It Will Now Cost You 0.5% To Save Money In Denmark: Danish Central Bank Cuts Rates For Third Time In Two Weeks

Tyler Durden's picture

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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fuu's picture

All hail the flow.

Stoploss's picture

What is it?

After one percent they start cutting balls off??

Doubleguns's picture

After one percent they start cutting balls off??

 

Well thaats where the gold is. Golden Balls. 

jbvtme's picture

and the banks are giving out toasters and danish pastries to attract deposits?

Haus-Targaryen's picture

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.

TerminalDebt's picture

Someone doesn't know the difference between Dane and Dutch?

asteroids's picture

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.

SumTing Wong's picture

Shit getting real all over? Ukraine, China and it's nine dash line, currency wars...

Got gold? Got weapons? 

madcows's picture

ok, who's going to be the first to cut off Yellin's balls?  what about Bulltard? Does Bulltard have nuts?

tarsubil's picture

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?

SumTing Wong's picture

There's one investment that tends to do well in negative real interest rate situations. What is that again? Hmmm...what was it???

pods's picture

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

Shizzmoney's picture

RE

Bankers aren't smart. They are evil.  

And cowards.

 

Rootin' for Putin's picture

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.

Shizzmoney's picture

Anyone who leaves a big chunk of their bankroll in the bank.....is a fool.  

LawsofPhysics's picture

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.

City_Of_Champyinz's picture

This world is Fucking insane....Stack Stack Stack my firiends...

kowalli's picture

another cut in 3,2,1...weeks

Peter Pan's picture

And they have the nerve to say that gold does not pay interest. LOL.

 

pods's picture

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

Seasmoke's picture

I think we are now past the Who Panic 1st stage !!!

wrs1's picture

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.

RaceToTheBottom's picture

Funny is Serta FDIC approved?  

Does that approval matter or is it just a list of depositors for future mining purposes?

Seasmoke's picture

Yes. But just don't rip that tag off mattress. That's a crime.

Soul Glow's picture

But everyone needs a bank because how else is the government going to track their money?

pods's picture

I remembered the story a couple years ago about how the gov was worried about the "un and underbanked."

Shit you not!

pods

rum_runner's picture

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.

franzpick's picture

Yes, thank you. Cancel the coffee and make that one of the day-old pastries.

NoWayJose's picture

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)!!!

Osmium's picture

Thank god there will be no more rate cuts in the USSA.  The FED will be raising rates here soon!!

</Sarc>

madcows's picture

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.

Peter Pan's picture

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.

KingFiat's picture

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.

markar's picture

Please keep your currency symbols accurate so as not to confuse the plebes. SFR is CHF

Quinvarius's picture

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. 

Al Capowned's picture

They need to start handing out spider man towels to offset the negative interest rate.

Hubbs's picture

But but I thought I had to pay for storage of my precious metals! You mean that fiat currency is the same?

Dr. Gonzo's picture

Stop calling it a savings account. It's a purging account now.

jose.six.pack's picture

"Dutch central bank"?

Be_Optimistic's picture

The banks are pricing themselves out of the money storage market.

polo007's picture

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."

malek's picture

Nice excerpts.

Too bad this was posted by another realist-turned-QE-apologist, AEP.