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Central Banks Helpless As Denmark Goes NIRP, Cuts Deposit Rate To NEGATIVE 0.2%

Tyler Durden's picture




 

A few days ago we noted that the ECB may well be contemplating the monetary neutron bomb, which would see it lower rates to below zero, ushering in a Negative Interest Rate Policy. Today, Mario Draghi cut such speculation short promising the ECB has not discussed this. Yet one bank which certainly has is the Danish Central Bank, which just lowered its Discount Rate to 0%, joining China, England, the ECB, and, of course, Kenya in easing, but also went one step further and cut its deposit rate to negative 0.2%. Keep a note of this: NIRP is coming to a central bank, and shortly thereafter to a bank deposit branch, near you very soon.

From Bloomberg:

Denmark’s central bank cut its main borrowing costs to record lows and brought the rate it offers on certificates of deposit below zero, as policy makers test uncharted territory to fight a capital influx.

 

The benchmark lending rate was cut to 0.2 percent from 0.45 percent, while the deposit rate was reduced to minus 0.2 percent from 0.05 percent, Copenhagen-based Nationalbanken said in a statement today. The move followed a quarter of a percentage point cut in the European Central Bank’s main rate to 0.75 percent. Nationalbanken doesn’t hold scheduled meetings and only adjusts rates to defend the krone’s peg to the euro.

 

“There’s no experience of how negative deposit rates will affect the financial markets and the krone,” Jacob Graven, chief economist at Sydbank A/S, said in a phone interview today before the decision was announced. “It’s a sign of the strong Danish economy. This is good. The opposite situation would be far worse, if the central bank would have to hike rates to defend the krone. We have a luxury problem.”

 

Denmark has stepped up its battle to prevent the krone from strengthening beyond its currency band as the nation’s haven status attracts investors. Danske Bank A/S, the country’s biggest lender, said last week it now has a risk scenario that envisages Denmark abandoning the peg should the cost of fighting currency appreciation grow too high. The bank doesn’t view this as a likely outcome, it said.

The liquidity trap has been sprung. Soon everyone will be paying their banks for the privilege of holding their cash for them.

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Thu, 07/05/2012 - 10:22 | 2588653 shanearthur
shanearthur's picture

Tyler, is this the 4th dimension I'm living in? Seriously, this can't end well.

Thu, 07/05/2012 - 10:24 | 2588660 tarsubil
tarsubil's picture

At this point, any end to this would be well.

Thu, 07/05/2012 - 10:36 | 2588729 BaBaBouy
BaBaBouy's picture

All I Know is that SOMEHOW out of these ludicrous policies, The Ultra-Rich Billionaires will end up Fatter and Richer than ever ...

Thu, 07/05/2012 - 10:59 | 2588894 slewie the pi-rat
slewie the pi-rat's picture

many remain unaware that the melancholie danes have pegged to the EUR currency, same as the swiss SNB

altho this is constant QE tyler doesn't mention it;  but these "free" central banksters of europa, plus the completely BK brits are printing like there's no tomorrow [if they stop printing]

two weeks ago, the danes started publicly groaning under the euro, and when the SNB went to negative, this is what they were groaning about

one or two people wrote about it at the time as i recall

these counterparties do have nice offices tho, don't they?  but they just don't want to count out the c.a.s.h. do they?  

Thu, 07/05/2012 - 11:08 | 2588942 Mark Carney
Mark Carney's picture

 

So if -0.2 is nominal, what is real???

 

LOLOLOL welcome to the outer limits.

Thu, 07/05/2012 - 10:34 | 2588732 Kingbingo
Kingbingo's picture

They should just make it illegal not to maximize your debt every year, they know they want to.

Thu, 07/05/2012 - 10:44 | 2588757 Divided States ...
Divided States of America's picture

and GOLD goes down 20 bucks? If I live in Denmark, I would be stocking up on gold right now.

Thu, 07/05/2012 - 10:48 | 2588813 BaBaBouy
BaBaBouy's picture

Part of the CB's interventions are to suppress the POG, ESPECIALLY on GOLD-Positive dayz like this!

 

It will not work forever, they are bound to Fuckup. The day IS coming.

Thu, 07/05/2012 - 11:02 | 2588910 Quinvarius
Quinvarius's picture

It is important that they create a positive feedback loop of both printing money and losing all their gold they will need to back their debt in the blowup.  Without this feedback loop, we would never have low targets of 8-10k and high targets of 50k.  That is how we got this far after all.  I say let them dump, and thank-you very much.

Thu, 07/05/2012 - 10:53 | 2588867 Yellowhoard
Yellowhoard's picture

But Warren Buffet says that gold just sits there.

Thu, 07/05/2012 - 10:58 | 2588893 EscapeKey
EscapeKey's picture

Apparently "sitting there" is worse than depositing with the CB of Denmark where the money actually disappears.

But then Warren Buffett wouldn't exist today had it not been for the bailouts, so of course he'll agree with the establishment.

Thu, 07/05/2012 - 11:14 | 2588948 BaBaBouy
BaBaBouy's picture

"" But Bluffet says that gold just sits there. ""

 

Hehehehehehe, Yeah...

And our Paper Fiats "Just Sit There" on Semi-insolvent Bank's Hard-drives, earing negative interest...

 

He's a nice Ole-fecker, isn't he ...

Thu, 07/05/2012 - 11:00 | 2588905 sunaJ
sunaJ's picture

 

 

 Little Miss Muppet
 Worshipped Warren Buffet,
 Ignoring his moral decay.

 Along came the crisis,
 Still The Oracle's advice is:
 Buy stock in Berkshire-Hathaway.

Thu, 07/05/2012 - 11:11 | 2588929 Tippoo Sultan
Tippoo Sultan's picture

Paying the moneychangers at "Nationbanken" for the privilege of deposit ?

A shoe box for my krone specie, hidden at the bottom of the hamper containing Pimco's dirty shirts.

Thu, 07/05/2012 - 11:11 | 2588956 Carl Spackler
Carl Spackler's picture

Why would a central Bank want to create a run on banks?

A run on banks doesn't impel savers to spend more, it causes them to panic and cease spending.

Thu, 07/05/2012 - 11:28 | 2589016 disabledvet
disabledvet's picture

You mean dollars--not gold. Dollars earn a positive return. Neither gold nor euro's do that.

Thu, 07/05/2012 - 13:13 | 2589437 A Nanny Moose
A Nanny Moose's picture

Dollars earn a positive return.

Perhaps in nominal terms, if you have winning 32 winning days every month (including Feb), like the Golman Suck Thimbleriggers.

Thu, 07/05/2012 - 10:41 | 2588771 i-dog
i-dog's picture

Be careful what you wish for! IMO, you now have just 70 - 100 days left to prepare before a very heavy hammer falls on the US.

The global oligarchy appears to have all their ducks coming into formation now -- and their planned denoument ain't pretty for us non-oligarchs!

Once the rulers see that the game can't continue beyond their present tenure, they just blatantly jam their theft and control systems right in our face ... which is exactly what they are doing right now (and have been continuously since the last US election).

Thu, 07/05/2012 - 10:47 | 2588822 Bartanist
Bartanist's picture

I wonder exactly how well they have their ducks in a row. Using ancient Rome as an example, they cannot afford to upset the military and police and make sure their pet slave enforcers are well paid (bribed), otherwise it will most likely be open season on oligarchs ... which ends badly for the oligarchs as well.

How are they prepared to make sure the slave enforcers are taken care of?

Thu, 07/05/2012 - 11:02 | 2588914 Offthebeach
Offthebeach's picture

Enforcers zots out oligarchs. See Rome, American Revolution, Lenin, etc....

Thu, 07/05/2012 - 11:52 | 2589123 Jumbotron
Jumbotron's picture

Offthebeach says...

Enforcers zots out oligarchs. See Rome, American Revolution, Lenin, etc....

 

Jumbo says...  So what....the Enforcers then become the new oligarchs or are wiped out or controlled by the new ones.

"Meet the New Boss....same as the Old Boss ! "

Thu, 07/05/2012 - 11:04 | 2588928 Dr. Engali
Dr. Engali's picture

If you haven't been paying attention they have been beefing up the police state across the country. They are having "military drills " with tanks in the streets so the populace gets used to seeing them. They are also coordinating globally with other foreign countries "training" on U.S soil. The take down is in place. It won't be long now.

Thu, 07/05/2012 - 11:14 | 2588967 ParkAveFlasher
ParkAveFlasher's picture

In a banana republic, and I know Ecuador from experience, the keys to keeping order are in 1) maintaining the police pensions and 2) the standard armed forces' bribes.  It's really that simple.

Thu, 07/05/2012 - 13:03 | 2589386 AlamoJack
AlamoJack's picture

Yeah, maintain POLICE PENSIONS WITH WHAT???  Beanie Weenies and Spam?  Hahahahaha!  Even cops want to eat.  Guess they'll just steal ours since they already have ALL THE PHUCKING MONEY

Thu, 07/05/2012 - 14:51 | 2589767 ParkAveFlasher
ParkAveFlasher's picture

"With what???"  That's easy.  Access to black markets and illicit goods.  And that's how the world goes round.

Thu, 07/05/2012 - 15:09 | 2589823 Cathartes Aura
Cathartes Aura's picture

poppies and coca leaves, maintaining the masses with profits bank-washed - the amrkn world does indeed have many black market irons in the fire pit.

Thu, 07/05/2012 - 15:18 | 2589871 ParkAveFlasher
ParkAveFlasher's picture

the "black market" could be contraband, it could be goods (stolen, confiscated from criminals, etc) sold at discount without cost to consider (pure profit), it could be goods released into the black market whose legal sale is highly regulated or taxed (liquor, nicotine, firearms), it could be access to financial products that actually deliver real growth, take your pick.  Expand your horizons, anything is possible under the sun.  Just don't think tptb will EVER run short of tradeables.

Thu, 07/05/2012 - 11:21 | 2588985 MachoMan
MachoMan's picture

Yes, but that doesn't really explain how they'll be paying for it all...

Thu, 07/05/2012 - 13:32 | 2589492 WillyGroper
WillyGroper's picture

Drones being tested----HA--- in OK now. People completely dismiss this. It's unbelievable.

Thu, 07/05/2012 - 15:14 | 2589847 Cathartes Aura
Cathartes Aura's picture

Texas appears to be the Queen of Drones,

Houston police, Texas A&M, other Texas agencies have gotten federal permission to use drones

http://www.texaswatchdog.org/2012/04/houston-police-texas-am-other-texas...

guess OK doesn't want to be "left behind" in the race to corral the herds. . .

Thu, 07/05/2012 - 11:33 | 2588930 i-dog
i-dog's picture

Back in those good old days, the (usually wealthy) mercenaries would go and sell the use of their sword and horse to another potentate, or just go back home to their veggie gardens, if an employer couldn't continue paying. These days, the sword and horse (drones, aircraft carriers, cruise missiles, etc) stay with the only potentate ... while the landless mercenary must find a way to eat. On top of that, the globalist empire controls all money flows and can print (or not) at will.

So ... voilà ... if a mercenary wants to eat (when the food supply chain is cut), he will not only be required to be chipped and compliant, but he'll also go to the front of the queue at the "free gubmint snacks" counter if he dutifully mans his joystick and keeps those drones circling over the terrrrrsts (ie. you and me).

There will be no nukes ... there will be few troops on the streets keeping order ... just "Papiere, bitte" checkpoints everywhere.

There is little, if any, time left to retake sovereignty. The time to act was last year (when I was getting junked for suggesting that secession was the only way to stop these fuckers).

 

[edit] For the first time ever, I'm recommending that you watch an Alex Jones interview -- with a very sharp lady and which gives a good rundown on what they are doing right now in the US (with Europe and elsewhere to follow shortly thereafter, if not simultaneously in some countries): http://www.youtube.com/watch?v=1YccTUy96vI (35mins)

BTW, this video explains exactly why they are building those ghost cities in China. I don't know why I didn't guess it earlier!

Thu, 07/05/2012 - 13:37 | 2589518 lemonobrien
lemonobrien's picture

obamacare

Thu, 07/05/2012 - 10:27 | 2588665 BaBaBouy
BaBaBouy's picture

Completely OUT OF CONTROL Idiots ...

 

Like it or not, its an MBA / G-Sacks world we live in now.

Thu, 07/05/2012 - 20:31 | 2590616 NJBDeflator
NJBDeflator's picture

just wrote an article about this: "Back In Black"

 

http://njbdeflator.blogspot.com/2012/07/back-in-black.html

Fri, 07/06/2012 - 05:07 | 2591089 Uber Vandal
Uber Vandal's picture

JFC, German 2 year notes just went negative.

http://online.wsj.com/article/BT-CO-20120706-702212.html

"The yield on the two-year German note, known as the Schatz, sank by a basis point to -0.01% in early trading, according to data from Tradeweb, indicating that even with no return on offer, investors are still keen to park funds in a safe retreat. ..."

Thu, 07/05/2012 - 10:23 | 2588654 ParkAveFlasher
ParkAveFlasher's picture

We won't be so much paying the banks to hold the cash, we will be paying them to hold it back.

Thu, 07/05/2012 - 10:23 | 2588656 Jason T
Jason T's picture

bury it in the back yard instead.  Purchasing power will rise wth the coming deflation.  Seem Ben has been unable to stop the deflation.

Thu, 07/05/2012 - 10:56 | 2588880 agent default
agent default's picture

Next step: Aggressive devaluation.

Thu, 07/05/2012 - 11:34 | 2589044 JoBob
JoBob's picture

JasonT: I gave you a greenie for knowing that back yard is two words. Oh...and the deflation thingie, too.

Thu, 07/05/2012 - 10:23 | 2588658 TrainWreck1
TrainWreck1's picture

And so NIRP began...

Thu, 07/05/2012 - 10:25 | 2588669 RacerX
RacerX's picture

And the Bankers rejoiced; the NIRP is Good.

Thu, 07/05/2012 - 10:24 | 2588661 Pretorian
Pretorian's picture

New bubble coming, bigger and better.

Thu, 07/05/2012 - 10:25 | 2588664 fuu
fuu's picture

Damn and I sold all my metals to get long the NSE.

Thu, 07/05/2012 - 11:05 | 2588934 slewie the pi-rat
slewie the pi-rat's picture

and when you issue that good-as-gold fuu IOU to the IRS/Treasury, ALL yer criminal counter-parties smile upon you...

Thu, 07/05/2012 - 10:25 | 2588668 razorthin
razorthin's picture

Yeah, well enter the fukking worldwide bankrun as people elect to stuff cash in various orifices at home.  Oh yes, smart move a$$holes.

Thu, 07/05/2012 - 10:39 | 2588766 ParkAveFlasher
ParkAveFlasher's picture

They'll just print to fill the deposit vacuum.  No one wins here.

Thu, 07/05/2012 - 15:11 | 2589837 Gief Gold Plox
Gief Gold Plox's picture

Paper and ink producers. :)

Thu, 07/05/2012 - 10:54 | 2588870 toady
toady's picture

Yes, that is the most obvious outcome, but what is the man behind the curtain doing?

The first scenario that pops into my head:

Mass withdrawals

Claims of 'blackmarket' fraud, currency invalidated

Consumers must turn in 'green' money for 'blue'(or you pick the color)(or electronic-only fee-based debit cards)

If you fail to turn in 'green' by a certain dateit becomes worthless

And the exchange rate is five 'greens' for one 'blue'

Thu, 07/05/2012 - 11:34 | 2589042 scatterbrains
scatterbrains's picture

Next comes fiat with expiration dates.  Better hurry up and spend it before it gets wiped out.

Thu, 07/05/2012 - 10:25 | 2588670 Oldballplayer
Oldballplayer's picture

Note to self:  Must buy a mattress with a lock.

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