Bank Run?

[4est_4est_Gump]

Starting today, the Royal Bank of Scotland will become the first bank in the U.K. to impose a negative interest rate on depositors. The negative rate will apply only to corporate customers, including mutual fund managers and pension funds, holding deposits of certain foreign currencies including euros. This means that RBS—in which the U.K. government still maintains a majority ownership stake since its 2008 bailout—will actually charge these customers to “borrow” their deposits. A few weeks ago, RBS notified more than one million small-business customers that they could also be charged for deposits if the Bank of England lowered the target interest rate, which now stands at .25%, into negative territory. Experts are warning that the latest move by RBS would “set alarm bells ringing” among small businesses and ordinary customers. The stage is set for a glorious and long overdue old-fashioned bank run if the BOE ventures to push rates into negative territory.

Meanwhile in the eurozone, since the ECB rate cut the interest rate in March to minus 0.4%, banks have paid a total of about 2.64 billion euros to keep their funds on deposit at the eurozone’s 19 central banks. With European central bankers threatening further rate cuts, private financial institutions are exploring the feasibility of circumventing the charges by converting central bank electronic deposit credits into cash and storing it in nonbank facilities. The German insurance company Munich Re is reportedly already storing tens of millions of euros at “a manageable cost,” and Commerzbank, Germany’s second biggest lender, is considering a similar option.

Of course any significant movement to convert bank reserves into cash would undermine the goal of central-bank rate cutting, because the cost of holding bank reserves in cold hard cash would not respond to a change in interest rates, short circuiting central bank efforts to stimulate further bank lending. More significant, if the movement to convert deposits into cash spreads to the nonbank public, it would bring down the fractional-reserve banking system in short order. And herein lies the real reason why prominent establishment economists are now leading the charge in the War on Cash. By abolishing cash, they seek to lock everyone’s money holdings into the fractional-reserve banking system and make the system completely run-proof for all time. This would preserve and strengthen the so-called “transmission mechanism” of monetary policy, whose central element is fractional-reserve bank lending, which creates new deposits out of thin air.

...

https://mises.org/blog/blessing-cash

 

[4est_4est_Gump]

45 years without gold...

https://mises.org/blog/45-years-without-gold

 

[Ishmael]

45 years without gold...

https://mises.org/blog/45-years-without-gold

Funny, as soon as you posted this thread I immediately went to the gold markets.

Ishmael

 

[4est_4est_Gump]

I still have my gold.

Cash in the safe.

Ammo for trade.



The Queen has her silver...

 

[Lancecastor]

A German bank moved to negative interest on deposits last week.

It's a good way to stimulate spending.

Money was meant to remain in motion...parking money for profit has always been contrary to its design.

This is why ( for example) money changers and small j jews have been reviled for as long as money has existed.

Hoarders will now have to dust off their money and put it back to work to make a profit.

No risk, no reward.

I see this as a positive trend.

 

[4est_4est_Gump]

Sorry, but money saved creates Capital.

Moving money creates nothing.

Without investment...,



Death.

 

[albertaboy]

Under Basil 111 rules, non-core deposits such as those from holding companies require the Bank to actually set aside Capitol against them.

The theory is in a liquidity slowdown, those funds will go out first and create instability.

Govt bond yields are negative in several large countries, this was bound to happen.

 

[RobDownSouth]

The portly situational Native Murican seems angry with Teh Bank of Scotland this morning.

http://replygif.net/i/170.gif

<Mel Gibson Voice>
FREE DUMB!
</Mel Gibson Voice>

Obviously, this is the biggest crisis to rock the world since the Great Cinnamon Shortage of 2010 in Sri Lanka, which coincidentally was also President Obama's fault.

 

[Lancecastor]

Sorry, but money saved creates Capital.

Moving money creates nothing.

Without investment...,



Death.

Capital in the modern sense is, in and of itself, a fiction created by Lenders to create money out of money.

Money wasn't intended or designed to replicate itself; it was designed to enable and foster added value through exchange for goods and services.

Money is a medium of exchange. Use it or lose it.

The pretzel logic of capital markets and lending instruments based on anything other than that are, by their fundamental nature, a fiction.

Hence, the various examples in recent times of various governments and institutions having to pay the piper.

There is no free lunch and there never was.

In the words of that great philosopher Ricky Lee Jones...

Because there ain't no man
Who got the money in his hand
Who got any of that bread
Bein' slow in the head
The easier it looks
The hotter it hooks
There ain't no such thing as easy money

 

[Saint Peter]

chicks for free

 

[Disgustipated]

The chicks are free, it's the pussies you have to pay for.

 

[Saint Peter]

pussies sold separately

 

[bronzeage]

I protect myself from bank instability by having as little money as possible, most of the time.

 

[Comshaw]

I protect myself from bank instability by having as little money as possible, most of the time.

There's a hell of a lot of us out here who have that very same philosophy. If you don't have it in the first place you don't have to worry about losing it.


Comshaw

 

[Lancecastor]

pussies sold separately

http://i.dailymail.co.uk/i/pix/2016/08/20/00/37677DE900000578-0-image-a-4_1471649345213.jpg

 

[Saint Peter]

http://i.dailymail.co.uk/i/pix/2016/08/20/00/37677DE900000578-0-image-a-4_1471649345213.jpg

How much did that set you back?

 

[eyerami]

Great...

Another expert thread full of wannabe money mavens.

It's like Marx pimping financial advice, basically never having made a nickel in his life, completely dependent on others for his and his family's survival.

Too bad he didn't have internet access, so he could've been as rich as his own PR posted, too.

 

[Saint Peter]

Hey eyer! Where does your mommy keep your money?

 

[Saint Peter]

Hey eyer! Where does your mommy keep your money?

I understand.


Get back to me when you get your allowance.

 

[Lancecastor]

Great...

Another expert thread full of wannabe money mavens.

It's like Marx pimping financial advice, basically never having made a nickel in his life, completely dependent on others for his and his family's survival.

Too bad he didn't have internet access, so he could've been as rich as his own PR posted, too.

Yes, this thread is JUST like Marx.


http://statusmind.com/images/2014/10/Hilarious-Quotes-50208-statusmind.com.jpg

 

[Colonel Hogan]

Capital in the modern sense is, in and of itself, a fiction created by Lenders to create money out of money.

Money wasn't intended or designed to replicate itself; it was designed to enable and foster added value through exchange for goods and services.

Money is a medium of exchange. Use it or lose it.

The pretzel logic of capital markets and lending instruments based on anything other than that are, by their fundamental nature, a fiction.

Hence, the various examples in recent times of various governments and institutions having to pay the piper.

There is no free lunch and there never was.

In the words of that great philosopher Ricky Lee Jones...

What do you think the financial services of borrowing and lending money are if not "added value through the exchange of the service of borrowing and lending"?

People are paid interest on their savings which are lent out and paid back (along with a profit to the bank) by the higher interest rates paid by borrowers.

Both depositors AND borrowers are routinely known to USE the money they receive as interest or the loan. The only difference is time. Borrowers tend to use the loan first and depositors tend to use their interest proceeds later after a period of accumulaton.

Your attitude to borrowing and lending is like saying wood was originally designed to be a transmission source of water and nutrients to the leaves of trees and was never "designed or intended" to be an instrument of commerce as a building material for homes and businesses. Technically, that's true, but it would seem to me its various other uses constitute an ingenious application, don't you think?

The same is no less true for savings and loans. Now we all know that bad loans contribute very little to the economic engine. Even if the use of the loan stimulated economic activity elsewhere, the failure of the borrower to pay the loan back is a problem that commercial lenders cannot sustain.

The fact that governments bail themselves out of irresponsible spending by simply printing more money is also a non-sustainable exercise, but that "fiction" is altogether different than what normally occurs in the commercial lending industry.

 

[Lancecastor]

Ho....gan!

In the Consumer Economy, most people toe your Party Line about Money & Credit....and that's why we've been in an unending cycle of buying things today with tomorrow's paycheque since the end of WW2.

But no matter how many times Governments and Banks move the goalposts on deficits, at some point, the piper must be paid.

Either that, or everyone except the Lenders become Wage Slaves...which is what we are seeing with the disappearance of the middle class, etc.

Money creating money out of itself is a false idol, always was.

https://cdn.meme.am/instances/500x/64908563.jpg

 

[4est_4est_Gump]

Capital in the modern sense is, in and of itself, a fiction created by Lenders to create money out of money.

Money wasn't intended or designed to replicate itself; it was designed to enable and foster added value through exchange for goods and services.

Money is a medium of exchange. Use it or lose it.

The pretzel logic of capital markets and lending instruments based on anything other than that are, by their fundamental nature, a fiction.

Hence, the various examples in recent times of various governments and institutions having to pay the piper.

There is no free lunch and there never was.

In the words of that great philosopher Ricky Lee Jones...

You make the classic mistake of conflating Capital with money.

 

[4est_4est_Gump]

What do you think the financial services of borrowing and lending money are if not "added value through the exchange of the service of borrowing and lending"?

People are paid interest on their savings which are lent out and paid back (along with a profit to the bank) by the higher interest rates paid by borrowers.

Both depositors AND borrowers are routinely known to USE the money they receive as interest or the loan. The only difference is time. Borrowers tend to use the loan first and depositors tend to use their interest proceeds later after a period of accumulaton.

Your attitude to borrowing and lending is like saying wood was originally designed to be a transmission source of water and nutrients to the leaves of trees and was never "designed or intended" to be an instrument of commerce as a building material for homes and businesses. Technically, that's true, but it would seem to me its various other uses constitute an ingenious application, don't you think?

The same is no less true for savings and loans. Now we all know that bad loans contribute very little to the economic engine. Even if the use of the loan stimulated economic activity elsewhere, the failure of the borrower to pay the loan back is a problem that commercial lenders cannot sustain.

The fact that governments bail themselves out of irresponsible spending by simply printing more money is also a non-sustainable exercise, but that "fiction" is altogether different than what normally occurs in the commercial lending industry.

I applaud you for bringing up the subject of time preference...

I will lend you a hamburger today if I think that you will give it back to me on Tuesday with a side of fries and a soda...

 

[Lancecastor]

You make the classic mistake of conflating Capital with money.

No; you make the Establishment mistake of suggesting Money has the ability to reproduce without a Partner.