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It Begins: German Bank 'Charging' Negative Interest To Its Retail Customers
Submitted by Simon Black via Sovereign Man blog,
Don Quixote is easily one of the most entertaining books of the Renaissance, if not all-time. And almost everyone’s heard of it, even if they haven’t read it.
You know the basic plot line- Alonso Quixano becomes fixated with the idea of chivalry and sets out to single-handedly resurrect knighthood.
His wanderings take him far across the land where he gets involved in comic adventures that are terribly inconvenient for the other characters.
He famously assaults a group of windmills, believing that they are cruel giants. He attacks a group of clergy, believing that they are holding an innocent woman captive.
All of this is based on Don Quixote’s completely delusional view of the world. And everyone else pays the price for it.
Miguel de Cervantes’ novel is brilliantly entertaining. But the modern-day monetary equivalent is not so much.
Central bankers today have an equally delusional view of the world. Just three months ago, Mario Draghi (President of the European Central Bank) embarked on his own Quixotic folly by taking certain interest rates into NEGATIVE territory.
Draghi convinced himself that he was saving Europe from disaster. And like Don Quixote, everyone else has had to pay the price for his delusions.
On November 1st, the first European bank has passed along these negative interest rates to its retail customers.
So if you maintain a balance of more than 500,000 euros at Deutsche Skatbank of Germany, you now have the privilege of paying 0.25% per year… to the bank.
We’ve already seen this at the institutional level: commercial banks in Europe are paying the ECB negative interest on certain balances.
And large investors are paying European governments negative interest on certain bonds.
Now we’re seeing this effect bleed over into retail banking.
It’s starting with higher net worth individuals (the average guy doesn’t have half a million euros laying around in the bank). But the trend here is pretty clear– financial repression is coming soon to a bank near you.
It almost seems like an episode from the Twilight Zone… or some bizarre parallel universe. That’s the investment environment we’re in now.
Bottom line: if you’re responsible with your money and set some aside for the future, you will be penalized. If you blow your savings and go into debt, you will be rewarded.
If we ask the question “cui bono”, the answer is pretty obvious: heavily indebted governments benefit substantially from zero (or negative) rates.
Case in point: the British government just announced that they would pay down some of their debt that they racked up nine decades ago.
In 1927, then Chancellor of the Exchequer Winston Churchill issued a series of bonds to consolidate and refinance much of the debt that Britain had racked up from World War I and before.
This debt is still outstanding to this day. And the British government is just starting to pay it down– about $350 million worth.
Think about it– $350 million was a lot of money in 1927. Thanks to decades of inflation, it’s practically a rounding error on government balance sheets today.
This is why they’re all so desperate to create inflation… and why they’ll stop at nothing to make it happen. (It remains to be seen whether they’ll be successful, but they are willing to go down swinging…)
What’s even more extraordinary is how they’re trying to convince everyone why inflation is necessary… and why negative rates are a good thing.
On the ECB’s own website, they say that negative interest rates will “benefit savers in the end because they support growth and thus create a climate in which interest rates can gradually return to higher levels.”
I’m not sure a more intellectually dishonest statement could be made; they’re essentially telling people that the path to prosperity is paved in debt and consumption, as opposed to savings and production.
These people either have no idea how economies grow and prosper, they’re outright liars, or they’re completely delusional.
I’m betting on the latter. Either way, this assault on windmills has only just begun.
As Don Quixote himself said, “Thou hast seen nothing yet.”
* * *
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Oh, NO! I'm worried! I guess I'll have to find somewhere else to store my hundreds of thousands of euros.
Wait...I DON'T HAVE HUNDREDS OF THOUSANDS OF ANY CURRENCY. I guess I'm not worried.
Dont they know that "Deutsche Skatbank of Germany" means "German Shitbank of Germany" in English?
Regards,
Cooter
Like Dominoes will the Western countries' economies fall in desperate attempts to keep their failed system running. Central Banking is evil and destorys freedom.
Deutsche Skatbank
From the Greek.. “skato”
https://translate.google.com/#el/en/%CF%83%CE%BA%CE%B1%CF%84%CF%8C
"I'll gladly pay you interest each and every Wednesday if you'll let me deposit my money in your bank today." - Wimpy
If the negative interest rate is between 50% and 100% per annum the technical term is "bail-in"...
Good article, Simon!
Try this for intellectual dishonesty. On The Fed's own website, they say:
If the Fed's own website were to list who actually owns The Federal Reserve Bank, it would be the very same U.S. banking holding companies, foreign banking organizations
operating in the U.S., and state-chartered member banks of the Federal
Reserve System it is charged with regulating.
Self-regulation for the mother-fucking win!
Meh.... 1250 Euros (~ 100 per month) for someone that has 500,000? It's like a convenience charge to keep in the the bank for someone with that kind of a balance.
Ya ya, I know. It's the PRINCIPLE of the matter, just like all the other bailouts, banker lawsuits, and legal accounting (FASB) that's gone on over the years. Right?
It's like big government. It starts small.
DAX to 100K!!! Hip Hip Horrah!!
So long as the bank's negative interest rate is less than 10% however it's refered to in the industry as a "tasting" the customer accounrt...
This is not...
Fifth Column
Fourth Estate
Its is...
Third RAIL....the Banksters and going over there and touch it .
Unbelieveable
http://www.youtube.com/watch?v=GKYcgMU-nJQ
Ahh, the famous Skatbank, brought to you by Skatman
http://youtu.be/y6oXW_YiV6g
I was just about to post that, but then I figured people would hate me the rest of the day.
It's annoyingly catchy, I'm probably still be humming it tomorrow...
The skatman looks like John Maynard Keynes.
"Skat" is a game for three players, something like a shell game.
Ist das nicht im Arsch gefickt?
Ja, das ist im Arsch gefickt!
Ist das nicht sehr verächtlich?
Ja, das ist sehr verächtlich!
O, diebische Betrug Skatbank,
O, diebische Betrug Skatbank.
@ CrazyCooter:
"Dont they know that "Deutsche Skatbank of Germany" means "German Shitbank of Germany" in English?"
NO, NO, NO...
A 'Scat-bank'. if I understand correctly, would be a group (a 'bank', as it were) of people that all look like 'Fat Bastard', all together; with deliveries on deck, ready to crown their openings to deliver their 'treasures' to their client recipient(s).
These are simply a group of bankers, doing God's work, delivering their results to their client savers. I fail to see the resemblance. HEY, if you don't WANT to pay them for their services, you are always free to LEAVE (but 'early withdrawl' will be penalized, as agreed upon).
Listen Pointless.
Ha. That "WAS" funny. A good opener for a Simon Black thread. But seriously, why would anyone have fiat. Fuck that.
My mates and I here in India accumulate "FAVORS". I believe in America you call it barter.
I do masonry work on the weekends as a hobby. Also Residental/Commercial electrical, circuit design, 3D prototyping, accurate concept models, master patterns and investment casting patterns. My friends an I trade goods and services as credits with no monies changing hands.
It's an excellent method. You quickly learn who is the greedy one and no one trades with him ever again(Fuck you Baasim!)
Anyhow. I want you to try this method to overcome your dependance on worthless fiat. Start small and grow big.
Wow, a constructive contribution. I'll be damned!
Listen! Is that you Baasim? Fuck you!
LOL first up vote from me. That was funny.
So you are proposing we go back to 3rd world bartering? How does one create wealth that way when you can't use your hands after a certain period of time? You have a career expectancy of an NFL player.
Listen.
No. I want you to be a tribesman. Use everyone around you to create wealth for "YOU". Then discard them and live like king and help only tribesmen so they can discard and live like king.
Smart guy you are.
https://www.youtube.com/watch?v=xWVxI6XZAuE
So...you do investment casting patterns and 3D prototyping on the weekends between digging outhouse holes (masonry) and posting 24 hours a day on ZH?
Listen.
I'm not Doo Chung Rollar Bering!
AND, you said,
"Use everyone around you to create wealth for "YOU". Then discard them and live like king and help only tribesmen so they can discard and live like king."
LISTEN.
As you climb the ladder, try not to step on too many fingers and toes of those you are passing; because when you eventually reach the top and are forced to make your way down, these people won't and can't help you descend comfortably. in fact, if you get to the top and have no more ladder to climb, these people will willingly push you over in their own internal desire to assuage their injuries that you inflicted on them. At that time, those 'tribesmen' will turn their backs and pretend not to notice as you cry out in distress and horror.
Don't continue to play the part of a fool.
Rules of Fight Club:
1. Do not trade with Baasim.
2. Do no talk about Fight Club.
3. Do not trade with Baasim!
Negative Interest Rates = Bank Bailin by Stealth
Dang! I didn't see your comment before I posted mine. That was exactly my first thought as well.
Haven't had a bank account in 20 years now. Doesn't mean I don't have an ATM card and checks. It just means there are other places to bank than at a bank.
Just in fees, fines and penalties for crossing over imaginary lines you can be losing 20% of your account balance in year if you don't watch what you're doing.
If you can't quite swing life cash-only (harder than it sounds), at least avoid banking at banks. They've sucked since forever. Believe me, you have been paying them since forever, even without negative interest rates.
Bank with a a credit union for a checking account. Pay cash whenever possible. Buy silver. Bitchez.
I pay cash for everything and ask for a 2% cash discount on purchases over $500
Starve the system.
no bank account here since 1994. It was interesting anyways... The guy in the branch denied me a savings account, told me it was a "character issue".
I have not given 1 cent to a bank since that day. Well maybe in some roundabout way I have but not directly.
A NIRP of -0.25% for having over 500,000 Euros?
They are going to chase money out of Germany.
And I suppose they'll scale that down gradually until it is 10,000 Euros, then 5,000, then 50.
It's like a slow motion bail-in.
"And I suppose they'll scale that down gradually until it is 10,000 Euros, then 5,000, then 50."
That's what bank fees are for. If you have accounts at TBTF bank (shame on you!) you're already likely experiencing negative nominal rates. God knows we've already been at negative real rates for some time.
Even my non-TBTF business accounts (but not my personal CU accounts) are negative nominal rates. They're stealing nickels everywhere.
True that. U.S. Bank was the only one I could find that wouldn't charge me a monthly fee for holding my money, and only if I applied for a Platinum credit card. I don't use the card or account much, so they keep calling me to see if I "need" anything.
The TBTF's all charge a fee to hold your money - after they got bailed out - talk about adding insult to injury.
The old saying of people used to keep a suitcase of money under their beds perhaps is the new normal.
It appears certain that it'll have higher returns than being in a bank account.
Just wait until banks start advertising "safety" to support the cost of keeping money in a NIRP account. That's going to be amusing.
.25% teh, let's go All in and make it a 25% bail-in. s/
If I was a central banking spokesman, I would respond thusly:
"You don't seem to understand. The figure only represents two and a half 'basis points'. It would equate to only an additional $250.00 added as interest to a loan you took for your $100,000.00 house. If it is streched over 30 years (the average life of the loan), it would only be $8.34 per year. Naturally, the average loan is for $500,000.00, but even at that amount, it only equates to approximately $42.00 a year (I'm not actually good at math, though). Is THIS trivial amount too much to pay for all the other benefits that YOU, the CONSUMER, realize as you have the ability to enter our bank building and our air-conditioned environment?. In retrospect, WE see this as a 'win-win' situation for everyone. It's NOT YOUR MONEY, really, you know. We print it and disperse it and control the supply of this commodity that you have come to rely on."
"But the trend here is pretty clear– financial repression is coming soon to a bank near you."
maybe ... the author does not address another possible reason for negative (and low) yields in germany
imo, the reason for low yields in germany is a BET ON EURO BREAK UP (germany leaving)
buy debt denominated in germany ... if break up occurs the germany mark will soar compared to euro
low/negative rates is the price to pay for big gain in currency
Cash in the fiat and buy PM. Problem solved. I see this as PM positive.
"Pay us for the privileged of stealing your deposit and using it as a base against our counterfeit loan-money. And just wait until we force you to relinquish your interest in your deposit and turn it into equity in our ponzi."
An American, not US subject.
"We are the Zionist banksters: We own your fleece, your hide,, your flesh, and your lambs."
Endeavor to persevere..... https://www.google.com/search?q=chief+dan+george&biw=1280&bih=621&tbm=is...
WTF? A deposit is a loan to the bank.
Fine! Give me my paper please! Long safes and PVC pipes.
When you bring your fruits to the bank, they are eaten right away by the bank.
When Japan went to zero interest rates in 1990's, sales of safes and domestic safety boxes went through the roof in that country.
Bah ha ha ha ha ha ha ha ah ha. Take your money out.
500,000€ ??? Who the fuck cares? Bleed the rich! Why the hell would any one individual put that much in one account anyway? Wake me up when something important happens. Thanks.
Right: there's a principled, moral stance. Screw everyone who's even slightly better off than I am.
But, like income taxes, once it becomes acceptable to charge this to the very rich, it won't stop there. Soon it'll be on €50,000 balances, then €5,000, ...
"First they came for " -- oh, you know the rest.
why would anyone have 500k idling in a bank anyway?
If you're not a goldbug, where are you going to put it? Lock it up in CDs with a 0.05% return and no access to your cash?
Ponzi markets and zero interest rates make leaving cash in the bank a fairly sane investing move.
Yes. But not in one bank, and DEFINITELY not in one account! Are people really THAT stupid??
Some are, but many are not. It's easy to get complacent during good times.
During the '08 collapse, I went in to the bank to reconfigure accounts specifically to maximize FDIC coverage (ie convert some accounts to joint accounts, change account types, and move money below limits on all accounts.) When I simply mentioned I wanted to make some account changes they already knew exactly what I was doing and had someone assigned to handle those cases, and they were processing a couple dozen a day.
I'd go further and say definite not one bank, either. Spread the risk. Of course the reality is when that day comes none of them will be covered in a way that will retain the value of what's been saved at the bank, though you might get some type of nominal payment worth half as much eventually.
Probably companies that have to meet regular payroll. Of course, they can just lay off a few more employees to cover the added expense.
Charging "negative rates"? You mean in ADDITION to the "Other Negative Rates"... aka "FEES"?
Is that like "Compounding Negative Rates" (Fees + Negative Rates)?
Solution = "BANK OF SEALY, SERTA & POSTUREPEDIC". Unless you prefer one of those offshore banks (in the Emerging Markets that Simon can advise yo on as a Client).
Nothing wrong with having something stashed safely away in a discrete, far off place. But for day-to-day or current activity, Sealy, Serta and Posturepedic are an ideal backup to the token (functionally minimal) amounts one might keep in a traditional bank.
There is still 12 billion Deutsche Marks in circulation in Germany. That amount was never encashed when Germany started using the Euro.
see page 24 https://www.bundesbank.de/Redaktion/EN/Downloads/Publications/Monthly_Re...
withdraw it
If I had 500,000 euros it certainly would not be in a bank. My concept of diversification would be roughly:
200,000 in PMs neatly kept in a very heavy, concealed safe which would cost about 10,000 euros (really, why skimp on protection?)
100,000 in cash of various currencies
50,000 in a bank for everyday bills (maybe spread around to a Paypal account and a credit union)
90,000 in a slush fund for possible land purchases (I like raw, undeveloped land. It's a personal problem)
50,000 for operational, functional vehicles or other hard assets.
Diversification. It's what's for dinar.
Seriously, when you look at it, 1/2 million euros can be nicely "invested" outside the system of stocks and bonds (upon which you pay capital gains and possibly income taxes). I didn't even get into art, energy systems or collectibles.
So just imagine if you had 5,000,000 euros and had to keep 500,000 in the bank for everyday bills. You'd be hating life!
Like the government rules on 750cc motorcycles created the 749cc engine, and the 30 hour Obamacare requirement created the 29 hour worker, the 500000 euro negative interest will create 490,000 euro accounts.
Of course, the only reason to park such an amount is on a very short term basis - otherwise the cash will go to bail-ins.
And when do they seize other assets? Precious metals? Survival gear? Stored food? Virgin daughters?
Is it time to get the pitchforks yet?
http://olduvai.ca
WTF does anyone expect when the governments offer to lend money to the banks at 0%?
The commerical and retail customer is a PITA when all the banks have to do is turn around and buy no brainer government offerings with the money.
They don't need private money anymore.
"So if you maintain a balance of more than 500,000 euros at Deutsche Skatbank of Germany, you now have the privilege of paying 0.25% per year… to the bank."...
Yeah this will work like the best advertisement for people to keep money in their bank accounts... Because if the hidden interest penalty fees and 24 to 48 hour delays in check clearing weren't enough of an incentive to keep your money in the "safest place" possible!... Negative rates will certainly seal the deal!!!!...
Oh almost forgot!... The security on your electronic account is absolutely guaranteed safe from predatory IT hackers inside and outside the bank!
You have their word!!!
I think we're all getting zero interest rates on savings due to lies about real rate of inflation. Hard assets bitchez.
Does this mean I can refi my car loan with a negative rate now?
Yes. In fact if you hold that loan long enough.. they will owe you.
Case in point: the British government just announced that they would pay down some of their debt that they racked up nine decades ago.
LMFO..............
I'm waiting for my currency to be worth zero... then I will pay off everything
There are 7 ways an places to preserve one's wealth and to protect one's Assets/Wealth, that you control directly.
These apply for almost any scenario that develops in your personal or professional life, or due to actions by Banks and your Government:
1. Domestic Bank Acct - - - Pay Bills (via checking acct., with modest cash reserve in Savings) = Traceable, Reportable, Confiscatable
2. Cash (at home) - - - Keep significant amount in Safe (Bullion, Cash Currencies) = Non-Traceable, non-reportable
3. Cash, Coins Offshore - - - Nest-egg for rainy day. Insurance Policy for If/When TSHTF.
4. Real Estate at home = Confiscateable by Gov or winners or Lawsuit
5. Real Estate abroad = Need not declare to taxman. Immune from domestic confiscation and lawsuit (depending on legal structure or secrecy)
6. Real Assets at home (car, boat, paintings, other valuables) - - - Non-reportable, except in Bankruptcy, but... Confiscatable.
7. Real Assets abroad (car, boat, paintings, other valuables) - - - Non-reportable and non-Confiscatable by native Gov
8. Offshore Trust. If your Net Worth is in the millions (min. 1-2 Million is liquid assets to offset Mgmt fees). While it may protect you from direct confiscation in your native country, it may not be enough to protect you from indirect confiscation: lawsuits. Especially where American lawyers and LEAs are involved -- who are almost the only ones in the world who act as though their Jurisdiction or Reach is Global. But it may deter frivolous lawsuits, if the "cost" to get at this wealth is too large, relative to the potential payback.
Speaking objectively (no dog in the fight, but from personal experience), Simon leverages his global network of connections, to help his Clients find the right combination of Customized Offshore Solutions... solutions that preserve and protect one's assets and peace of mind -- no matter what ruthless banksters and compromised politicians do to make our lives more difficult each year.
My impression and knowledge to date, is that if you have some Thousands to few Tens of thousands to "safeguard" offshore, then some combo of cash and bullion is probably the right thing for you. If you have Hundreds of thousands to safeguard offshore, than you probably add foreign RE to the mix. If you have >$1M to safeguard, then you will probably add an Offshore Investment Portfolio. If you've got >$2M, you will want to add the Offshore Trust to the mix.
The point is, (1) it is the SUM TOTAL of your Safeguards that make for a robust overall protection, and (2) the Customized Solution that's tailored to you adds to a sensible and affordable fit that Diversify and Safeguard your assets -- which were presumably hard-earned and taxed, but now want to keep.
Besides everything, what's wrong with this picture?...
Big banks do not want your money, period. They don't need it. They get what they need for next to nothing and do not need to hassle with customers. Besides loaning to big well capitalized businesses and high net worth individuals, the risks are far too great at current interest rates. Hell, go ahead and take a big wad of cash to a bank and see what happens. I can almost guarantee you they will recommend a third party annuity for any cash you do not currently need - and earn a big commission in the process. Banks are practically begging you to take money out in one way or another.
If you don't borrow "money" at 0% you are retarded. If you attempt to pay that "money" back you are retarder. If you don't buy hard assests with that "money" you are retardedest.
You won't see it happen cause the rich don't stand in cues but it would be nice to see a bank run performed by rich people.
Anyway, people with more than 500,000 Euro in the bank will divide that money over multiple accounts or multiple banks or will take that money somewhere else altogether.
Remember that time when banks used deposits as their capital base? Strikes me as kind of funny they're telling those deposits to please go away and put your money into a bank outside the EZ.
It's a very dangerous game they're playing. I guess because they can't debase their currency by buying up EZ members' bonds in unfettered fashion, they've got to do, something, anything. If they can't generate some monetary velocity this way, I can't wait to see what desperate economic measure they lurch to next.
The answer to the statement near the end of the article: They are outright liars, which should be obvious by now. I'm quite tired of the greedy elite confiscating my wealth, while trying to convince me that it's good for me.
Wow a bank with holes in it.
Basically what gubmints are saying in Europe is,"No one should have more than 500,000 Euro. No matter how hard you work and save, if you exceed 500,000 we will take your money and redistribute it as we see fit." Is that communism or what?
This is issue 2.0 of Modern Monetary Theory (MMT). MMT issue 1.0 says central banks can go on creating fiat currency in perpetuity, so governments need never worry about deficit spending, trade deficits, current-account deficits, debt levels, debt service costs, or defalulting on debts. One need never worry about Wiemar-like inflation because under MMT, currency is all electronic, and inflation can be handled by adding a few zeroes to the limit on your credit card (handled electronically - super easy). All the economists have to do is persuade people that the idea of currency having a fixed value, or value in some fixed relation to something (precious metals, commodities, whatever) is old-school and passe. Savings, of course, will be inflated away quickly, so savers will be seen as fools who do not understand their societal obligation to go out and shop. All economic metrics will be replaced by one: Velocity of Money.
MMT 2.0 says that savings are evil. Spending is divine.
Now all we have to do is convince the central bankers that we, the common folk, should be included as recipients of fiat handouts. Why the central bankers have not realized that the key to economic recovery is to put money into the hands of consumers, I do not understand.