Deutsche Bank Unveils The Next Step: "QE Has Run Its Course, It's Time To Tax Wealth"

Tyler Durden's picture

Helicopter money may be on the horizon, but if Deutsche Bank has its way, there is at least one intermediate step.

According to DB's Dominic Konstam, now that the benefits QE "have run their course", it is time for the next, and far more drastic step: "the ECB and BoJ should move more strongly toward penalizing savings via negative retail deposit rates or perhaps wealth taxes. With this stick would also come a carrot – for example, negative mortgage rates."

Here is the big picture unveiling of what is coming next from Deutsche Bank's Dominic Konstam, who is also buying the Treasury long end hand over fist:

  • The G3 central banks all stood pat, continuing the move away from the beggar-thy-neighbor paradigm. However, the adverse market reaction to the BoJ’s inaction suggests that the benefits of QE (or QQE) in its present form might have run their course.
  • It is becoming increasingly clear to us that the level of yields at which credit expansion in Europe and Japan will pick up in earnest is probably negative, and substantially so. Therefore, the ECB and BoJ should move more strongly toward penalizing savings via negative retail deposit rates or perhaps wealth taxes. With this stick would also come a carrot – for example, negative mortgage rates.
  • Until then, bank NIM compression will continue to drive elevated demand for dollar-denominated assets, which manifests itself in suppressed UST term premia and wide cross-currency bases.
  • What this means for the US is that policy rates and longer bond yields are unlikely to go up until global growth accelerates materially. Until such time, it is critical for the Fed to continue to relent, allowing real yields to keep falling while breakevens rise and nominal yields remain roughly static.
  • If the Fed were to turn hawkish, there is perhaps even less scope for long-end yields to rise as breakevens would likely collapse on policy error fears.

Some of the troubling detail:

QE as implemented in major economies since the crisis has operated through two shocks: a demand shock whereby real yields are forced lower through lower nominal yields and static – or even falling – breakevens, and a shock to inflation expectations, whereby real yields ultimately continue to fall but due to rising BEI and static to lower nominal yields. In the case of the Anglo-Saxon economies, the demand shock quickly gave way to the shock (higher) to inflation expectations and actually allowed nominal yields to rise, if fleetingly.


The second shock, to inflation expectations, has thus far remained stubbornly elusive in Europe and more so in Japan, and ephemeral in the Anglo-Saxon economies. That said, this dynamic appears to have re-emerged in the US post Fed relent and has been an important driver of the recovery in risk assets and, more generally, the easing of financial conditions.


This week’s BoJ announcement disappointed, and as a result the yen appreciated sharply. This outcome does not bode well for the future efficacy of QE, at least while that is the primary policy tool in use. Breakevens have been drifting lower and real yields have been drifting higher since last summer. In other words, financial conditions in Japan are tightening, suggesting the need for more stimulus. However, the BoJ already holds a significant proportion of the assets that would be available for purchase, and the gains from additional QE activity – higher breakevens, lower real yields, and a weaker yen – are likely on the margin to be fleeting. It appears that the markets doubt the BoJ’s willingness or ability to carry on with larger and broader asset purchases, or worse yet they do not believe that such asset purchases will have their desired stimulative effect


Further QE should be viewed as an experiment in real time, where the point of inquiry is the level of real or nominal yields at which credit will begin to expand more strongly with loan-to-deposit ratios increasing. What seems increasingly clear to us is that this level is likely at negative yields, and probably substantially so. If this is true, it would suggest to us that the equilibrium level of rates in the economy is probably negative. This in turn would strongly suggest a significant re-think to short-rate policy. In this case, central banks should move more strongly toward penalizing savings, rather than just the institutions that “house” those savings – the banks. This would mean allowing significantly negative retail deposit rates or perhaps even wealth taxes. With this stick would also come a carrot – one example being that while deposit rates penalize savings (the whole point), banks might also pay borrowers to buy houses via negative mortgage rates.

In short, the real central bank panic is about to be unleashed; who will suffer? Why everyone else. And should wealth taxes really be imminent, we foresee a lot of "boating incidents" in the immediate future.

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Tinky's picture

To use a technical phrase: fuckers.

38BWD22's picture




Wealth Tax???  Hide it, bitchez!


Douche Bank, not much of a surprise...

Government needs you to pay taxes's picture

Time to start hanging banksters and their political stooges.

LowerSlowerDelaware_LSD's picture
LowerSlowerDelaware_LSD (not verified) Government needs you to pay taxes Apr 30, 2016 8:21 PM

"...the benefits QE 'have run their course'"

You mean benifits like a non-recovery?  Or, falling wages?  Or is it high unemployment that we should be thankful for?  No, no... it must the the benifits of a lot more bartenders.

SuperRay's picture

Negative rates: how stupid do they think people are? And this douche bank asshole looking for one more way to keep the party going? Nail gun time. Gold gonna be YUGE this year

tc06rtw's picture

 Uh-uh!  That’s how  the RICH  get  RICH…  somebody  ELSE  pays!

Seagate's picture

Who has the most wealth?



Ballin D's picture

shame we already chased a lot of their money out of the states with short sighted policy

eatthebanksters's picture

Wait, they are going to pay people to take out mortgages and buy homes?  What kind of asanine shit is this?  They just keep inventing shit to keep the corrupt banks from imploding and while they are doing it they are digging a deeper hole for all of us.  Wonder what the bond vigilantes will do?


John Kich's picture

This is Donald Trump's most shocking statement yet,

However the mainstream media isn't saying a word about it!

What are they really trying to cover up?

Kissy Ass's picture

Who has the most wealth?

2% of the population controls 76% of the wealth.

TAX these fucking jews! They are just going to send that wealth to isral when they drive this cuntry into the ground so what-the-fuck? Avenue de Rothschild, buy your condo in new Trump tower -tel aviv. FUCK YOU!

monk27's picture

I am good and ready to start taxing their wealth, first. It must be larger than mine anyway...

Mountainview's picture

The end of democracy comes when a majority finds out that there is always a minority you squeeze (tax) a little bit more ( dog owners, motorhome owners... richers than you etc.) This was first found by Benjamin Franklin. Follows dictatorship by public administration.

WTFRLY's picture

Taxation is extortion in this pig Joo World Order

illyia's picture

The end of democracy has already happened. You missed it.

NidStyles's picture

So much echo, so much Tribe.

Still Losing Money's picture

your hero tRump is in the 2 percent, so does that make him a member of the tribe who needs his wealth stolen and sent to the camps and be blamed for being part of the joooish conspiracy? cause after all every rich person is a joooo and the joooo need to dealt with, isn't that right, Adolph?

A82EBA's picture

Sounds like negative mortgage rates are more like a monthly discount on premium but only after financing the house at an even higher price so they can pass on the costs of neg rates.

Bilderberg Member's picture

How much does the Federal Reserve rake in each year, does anyone know?

zeropain's picture

how about we let douche bank default instead.

cornflakesdisease's picture

6% of all debt they monitize for the gov + expenses (50 lear jets, a collection of art with it's own currator, etc)

OverTheHedge's picture

5 years of encouraging malinvestment has failed to create a real economy: obviously they need to FORCE malinvestment instead.

All seems perfectly reasonable to me.

Is there any mileage in court action regarding theft of assets? Inflation is subtle, but naked removal of money from your bank account seems too unsubtle to get away with. I imagine one or two class actions might dampen banks' enthusiasm for this policy, but I don't know how banks are protected legally, not being a banker, lawyer or other blood-sucking parasite.

I wonder if my mother will come around to the "buy gold" argument now.....

AE911Truth's picture

The Directors of Unacknowledged Special Access Projects are implicated in the theft of $Trillions.



Someone is messing with the links. Try this ...


Otherwise, just keep digging, they can't shut them all down...

illyia's picture

Exactly. Who cares Trump - you think he is going to do anything? Who cares Hilarity - she is just as bad.

Who is responsible for all this pain - the funding of wars and moving men like chess pieces on a chess board.

BANKSTERS!!! Those are the enemies of the people.

Just try to get ONE of them jailed! Just One.

Bah... Back to the Hill and Donny show...

robertsgt40's picture

What will a negative interest rate on your mortgage tell you about the "true" value of your home?

ClydeCrashcup's picture

And when do they plan to start instituting negative interest rates on credit card debt?  Yeah, I'll be holding my breath waiting for it, ha ha.

Lore's picture

Cute, but this is no joking matter. These banksters are psychopaths, hellbent on pursuing their destructive paradigm to its end, dismissive of the cost to nations and peoples that they victimize. Unchecked, they commit horrors.

Ward cleaver's picture

You know what I've always wondered about this recovery, what happens when they don't need anymore bartenders?

The Once-ler's picture

 …  There’s  no such thing  as
        too many bartenders!

Yukon Cornholius's picture

Look at Cheers. They always had no fewer than three bartenders and a manager on at all times. Nobody ever paid for their drinks, but thats NBC for ya.

TahoeBilly2012's picture

"Well, sorry folks, we tried to print our way out of this (mostly to ourselves) but that didn't bendover, all hail the mighty King"

l8apex's picture

What the fuck does a link about UFOs have to do with central banks.  Wait - don't answer that question.

NAV's picture

To summarize, these people are simply crooks.

To quote Vincenzo Pecci, they are "extracting labor's surplus value from every prosperous economy in the world."

Mr. Kwikky's picture

LOL it's BENDING OR BREAKING...btw What are the Vaseline stocks doing lately?

de3de8's picture

Taxing wealth, for everyone except the one percent

CPL's picture

cough cough...bitcoin if other things are unavailable in physical.

38BWD22's picture



*cough*, yep...

Han Cholo's picture

I like the ledger technology; but it is volatile. It is not something I can hold. Since I "cashed" out my LTC and BTC purchasing PM, I've already improved my holdings (both in wealth and in metal). crypto cannot do that when a collapse happens.

CPL's picture

Okay I'm not going to bother explaining it for the nth time on why PM's are meaningless in that situation, I'll just state for the record it'll be like holding billions of dollars and having no ability to make change anywhere. 

So BTC in a nutshell.  There are 21 million BTC that can be made.  The total amount of gold acting as currency is 21 million ounces (that's all there is, 21 million ounces.  You look it up if you aren't sure of what you are actually holding).  If you don't understand that you will be destroyed the moment anyone catches wind you've got shiny rocks in your pocket...and I already know most of your types.  You blab too much, you've all blabbed too much already about your intentions and forward thinking.  That blabbing is why they won't let the price of PM's off the mat and why you've painted targets on all your own backs.

Want to back a currency with gold?  BTC.  It's BUILT to not get fucked with because it's painful to anyone that does and just happens to fit the exact amount of gold PM's available to park into BTC.  But by all means...pretend you have the armies to defend yourself.  You'll find out very quickly how costly that enterprise is, especially with gold.  It runs out faster than you can possibly imagine.  Unlike fiat where it's printed from thin air.  While government level collapses happen, here a protip.  Business never stops...not for war, weather, recessions or socially inept economists that couldn't find their asses with both hands and a road map.  Business is always happening even when it appears nothing else is.  So would you rather buy a bushel of apples for one ounce of gold or 0.00000001 BTC/Satoshi?

PMs are not functional at all in any collapse situation, but I'm willing to bet most businesses will make the switch faster than the governments or banks can approach BTC and eventually you stubborn dipshits will start pricing the PM's in BTC to allow proper trade value of the currency offered.

orez65's picture

Dear CPL:

You are infected by the "I don't undertand what money is disease". But fear not you have plenty of company.

Just to give you a clue:

Money has to have some "inherent value" that a lot of people desire. Gold and silver have survived the test of time for thousands of years. But there could be other forms of money in today's world or the near future.

For example, if there was a pill that could extend one's life for, say a year. That could be used as money. Because it has "inherent value" and lots of people would want it. Or a pill that could cure cancer for, say a year. Or a pill that could give you one orgasm.

The point is that, whatever you call "money" has to have "stand alone value" that a lot of people desire.

That's why a dollar is not money. It is a NOTE, some writing and pictures on a piece of paper. It has no "inherent value" because paper is very abundant, cheap and can be obtained almost as easily as sand.

That's not to say that the US Dollar has no value. Right now it does. For example you could gather about $45 and buy your self a barrel of oil. 

But the US Dollar nor any other currency is money.

RedDwarf's picture

Man, this stupidity again.  It won't die.  THERE IS NO SUCH THING AS INHERENT VALUE YOU FUCKING MORONS!!!  Marx's labor theory of value, which states that the value of a good or service is based upon the labor used to create it, is stupid.  I can spend 5 hours making a painting, not going to make it equal to 5 hours of ditch digging, or a painting Van Gogh spent 5 hours on.  The labor theory of value is insane and stupid for assuming inherent value to labor.

Well, you dipshits with your variation on this theory who talk about inherent value of stuff are just as stupid.  ALL VALUE IS SUBJECTIVE.  Value is assigned by people to goods, services and resources based upon perceived utility.  Stuff has inherent PROPERTIES, not inherent VALUE.  It is rank and ridiculous magical thinking to think ANYTHING can have INHERENT VALUE.

AGuy's picture

'Okay I'm not going to bother explaining it for the nth time on why PM's are meaningless"

I am pretty sure just about anyone will accept PMs for Barter in Venezuela or any collapsed nation. On the other hand, in these countries with no access to electricity or the internet, I am absolutely sure they arent excepting BTC.

'Want to back a currency with gold? BTC. It's BUILT to not get fucked"

BTC is just as bad as currency and banking:

Its highly subject to regulation: Its not too difficult to block BTC transactions. Only a tiny majority of people have the ability to use BTC (either because the don't understand or lack the equipment/means to conduct BTC transacation).

I believe something like over 1M BTC have been forever lost, because of data loss, destruction. Those lost BTC's can never be recovered. Over longer periods even more BTC coins will been forever lost.


"Ms are not functional at all in any collapse situation, but I'm willing to bet most businesses will make the switch faster than the governments or banks can approach BTC"

Damn! your Frack'n cluesless. Collapse means no eff'n internet. No Cell phones etc. BTC has to be the most infrastructure depend system in existances. Even greenback are more usefull in a collapse, since there is a method available to conduct transactions. You really think the internet, electricity and other infrastructure will be available? Ha. Go read how life is like in Venzeula these days.


FWIW: In my opinion is pretty dumb to put all your preps into any form of currency. The most practicle option is to go rural, and become self-reliant. Grow your own food, use a wood lot on your property for fuel, lumber, and make investment in tools and equipment that provide you the means to be self-reliant. Living in a City or the Burbs with just some PMs and some can goods is a disaster waiting to happen. Of course very few people want to do go rural/self-reliant, since it, more difficult, and forces them to leave their comfort zone (area, friends, family, job, conviences available in urban regions, etc)



Lore's picture

I think CPL just goading you. BTC is just another kind of e-fiat, an encrypted coupon with a unique identifier. The potential quantity is infinite; the number of potential cryptocurrencies is infinite. 

TheReplacement's picture

If governments collapse who is going to make sure all that infrastructure that is necessary for BTC stays up and running?  Worst case, you can still trade tangible wealth for tangible goods even if there is now electric because the local nuke plant stopped nuking because there was no government to make sure it kept nuking.

Lockesmith's picture

Dude weed LMAO

Silver is for buying apple bushels, gold is for buying silver.

When pm are priced in btc,what makes you think we won't trade it in then?

By holding pm, you have the security of their history, and you get to see whether btc pans out.

People holding wealth in fiat are morons.

Winston Churchill's picture

I get total peace of mind knowing my long term savings are  in PM's.Notice I said long term.

Can you same that about BTC ?

Just wondering.