Negative interest rates.

[ladylola]

The subject of negative interest rates has been under discussion on other forums I use so it would be interesting to hear people's thoughts on here. Seems it has become a realty in Switzerland and Sweden and May very well come here in a few years time. Have a read ,
http://www.telegraph.co.uk/finance/...eriment-has-turned-economics-on-its-head.html

 

[Brigadier]

It's to discourage saving, therefore effectively forcing people to spend, and "stimulating" the economy.

All well and good, but it disincentives hard work and personal progress, in my opinion.

 

[Deleted member 63160]

Burglars will be happy with that.

 

[joe-90]

Buy to let will go berserk.

 

[JBR]

True. I also heard, the other day, that it is quite likely that banks will begin charging for providing current accounts. I think we're all familiar with the lack of interest on such accounts, but having to pay for their keeping our money is very annoying.

I've thought about keeping my money (for what it's worth) under my mattress!

 

[Newboy]

I've always been slightly surprised by free (personal) banking.

My cash is protected, I can get to it 24 hours a day from cash points anywhere in the country/world, I can move money about sitting at home, pay bills at whatever day/hour I choose and I don't pay anything for any of these facilities .... why the fuss?

Business banking - a whole different kettle of fish!

 

[Brigadier]

I've always been slightly surprised by free (personal) banking.

My cash is protected, I can get to it 24 hours a day from cash points anywhere in the country/world, I can move money about sitting at home, pay bills at whatever day/hour I choose and I don't pay anything for any of these facilities .... why the fuss?

Business banking - a whole different kettle of fish!

Of course you pay something, Newboy - the bank uses your money, makes itself huge profits with it, and pays you next to nothing (in interest) for the privilege.

 

[ladylola]

Burglars will be happy with that.

By which I take it you believe people will draw their money out of the banks? I'll admit that was my first reaction and that of many others although it seems not to have happened in Switzerland and Sweden .on other forums some have talked about buying precious metals . I'm not totally convinced but if that's the plan then best to get in early as if more people are buying the price could well rise quite steeply. It would be wise to stick to the physical metal rather than the paper gold market and to hold that gold oneself which would seem an even bigger lure for your burglars.
I think JBR is also probably right when he says that we will probably start paying for current accounts too. Personally I try to deal in cash as much as possible and keep my current account as low as possible using it as a sort of float for materials.

 

[Deleted member 63160]

Burglars will be happy with that.

By which I take it you believe people will draw their money out of the banks?

Yeh. I never have more than 2 or 3 grand in my current account and don't mind receiving boogerall interest but if they started charging me for the priv of them using my cash, I'd stick it under the mattress. I assume we will still get a return on isas etc??

 

[Brigadier]

I assume we will still get a return on isas etc??

That's not logically consistent with the principle of negative interest rates though, which is
"Spend it like you stole it!"

ISAs etc encourage spending in the future.

 

[Newboy]

Of course you pay something, Newboy - the bank uses your money, makes itself huge profits with it, and pays you next to nothing (in interest) for the privilege.

So just the usual anti-bank rhetoric - how much money do you think the banks earn from current account balances?

 

[Newboy]

Yeh. I never have more than 2 or 3 grand in my current account and don't mind receiving boogerall interest but if they started charging me for the priv of them using my cash, I'd stick it under the mattress.

And when you want to pay a bill or make a purchase how do you plan to do that - wander down to the supplier with a wad of cash?

 

[joe-90]

Yes. You get a discount if you do that.

 

[ladylola]

On a personal basis I've got no problem with paying with a wad of cash other than it becomes increasingly awkward when large sums are involved . Large amounts are viewed with some suspicion and covered by the Money Laundering Regulations. On the whole though I'm more concerned that it is another move towards the cashless society something mentioned in the link.

 

[ladylola]

My cash is protected, I can get to it 24 hours a day from cash points anywhere in the country/world, I can move money about sitting at home, pay bills at whatever day/hour I choose and I don't pay anything for any of these facilities .... why the fuss?!

Of course you pay something, Newboy - the bank uses your money, makes itself huge profits with it, and pays you next to nothing (in interest) for the privilege.

Yes cash is protected and you can access all the things you mention , but the fuss is really would you be happy paying the bank for that "privilege " . Put it another way would you be happy for a government to slap another tax on your wealth?
As to the bank using our money to make themselves huge profits. Yes it's true they have been forced to raise their capital holdings but by far the largest percentage of the money they loan is still invented from thin air , it's called fractional reserve banking.