquidity and use it to pay the Treasury in lieu of money collected through paycheck withholding. In other words, if you had a bi-weekly pay of $3,000 aggregate and $2,200 after tax, the Fed could pay the withholding instead of you and your next paycheck would be $3,000. This is a simplistic example, but the point is that it would have an immediate and tangible impact on nearly all consumers (except the relatively small % who are unemployed). While banks may be afraid to lend, the fact is that if you put more money in consumer hands as a windfall like this, I have confidence that they will not be afraid to spend.

There are other advantages to this approach, specifically that it does not rely on government spending programs for stimulus, it instead relies on consumers to decide how to use the money. Also, it would permit some consumers with very stressed balance sheets to perhaps avoid foreclosure/bankruptcy, so it could be a very helpful policy to mainstreet instead of this perception that all efforts are focused on helping Wall Street and the banks.

These are just some musings from myself--a banker--who is not very impressed with the lack of creative uses of Fed power by a Fed governed by someone who ostensibly is an "expert" on the mistakes of the Fed during the Great Depression.

I live in British Columbia and my parents in Ontario.
As a family we are buying three homes in port huron for a total of $120,000 Ameri-cash.
Our problem is resale at some point.
And burnt remnants of greyblack hip hip diddly, do not pay euros

Originally posted by Dulcimer
I am already at a point in time where I look around and I wonder why we are not storming the parliament buildings across our fine countries.

It is time for a revolution.

How long can people sit back and take it.

I don't understand this economy.

I don't understand our politics (Canada) Didn't we just have an election? Shouldn't it be over?

Everything is screwed up.

Nothing would please me more than something to wake these suck boys out of their slumber. Dion is gone, God Bless.
Now it is time for the rest to fall. Harper"s majority will never come to pass.

reply to post by evilod


www.lightparty.com...

You might like this article. It's about the decentralization of the banking system.

[edit on 9-12-2008 by cognoscente]