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What are the economic implications of negative interest rates?

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What are the economic implications of negative interest rates? Why would anyone loan money with negative interest rates
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>>964894
encourage spending
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>>964896
Why would a bank loan money though
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>>964901
The negative interest rates are for the deposits, no? No banks are gonna lend money with negative interests.
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>>964901
>>964904
They don't lend to the consumer. The FFR is for inter-bank lending. Any loan an actual person gets from a bank will have enough interest to turn a profit.
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>>964904
So why would anyone deposit money
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>>964909
I assume you have a bank account. Why do you? I can guarantee you the real interest rate after inflation is negative for your savings account. For your checking account, it even more obviously is.
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>>964908
I'm not trying to sound like a retard, but I still don't see why a bank would make a loan to another bank if they're paying to do so
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>>964911
I have almost no money in my checking at anytime and I don't accrue any fees
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>>964915
Fees are irrelevant. Any money you have in the bank is accruing such a low interest rate, if any, that it is, in fact, losing value due to inflation.

>>964913
I don't know the how the incentives work, but suffice it to say when banks lend to each other, it's far more important that the borrower be able to afford the loan than it is the lender be able to lend. When the FFR is low, lending increases. When it's high, it decreases.

The real interest rate has been negative for years now, anyway.
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They cannot do so while cash exists, people would stop keeping money in banks beyond what's needed to pay immediate bills.

So, obviously the jews aim to outlaw cash. Once you have nowhere to take your money, when all is electronic and every possible location under the one taxation authority, the central bankers will finally be able to suck marrow from everyone at once.

They even openly admit this, it's all googlable.
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>>964999
Gee, thanks /pol/! What a good answer grounded in economics!
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>>964894
the negative interest rate loans are from the Fed to the central banks. This gives central banks an incentive to take risks in their loans because they can afford for a higher percentage of those loans to default.

Consumers don't see negative interest rates, beyond getting slightly better loan rates like a 2.5% 30year mortgage.
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>>965006
The bund auctioned for -.30% today
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In short, it increases the money supply, lowers prices, and expands the nominal GDP.

That is the economic theory, anyway.
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>>965013
The only reason to buy that is if the dollar itself is falling faster than that, i can't imagine that happening anytime soon.
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>>965006
>the negative interest rate loans are from the Fed to the central banks
No. It isn't. That's the discount rate, which the Fed doesn't bother with setting. It's just .25% above the Federal Funds rate, which is the rate that banks lend to each other. The goal of hte fed is NOT to have people borrow from it. It's a lender of last resort.
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When a central bank imposes a negative interest rate on banks (on excess reserves) it's basically like a tax on the banks for failing to loan out money. It's an incentive to the banks to reduce excess reserves and make more loans. The central bank wants to push money into the economy.

When a bank loans money at a negative rate, or buys government bonds with a negative interest rate, the bank thinks there will be deflation. The real rate of interest will be positive. In other words, the rate of the loan may be -0.3%, but deflation may be -2%.

They cannot impose a negative interest rate on savings accounts because, as has been pointed out, people would simply withdraw their money and hold cash, unless we go to a cashless system. I don't know why some blue pilled anon above dismissed that idea. There have been proposals to do exactly that.
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>>965005
There you go shill dickhead.

Negative interest rates simply mean negative interest rates at the central bank. Money is essentially destroyed by the central banks. Banks will loan at lesser rates. So if the Fed sets the rate at -0.50%, then banks will loan to each other at -0.25% and make profit from the differences of appreciation relative to deflation.

However, loans for the public would still be at positive interest rates. Banks would simply hold as little capital as possible. Sweden and Denmark, as well as Switzerland are the current nations to look at for negative interest rates.
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>>965528
If the Fed wants to destroy money, then they would just literally destroy money.

Again. The FFR is already at negative REAL interest rate, and yet banks are lending to each other plenty. You know nothing about how central banking works, and you should probably at least learn the most fundamental mechanisms of open market operations before you start spouting nonsense.
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Posting in a blue ID thread.
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>>964894
people will spend money
or not it depends
Thread posts: 22
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