The 99.9% have all come to love the Bernanke/Yellen Zero Interest Rate Policy, affectionately known as ZIRP. This is the policy where you provide Too Big To Trust Wall Street banks with hundreds of billions in newly created fiat currency for free and allow them to invest it in risk free Treasuries, while paying senior citizens and other responsible savers 0% on their savings. This allows the oligarchs to further enrich themselves by gorging on free money, while widows are forced to choose between dinner and medicine. ZIRP was designed by bankers to benefit bankers – NO BANKER LEFT BEHIND.
ZIRP is slowly but surely impoverishing the majority of people in the country. It deters saving and investment. It deters job growth. It creates inflation in food, energy, housing, and the other necessities of daily life. Well get ready for NIRP – Negative Interest Rate Policy. The bankers will offer you the privilege of charging you for letting them keep your money. This is what happened today in Europe.
The mainstream media, the government bureaucrats, and the central bankers have all touted the huge success story of government actions in Europe. Interest rates have been manipulated to record low levels. Spain and Italy are supposedly as safe as the U.S. now. It’s all a cruel fucking joke. And the joke is on the people. These lying scumbags actually believe confiscating depositor’s funds through negative interest rates will spur an economic recovery in Europe. They have the balls to make statements like this with a straight face:
“It’s completely wrong to suggest we want to expropriate savers” – Mario Draghi
It seems he is following the advice of his predecessor:
“When it becomes serious, you have to lie.” – Jean Claude Juncker
The central bankers and politicians of the world have solved absolutely nothing. They have shifted bank debt onto the backs of the people and issued more debt to pay off the old debt. They will continue to use convoluted asinine “solutions” and “programs” to keep the Ponzi scheme going as long as possible to allow their oligarch masters to siphon off the remaining wealth of the people. In the final phase you will be Cyprused. They will seize your money if it is in their banks.
If you think NIRP is something that can only happen in Europe, think again. Read the words of your own esteemed Federal Reserve Goddess:
“Accommodative policy is appropriate, in my view, because the economy is operating well below its potential and inflation is undesirably low. If it were positive to take interest rates into negative territory I would be voting for that” – San Francisco Federal Reserve Bank President Janet Louis Yellen – February 2010
Remember who Janet really works for. The Wall Street banks are her bosses. Janet and her banker buddies are already taking advantage of the math challenged American Sheeple. Savings accounts are already paying .15% interest, while inflation in the real world is 5% or higher. The dollars you keep in a Wall Street bank today are worth 4.85% less every year. The goal of Janet and the Wall Street scumbags is to force you to spend your dollars before they waste away to nothing. They have failed so far, as retail sales collapse and the middle class runs out of money.
The banking cabal has made holding money market funds so distasteful, they force investors into the stock market. Based on this chart, that part of their plan has worked. Stock prices have reached new all-time heights and the ratio of money invested in equities to the amount invested in money market funds is now 20% to 30% higher than the peaks previously reached in 2000 and 2007. When you see the actions of bankers and their puppets, you better understand Lord Acton’s thoughts in the 1800′s:
“The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks.”- Lord Acton
The time for this fight is approaching rapidly. Get your money out of the banks before it is too late. You get a better return under your mattress.
NIRP Has Arrived: Europe Officially Enters The “Monetary Twilight Zone”
Submitted by Tyler Durden on 06/05/2014 07:57 -0400
Goodbye ZIRP, hello NIRP. Today’s decision by the ECB to officially lower the deposit facility rate to negative (as in you pay the bank to hold your deposits) is shocking, but not surprising: we previewed just this outcome precisely two years ago in “Europe’s “Monetary Twilight Zone” Neutron Bomb: NIRP”
Here is what we wrote in June 2012 about Europe’s unprecedented NIRP monetary experiment.
Just because ZIRP is so 2009 (and will be until the end of central planning as the Fed can not afford to hike rates ever again), the ECB is now contemplating something far more drastic: charging depositors for the privilege of holding money. Enter NIRP, aka Negative Interest Rate Policy.
Bloomberg reports that “European Central Bank President Mario Draghi is contemplating taking interest rates into a twilight zone shunned by the Federal Reserve. while cutting ECB rates may boost confidence, stimulate lending and foster growth, it could also involve reducing the bank’s deposit rate to zero or even lower. Once an obstacle for policy makers because it risks hurting the money markets they’re trying to revive, cutting the deposit rate from 0.25 percent is no longer a taboo, two euro-area central bank officials said on June 15… “The European recession is worsening, the ECB has to do more,” said Julian Callow, chief European economist at Barclays Capital in London, who forecasts rates will be cut at the ECB’s next policy meeting on July 5. “A negative deposit rate is something they need to consider but taking it to zero as a first step is more likely.” Should Draghi elect to cut the deposit rate to zero or lower, he’ll be entering territory few policy makers have dared to venture. Sweden’s Riksbank in July 2009 became the world’s first central bank to charge financial institutions for the money they deposited with it overnight.”
There is only one problem when comparing the Riksbank with the ECB: at €747 billion in deposits parked at the ECB as of yesterday, the ECB is currently paying out 0.25% on this balance, a move which may or may not be a reason for the depositor banks, primarily of North European extraction, to keep their money parked in Frankfurt. However, once this money has to pay to stay, it is certain that nearly $1 trillion in deposit cash, currently in electronic format, would flood the market. What happens next is unknown: the ECB hopes that this liquidity flood will be contained. The reality will be vastly different. One thing is certain: inflating the debt is the only way out for the status quo. The only question is what format it will take.
More from Bloomberg:
“It won’t help the prospect of a functioning money market because banks won’t be compensated for the risk they’re taking,” said Orlando Green, a fixed-income strategist at Credit Agricole Corporate & Investment Bank in London. It would make more sense to lower the benchmark rate, thus reducing the interest banks pay on ECB loans, and keep the deposit rate where it is, Green said.
The ECB has lent banks more than 1 trillion euros in three- year loans, with the interest determined by the average of the benchmark rate over that period. Societe Generale SA estimates that cutting the key rate by 50 basis points would save banks 5 billion euros a year.
The deposit rate traditionally moves in tandem with the benchmark, which policy makers kept at a record low of 1 percent on June 6. Draghi said “a few” officials called for a cut, fueling speculation the bank could act next month.
Sadly, because all this is merely operating in the confines of a broken system, just as the LTRO provides a brief respite only to commence crushing banks such as Monte Paschi, so any further intervention by the ECB will only lead to a faster unwind of an unstable system.
Other institutions have opted against such a move. The Fed started paying interest on deposits to help keep the federal funds rate near its target in October 2008 and has reimbursed banks with 0.25 percent on required and excess reserve balances since December that year.
Some Fed policy makers last August argued that reducing the rate could be helpful in easing financial conditions. While they discussed doing so in September, many expressed concern that such a move “risked costly disruptions to money markets and to the intermediation of credit,” the Fed said in minutes published on Oct. 12.
The Bank of Japan (8301) introduced a Complementary Deposit Facility in October 2008 to provide financial institutions with liquidity and stabilize markets, and has kept the interest it pays for the funds at 0.1 percent since then. Governor Masaaki Shirakawa told reporters on May 23 there would be “large demerits” to reducing the deposit rate because it could lead to a decline in money-market trading.
It gets worse: by trying to help banks, the ECB will actually be impairng them:
“If the ECB cut the deposit rate, it would take an important profit opportunity away from banks,” said Tobias Blattner, an economist at Daiwa Capital Markets Europe in London. By doing so, the ECB would also be “encouraging banks to lend to the real economy” even though “there’s hardly any demand for credit,” he said. Blattner predicts the ECB will cut its benchmark and leave the deposit rate at 0.25 percent.
ECB Executive Board member Benoit Coeure said on Feb. 19 that market interest rates of zero or lower “can result in a credit contraction.”
That’s because banks, trying to preserve their deposit bases by paying customers a reasonable interest rate, may reduce lending to companies and households because the return is too low and invest in higher-yielding assets instead.
Finally kiss money markets – which together with Repos are one of the core components of shadow banking – goodbye:
“A deposit rate at zero will be of particular support to banks in southern Europe because it could help encourage some flow of credit,” said Callow. “A negative deposit rate can be damaging for money markets.”
Negative rates would destroy the business model for money- market funds, which would face the prospect of paying to invest, said Societe Generale economist Klaus Baader.
“But the ECB doesn’t set policy to keep alive certain parts of the financial sector,” he said. “Policy makers want to show that they haven’t exhausted their options yet.”