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It Will Now Cost You 0.5% To Save Money In Denmark: Danish Central Bank Cuts Rates For Third Time In Two Weeks
When the Danish Central Bank cut rates precisely a week ago, going from NIRP to NIRPer, and pushing the deposit rate from -0.2% to -0.35%, the sense of desperation was already in the air: after all this was already the second rate cut by the Denmark's monetary authority in one week, all in the hope of preserving the peg to the DEK to the EUR. That sense of desperation just hit a fever pitch moments ago, when the Dutch central bank just went NIRPest, and cut rates across the board yet again, and made it even more costly to save money in the north European country, where the Deposit rate has just been cut from -0.35% to -0.5%!
From the release:
Effective from 30 January 2015, Danmarks Nationalbank's interest rate on certificates of deposit is reduced by 0.15 percentage point to -0.50 per cent. The lending rate, the discount rate and the current account rate are unchanged.
The interest rate reduction follows Danmarks Nationalbank's purchase of foreign exchange in the market.
Danmarks Nationalbank's interest rates are:
Lending rate: 0.05 per cent
Certificate of deposit rate: -0.50 per cent
Current account rate: 0.00 per cent
Discount rate: 0.00 per cent.
Ironically, all this will achieve is delay the Peg breach by a few weeks. If anything, the Danish central bank is merely confirming that while it hasn't sounded an all out retreat from currency wars, like the Swiss and Singapore banks did recently, it is in furious retreat and it is only a matter 0f time at this point.
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All hail the flow.
Now it's just getting sad.
What is it?
After one percent they start cutting balls off??
After one percent they start cutting balls off??
Well thaats where the gold is. Golden Balls.
and the banks are giving out toasters and danish pastries to attract deposits?
This should be the death knell for the Danish banking system. It is now a more prudent financial decision to liquidate your bank account into cash, and hide it in the mattress or bury it in the backyard.
Someone doesn't know the difference between Dane and Dutch?
No, its far worse than that. Any country or bankster that abuses the value of cash like that needs to have it dumped in favour of gold or silver. Should such stupidity come to in my direction, that's exactly what I would do.
Shit getting real all over? Ukraine, China and it's nine dash line, currency wars...
Got gold? Got weapons?
Long MATRESSES
Stuffed Mattresses.
ok, who's going to be the first to cut off Yellin's balls? what about Bulltard? Does Bulltard have nuts?
If this happened in the US, I'd pull out my emergency and situational savings and hold it as cash. Won't this sooner or later have a negative effect on flow?
There's one investment that tends to do well in negative real interest rate situations. What is that again? Hmmm...what was it???
Seriously. Put it in a "bank" and lose 0.5% or put it in your mattress for 0%.
They are playing with fire as I am sure the actual physical note supply is dwarfed by the electronic.
I can see why the bankers dread deflation, it makes them look as stupid as they are.
Bankers aren't smart. They are evil.
pods
RE
And cowards.
I was just wondering that myself, everypayday you would just have to cash your check and actually get the cash. That does not sound like a smart move for a bank.
Anyone who leaves a big chunk of their bankroll in the bank.....is a fool.
There is no skim is there is no flow. money and capital continue to be disrespected all over the world.
Let me be clear, all fiat is dying.
This world is Fucking insane....Stack Stack Stack my firiends...
another cut in 3,2,1...weeks
And they have the nerve to say that gold does not pay interest. LOL.
Well at least you don't have to pay them interest on gold.
LOL. What a world.
You now have to pay the bank to hold THEIR banknotes.
Like having to pay my neighbor for storing the lawmover he borrowed.
pods
I think we are now past the Who Panic 1st stage !!!
pull my finger
Eventually maybe someone will use the money to pay off some debts since money in the bank is a losing proposition. Of course I don't think that is the intent of the NIRPers.
Funny is Serta FDIC approved?
Does that approval matter or is it just a list of depositors for future mining purposes?
Yes. But just don't rip that tag off mattress. That's a crime.
But everyone needs a bank because how else is the government going to track their money?
I remembered the story a couple years ago about how the gov was worried about the "un and underbanked."
Shit you not!
pods
There's an app for that...
Sooner or later even regular joe carlsberg folks have got to start thinking that a roll of krugerrands might be a good place to park some wealth and forget about it. But yea, I agree with the previous poster that this is just getting sad.
Yes, thank you. Cancel the coffee and make that one of the day-old pastries.
Speaking of things that 'cost' -- my Internet was a little slow this morning when I went to check package tracking at UPS -- and across the bottom of my screen I saw a quick flash for www.facebook.com followed by the usual gibberish???? I am not even a facebook user, but what is facebook doing tracking my UPS lookup? No wonder they are getting 'more revenue per user' -- it seems like they are paying companies to allow them to track activity on those company's web sites -- then using that for their own targeted advertising! (Of course, this is Google's recipe too)!!!
Thank god there will be no more rate cuts in the USSA. The FED will be raising rates here soon!!
</Sarc>
what are savings accounts paying now, 0.01%? It's irrelevant. By understating inflation by 5%, they have actually achieved NIRP w/o telling you that you're being NIRPed to death.
For over 5000 years man has applied the concept of interest to all of his commercial transactions and here we are doing something that has never been done.
If a depositor needs to "pay" his bank interest then perhaps we might get to the stage where workers will have to pay their employers, landlords pay their tenants to live in their houses.etc etc.
This rate cut was almost as expected.
However, I should warn people against betting on the EURDKK peg being abandoned. Unlike SFR this peg has been in place from the Euro was created, and even before then there was a peg to a basket of other European countries. And unlike SFR, where the peg was announced as temporary, both ECB and the Danish central bank have announced that this peg is permanent. There is even a binding agreement ECB and the Danish central bank in place that requires both parties to defend the peg.
Please keep your currency symbols accurate so as not to confuse the plebes. SFR is CHF
You can either put money in a bank and run the risk of it being stolen in a bail in to pay bond holders, while at the same time being penalized for saving, or you can buy CB propped bonds and be the guy that everyone gets robbed to pay off, while still getting chiseled on interest. It is a sad world if you have billions.
Of course you could also stop being a dumbass and walk out the crazy house casino while only 40% of it is on fire. Buy gold. Hide gold. Wait.
They need to start handing out spider man towels to offset the negative interest rate.
But but I thought I had to pay for storage of my precious metals! You mean that fiat currency is the same?
Stop calling it a savings account. It's a purging account now.
"Dutch central bank"?
DANISH not Dutch.
DKK not DEK
The banks are pricing themselves out of the money storage market.
Exactly!
http://www.telegraph.co.uk/finance/economics/11358316/Central-bank-prophet-fears-QE-warfare-pushing-world-financial-system-out-of-control.html
Mr. William White said Quantitative Easing (QE) is a disguised form of competitive devaluation. "The Japanese are now doing it as well but nobody can complain because the US started it," he said.
"There is a significant risk that this is going to end badly because the Bank of Japan is funding 40pc of all government spending. This could end in high inflation, perhaps even hyperinflation.
"The emerging markets got on the bandwagon by resisting upward pressure on their currencies and building up enormous foreign exchange reserves. The wrinkle this time is that corporations in these countries - especially in Asia and Latin America - have borrowed $6 trillion in US dollars, often through offshore centres. That is going to create a huge currency mismatch problem as US rates rise and the dollar goes back up."
Mr. White's warnings are ominous. He acquired great authority in his long years at the BIS arguing that global central banks were falling into a trap by holding real rates too low in the 1990s, effectively stealing growth from the future through "intertemporal" effects.
He argues that this created a treacherous dynamic. The authorities kept having to push rates lower with the trough of each cycle, building up ever greater imbalances, in an ineluctable descent to the "zero bound", where monetary levers stop working properly.
Under his guidance, the BIS annual reports over the three years before the Lehman crisis were a rising crescendo of alarm calls at a time when other global watchdogs were asleep. His legendary report in June 2008 openly discussed whether the world was on the cusp of events that might prove as dangerous and intractable as the Great Depression, as it indeed it was.
Mr White said central banks have been put in an invidious position, compelled to respond to a deep economic disorder that is beyond their power. The latest victim is the Swiss National Bank, which was effectively crushed last week by greater global forces as it tried to repel safe-haven flows into the franc. The SNB was damned whatever it tried to do. "The only choice they had was to take a blow to the left cheek, or to the right cheek," he said.
He deplores the rush to QE as an "unthinking fashion". Those who argue that the US and the UK are growing faster than Europe because they carried out QE early are confusing "correlation with causality". The Anglo-Saxon pioneers have yet to pay the price. "It ain't over until the fat lady sings. There are serious side-effects building up and we don't know what will happen when they try to reverse what they have done."
The painful irony is that central banks may have brought about exactly what they most feared by trying to keep growth buoyant at all costs, he argues, and not allowing productivity gains to drive down prices gently as occurred in episodes of the 19th century. "They have created so much debt that they may have turned a good deflation into a bad deflation after all."
Nice excerpts.
Too bad this was posted by another realist-turned-QE-apologist, AEP.
Get your money out of the banks before they take more of it.
Watch out. Banksters are getting desperate now. They'll just take since their too big to prosecute.
Help me out here...what are the Central bankers "theoretically" hoping to achieve here? Velocity? What?
The theory is that when Inflation in Europe has fallen far below the 2 percent or so that the central bank aims for, unemployment remains high in much of the continent, and growth sluggish. The central banker’s usual answer to that set of problems is simple: Cut interest rates. Thus, when the banks park ther with it, the only way to cut rates further is to go into negative territory. When it becomes more costly for European banks to keep money in the central bank, they will have incentive to do something else with it: Lend it out to consumers or businesses, for example.
It follows that the banks may not lend it, but just pass the cost on to their customers... or as what happened here in the US, there were no loans to small business, no passing on of the cost to deposit holders, just better credit offers for those with good credit, like 6 months no interest on a new CitiBank card.
I am sure that many of you can see the process behind this play. YET, it is still up to the National/regional/local banks to actually let those effects come to fluition.
Either way, the Danish people have not allowed those other forms of destruction to take hold as much as other nations within this shared western society.
If anything, compare it to the versions of what the Swiss are OR are not doing.
Pens,
And for the Savers... A Purple NIRPle.
Ha ha, tell me the story about gold being a useless barbaric relique that pays no interest.
We are so freaking doomed.
Got gold??
Danish = Dutch?? not quite, LOL
exactly. Should have been obvious but surprised he still has "Dutch" up
Anyone know geography at ZH?
Denmark does not have the "Dutch central bank". "Dutch" refers to Holland/The Netherlands.
Thank you sir may I have another.
What sort of person would leave a significant amount of money in a bank if they are charging you .5%?
Sure I need to pay the bills - I need a checking account with some small balance - but other than that how can this even be?
Charging negative interest will hopefully give them the same result as eating a dozen prune Danish.
Years ago some fellow named Tobin proposed a tax on currency movements to slow the global velocity of money (digital transfers).
You would have thought he farted in the Vatican chapel,from the response of the Forex traders...
Oh well,can't have manipulation of themarkets,now can we?
http://www.project-syndicate.org/commentary/eurozone-needs-more-than-qe-by-martin-feldstein-2015-01
First, though, consider why QE’s ability to stimulate growth and employment in the US does not imply that it will succeed in the eurozone. QE’s effect on demand in the US reflected the financial-market conditions that prevailed when the Federal Reserve began its large-scale asset purchases in 2008. At that time, the interest rate on ten-year Treasury bonds was close to 4%. The Fed’s aggressive program of bond-buying and its commitment to keep short-term interest rates low for a prolonged period drove the long-term rate down to about 1.5%.
The sharp fall in long-term rates induced investors to buy equities, driving up share prices. Low mortgage interest rates also spurred a recovery in house prices. In 2013, the broad Standard and Poor’s index of equity prices rose by 30%. The combination of higher equity and house prices raised households’ net worth in 2013 by $10 trillion, equivalent to about 60% of that year’s GDP.
That, in turn, led to a rise in consumer spending, prompting businesses to increase production and hiring, which meant more incomes and therefore even more consumer spending. As a result, real (inflation-adjusted) GDP growth accelerated to 4% in the second half of 2013. After a weather-related pause in the first quarter of 2014, GDP continued to grow at an annual rate of more than 4%.
Thus, QE’s success in the US reflected the Fed’s ability to drive down long-term interest rates. In contrast, long-term interest rates in the eurozone are already extremely low, with ten-year bond rates at about 50 basis points in Germany and France and only 150 basis points in Italy and Spain.
So the key mechanism that worked in the US will not work in the eurozone. Driving down the euro’s dollar exchange rate from its $1.15 level (where it was before the adoption of QE) to parity or even lower will help, but it probably will not be enough.
So basically if you stuff the money in your matress, you are .05% ahead right away.
On one side, in a crisis, banks seize up, cash becomes difficult to retrieve, then Whammo, the money in your mattress carries a big premium.
On the other side: in a crisis, currency is banned forcing only electronic spending. HS, IRS, DEA and your local police, and so many others become happy now able to track every penny. The black/gray market dies. Or currency is exchanged for new currency. Uh, as long as you can explain just how you happened to hold such an amount... (civil forfeiture).
A few years ago in Cebu, Philippines I found what appeared to be a very old coin from the early '60s (well it looked old) and picked it up thinking it was a rarity. I handed it to my niece who was about age 4, she took it, looked at it, and threw it away. Then I came to understand how currency can be made worthless by any government.
Gold/silver ownership can be banned. So buy buckets of copper pipe. *lol* very strange times.
NIRP is punishing your prosperity. It’s punishing the fruits of labor. It’s punishing private property.
“Globalism destroys the sovereignty of every country except the world reserve currency country that controls the system…
“No country dependent on foreign capital is sovereign… The American attack on the ruble is also teaching sovereign governments that are not U.S. vassals the extreme cost of allowing their currencies to trade in currency markets dominated by the U.S. m… Considering the gangster nature of financial markets in which the U.S. is the heavy player, a country that permits free trading of its currency sets itself up for trouble.” – Paul Craig Roberts
To follow neoliberal prescriptions is to help Washington attack your economy. What are sovereigns going to do that the Fed doesn’t like? Nothing.
Globalization is having the central banks run trade.
RAMMING SPE--- aw, fuck it.