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Why Negative Interest Rates Spell Doom For Capitalism
Be prepared for the next great transfer of wealth. Buy physical silver and storable food.
zerohedge.com / by Robert Romano via NetRightDaily.com on 02/18/2016 17:40
Interest rates in Switzerland, Denmark, Sweden, the European Central Bank and now the Bank Japan have now plunged into negative territory, starting a new phase in the era of central banking that is very much uncharted.
Time will tell if it leaves the global economy lost at sea.
So far, banks are primarily being charged for keeping excess reserves on account at these central banks, a policy designed to jumpstart lending by making it more expensive for banks to sit on reserves. In some cases, like Sweden, the deposit rates have gone negative, too.
Whether it will all work out or not remains to be seen — initiating inflation and economic growth. Maybe it will, but so far it’s not really looking good.
So what if it doesn’t work? The longer term implication is that central banks will then feel compelled to move their discount rates and other rates negative, too. Once that Pandora’s Box is open, it will mean that when financial institutions borrow money from the central bank, they will earn interest instead of owing it.
You read that right. When, not if, central banks go completely negative, they will wind up paying banks to borrow money from them.
That’s quantitative easing by another name.
The post Why Negative Interest Rates Spell Doom For Capitalism appeared first on Silver For The People.
Thanks to BrotherJohnF
Source: http://silveristhenew.com/2016/02/18/why-negative-interest-rates-spell-doom-for-capitalism-2/
