Introduction of Quantitative and Qualitative Easing With a Negative Interest Rate

[Lucky Luciano]

Source: Bank of Japan website

http://www.boj.or.jp/en/announcements/release_2016/k160129a.pdf



Read more: http://www.boj.or.jp/en/announcements/release_2016/k160129a.pdf

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Rates cut from 0.1% to -0.1%.

Pace of QE unchanged.

This is a big deal in Japan - and will have repercussions here of s stronger dollar which will be disinflationary for us.

Hard to paste the excerpt from the pdf file on the website using my iPhone.

[elmac]

1. Something that Europe’s central banks have done

may be the new norm.

[Yupster]

12. People it hurts the most are elderly people who live off

the interest of their cd's.

Instead of getting 4-5 %, now they're getting 1 %.

That missing interest is not showing up in restaurants, shoe stores and book stores.

[DRI]

17. It hurts the elderly and helps large banks and corporations

QE is devasting to the elderly and retired while the Corporations use it to borrow and pay off older higher interest debts.

[roamer65]

2. It's called a "currency war".

Next up will be the U.S. with QE4 and negative interest rates.

Make sure you have enough cash on hand, as they will probably invoke capital controls when they go negative here.

As Gerald Celente says, "Currency wars, trade wars then world war."

[GummyBearz]

7. First thing I do when rates go negative is empty my checking account and

buy an expensive safe for my home. I'll keep the credit card account open. Too bad the cc interest rates wont go negative, I'd have a ball maxing my cards and then actually RECEIVING 0.1% interest on the money I spent :p. If I have to use the cc I guess I will have to pay it off by money order or in person every month, which would be annoying.

[Lucky Luciano]

11. Does the safe cost more than the negative rate? nt

[GummyBearz]

13. Depends on how long the rates are negative...

how much cash you have, how much lower the rates will go, and how much the safe costs. One thing is for sure, if I buy the safe, I will also be able to use it for my wife's jewelry, our wills, and any other important documents... could be useful

[Truprogressive85]

3. oh goody (not)

Coming soon to US

[nitpicker]

4. Link to BBC

http://www.bbc.com/news/business-35436187

(snip)

The benchmark rate of -0.1% means that the central bank will charge commercial banks 0.1% on some of their deposits.

It hopes this will encourage banks to lend, and counter the ongoing economic slump in the world's third-largest economy.

The European Central Bank also has negative rates, however, it is a first for Japan.

The decision came in a narrow 5-4 vote at the Bank of Japan's first meeting of the year on Friday.

"The BOJ will cut interest rates further into negative territory if judged as necessary," the Bank of Japan said, adding it would continue as long as needed to achieve an inflation target of 2%.

Some analysts have cast doubt over how effective the rate cut will be.
(snip)

[mtasselin]

5. trouble

I see trouble coming down the road with currency manipulation and trade agreements that are not trade agreements, but just give aways to corporations at the expense of workers.

[bemildred]

6. Why not just tax the shit out of them and give the money to people who will spend it?

There are plenty of people out there who need money and will be happy to do their part by spending it.

[GummyBearz]

8. You don't need to tax the shit out of them to do that

And it is probably the best approach. Keep interest rates very low, and instead of government giving untold billions to private banks in the HOPE the banks lend it out to people for things like starting new businesses, how about the government cut out the greedy and unreliable middleman and just lend it to people DIRECTLY.

This will never happen thought, since everyone in the governmental position to make that decision came from those same banks, and will likely go back into the banks when they are done with government work.

[annabanana]

9. Just what people who need money want..

(more debt "opportunities&quot )

[GummyBearz]

10. Not sure what you are saying

People who need money for starting a new business is a legit thing. People who need money to buy a house is a legit thing. Have you ever bought a house without using all cash? Yes, it is debt and it is an opportunity at the same time. That is how things work... take out a loan to buy some equipment, start a business, work hard, pay back loan, and continue making money off your successful business....

Even people who are not interested in starting small businesses (ie. most of society) benefits. I'm pretty happy that my current employer got his small business loan 20 years ago and now has a ~45 employee sized profitable business with benefits, pays me well, etc.

[bemildred]

14. But you can, and it works great when you do. nt

[GummyBearz]

15. Taxing the shit out of everyone works great to fund pork belly projects

The dollars I am referring to are getting pumped into the system from quantitative easing. This is a stealth tax in the sense that it will eventually devalue the dollar, and decreases everyone's savings accounts. QE doesn't need an act of government to pass, the federal reserve bank has been unilaterally implementing it since around 2008. The problem is they just give the money to commercial banks, with the HOPE those banks loan it to people trying to start a small business or buy a house. Instead the banks have just bought back their own stock, or loaned the money to rich corps so they can buy back their own stocks.

So I'm saying is instead of giving QE money to banks, and HOPING, they lend it to people, the gov. could just be giving loans to people directly. No need to tax the shit out of people, no need to hope the commercial banks do what you want, just lend to people who want to start a business, or whatever else.

[bemildred]

16. The government is pissing trillions of dollars away, as we speak.

I just want to waste that money on people, citizens, human beings, who need it.

Not banks or corporations or mercenary armies.

There is no need to create a debt, just give them the fucking money, enough for food and shelter etc., every day.

You can loan business people startup money too, no problem. They can start businesses to serve the people who now have money to spend on food, shelter, etc. It will be a great boost for the economy and reduce crime an order of magnitude..

[GummyBearz]

18. I think we have the same opinion on this

Maybe we got confused some how. I agree with all you last said, especially the final paragraph. I'm very glad my current employer got a small business loan 20 years ago. He pays well, employs ~45 people, gives benefits, etc. This is the most effective way to bolster the economy, create jobs, bring people out of poverty, etc...

[bemildred]

19. I thought we might.

We need business people who want to provide quality goods and services, at a fair profit, not business people who want to get rich and make a killing screwing their fellow citizens and employees. We have far too many of those already.

And there is no better way to goose the economy, help small businesses, and reduce crime, than making sure everybody has a warm place to sleep, enough to eat, etc. And it can be amazingly cheap.