{"id":18462,"date":"2016-03-03T11:50:45","date_gmt":"2016-03-03T16:50:45","guid":{"rendered":"http:\/\/olduvai.ca\/?p=18462"},"modified":"2016-03-03T11:50:45","modified_gmt":"2016-03-03T16:50:45","slug":"where-negative-interest-rates-will-lead-us-2","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=18462","title":{"rendered":"Where Negative Interest Rates Will Lead Us"},"content":{"rendered":"<header class=\"wrapper entry-header page-header\">\n<div class=\"title-with-sep single-title\">\n<h3 class=\"entry-title\"><a href=\"http:\/\/www.cobdencentre.org\/2016\/03\/where-negative-interest-rates-will-lead-us\/\" target=\"_blank\">WHERE NEGATIVE INTEREST RATES WILL LEAD US<\/a><\/h3>\n<\/div>\n<\/header>\n<div class=\"entry-media\">Despite zero-interest-rate-policy (ZIRP) and multiple quantitative easing programs \u2014 whereby the central bank buys large quantities of assets while leaving interest rates at practically zero \u2014 the world\u2019s economies are stuck in the doldrums. The central banks\u2019 only accomplishment seems to be an increase in public and private debt. Therefore, the next step for the Keynesian economists who rule central banks everywhere is to make interest rates negative (i.e., adopt negative-interest-rate-policy or \u201c<a href=\"http:\/\/www.investopedia.com\/terms\/n\/negative-interest-rate-policy-nirp.asp\" target=\"_blank\">NIRP<\/a>.\u201d) The process can be as simple as the central bank charging its member banks for holding excess reserves, although the same thing can be accomplished by more roundabout methods such as manipulating the reverse repo market.<\/div>\n<div class=\"wrapper\">\n<div class=\"grids\">\n<div class=\"grid-8 column-1\">\n<div class=\"single-box clearfix entry-content\">\n<p>Remember, it was the central bank itself that created these excess reserves when it purchased assets with money created out of thin air. The reserves landed in bank reserve accounts at the central bank when the recipients of the central bank\u2019s asset purchases deposited their checks in their local banks. Now the banks have liabilities that are backed by depreciating assets (i.e., the banks still owe their customers the full amount in their checking accounts), but the central bank charges the banks for holding the reserves that back the deposits. In effect, the banks are being extorted by the central banks to increase lending or lose money. The banks have no choice. If they can\u2019t find worthy borrowers, they must charge their customers for the privilege of having money in their checking accounts. Or, as is happening in some European banks, the banks try to increase loan rates to current borrowers in order to cover the added cost.<\/p>\n<p>In European countries where NIRP reigns, so far, the banks are charging only large account holders for their deposits.<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>WHERE NEGATIVE INTEREST RATES WILL LEAD US Despite zero-interest-rate-policy (ZIRP) and multiple quantitative easing programs \u2014 whereby the central bank buys large quantities of assets while leaving interest rates at practically zero \u2014 the world\u2019s economies are stuck in the doldrums. The central banks\u2019 only accomplishment seems to be an increase in public and private [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[124,7380,195,467,534,558,1389,12738,3053,1940,1939],"class_list":["post-18462","post","type-post","status-publish","format-standard","hentry","category-economics","tag-central-banks","tag-cobden-centre","tag-debt","tag-keynesian-economics","tag-monetary-policy","tag-negative-interest-rates","tag-nirp","tag-private-debt","tag-public-debt","tag-zero-interest-rate-policy","tag-zirp"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/18462","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=18462"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/18462\/revisions"}],"predecessor-version":[{"id":18463,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/18462\/revisions\/18463"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=18462"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=18462"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=18462"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}