There’s No Positive For Us in Negative Interest Rates

Archive Blog from March 10, 2016 by Anne Trimble 

Want one of the best examples of how the slow collapse of the global economy is turning the world upside down? And another reason why you should be very cautious about keeping money in any U.S. bank or credit union that you can’t afford to lose?

Consider “negative interest rates.” Because of the inability of the controllers of man’s debt-money system to generate growth using every other tool they can think of, now they are resorting to negative-interest-rate policies that literally stand centuries of thinking about financial incentives on their head.

What are negative interest rates? One textbook definition calls them “an unconventional monetary policy tool whereby nominal target interest rates are set with a negative value, below the theoretical lower bound of zero percent.”

Stunningly, what that means is that you have to pay a bank just so they’ll keep your money in their vault, or rather their computer system somewhere. Depositors actually pay to hold money in bank accounts!

Of course, the traditional arrangement is that, when you lend somebody money, they have to pay you—something—for the privilege. That has been a bedrock assumption across centuries of financial history.

But as the New York Times explained, it is “an assumption that is increasingly being tossed aside by some of the world’s central banks and bond markets.”

And anyway, that idea has suffered a lot since the beginning of the Great Recession, as bank account holders and owners of U.S. Treasury Bonds have gotten used to interest rates of near zero. Same with people in other countries.

So we’ve been conditioned to feel like the move to negative interest rates isn’t such a huge leap into the unknown. Specifically, for example, Sweden’s central bank recently lowered its bank lending rate to a negative 0.5 percent from an already negative 0.35 percent and said it could cut further still.

And even the chairwoman of the U.S. Federal Reserve, Janet Yellen, acknowledged in congressional testimony last month that the American central bank is looking at a negative interest rate strategy too!

The policymakers’ thinking behind this approach is that everything they’ve tried over the last few years to coax the global economy out of its long-term stagnation simply hasn’t worked. That includes the several-year policy of “quantitative easing” in which the U.S. Fed bought billions and billions of dollars of Treasury bonds from the market in order to lower interest rates, increase the money supply, and try to goose the economy.

“QE” didn’t work. The U.S. economy remains very sluggish. China’s growth has cooled considerably. Europe still can’t seem to find its way out of its long doldrums. Japan is still lost somewhere after its Lost Decade.

So with negative interest rates, central banks hope to take yet one more step to encourage business investment and consumer spending, increase the value of the stock market, lower the value of a country’s currency to make exporters more competitive; and create expectations of higher future inflation which can induce people to spend now.

And they’re apparently expecting businesses and consumers to go along, which they already have to a great degree in Sweden. As the Times put it, “It looks as if the convenience of keeping money in a bank account is worth a small negative interest rate or fee for most consumers and businesses, at least the only slightly negative rates currently in place. Storing and providing security for cash may be more expensive than a small bank charge.”

But as negative interest rates creep into commercial banks in the United States, don’t be fooled! President Obama long ago already signed an executive order that allows banks to use negative interest rates if the bank runs out of cash—period.

So please pay attention to this warning: Do not keep extra money in a bank or a credit union. There are more and more ways in which the federal government is equipped, and is threatening, to confiscate your wealth. And now negative interest rate policies are just one more.

In fact, the only way you can be sure of safeguarding the assets you’ve compiled is to put them into God’s Money, gold and silver coinage, and remove them entirely from the teetering debt-money system that has been constructed by man and that is used by today’s financiers to control the system with their global electronic reach.

For more information and advice, contact us at info@RealMoneyUsa.com or at 866-966-0177.