
Negative creep - csomar
http://www.economist.com/news/leaders/21690031-negative-rates-club-growing-there-limit-how-low-rates-can-go-negative-creep
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USAnum1
>"Savers might stomach a modest fee for making bank deposits, but as rates go
deeper into negative territory, they will find ways to avoid charges.
Switching to cash is the obvious solution, which is why some have suggested
getting rid of banknotes altogether"

This is an incredibly troubling aspect of the push toward a cashless economy.
Not only does it marginalize the unbanked (those who can't bank due to illegal
immigrant status, or other mitigating circumstances), but it's also an
incredibly powerful tool for population control.

It removes the agency a modest savings give us, by concentrating all wealth
under the control of a select few anointed conglomerates. It also allows
onerous policies like negative interest to be a new, truly inescapable
regressive tax regime.

Edit: notahacker makes a compelling point that negative interest is likely
less regressive than inflation. I thought it was something worth bringing to
the root of the thread.

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repomies691
Thank god cryptocurrencies exist.

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germanier
There is no structural reason why cryptocurrencies can't have negative
interest rates.

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repomies691
But what would make me to use cryptocurrency with a negative interest rate? Of
course all kind of cryptocurrencies can exist, it wouldn't be a surprise if
there were already some kind of negative interest-rate model in some of the
100's of altcoins. But the user decides what kind of cryptocurrency he uses.

~~~
repomies691
Based on your comments, I don't think you understand cryptocurrencies very
well. Who would get the money from negative interest rates? Miners?

If miners are so powerful that they can change the protocol rules, why they
wouldn't just raise the block reward? ( increase inflation/monetary expansion)

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germanier
I do understand how cryptocurrencies work. Negative interest rates don't have
the same effect as inflation and could be implemented in code. Just because
miners have the same nominal changes in their wallets doesn't mean that the
effect on anyone else is the same.

I just don't think our current problems with currency go away just because we
use cryptocurrency. There is no reason to. Central banks don't enact policies
because it's fun but because they think it will have a certain effect. People
will find a way to do so in the future. Whether it's called "Inflation" or
"negative interes rates" or whatever is not relevant. The only thing that
matters is what happens to people's money.

Oh, and it would be much easier if you would actually reply to my comments
(instead of yours). If neccassary wait a few minutes to do so.

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GreaterFool
The reasoning behind BOJ's move was to force banks to actually lend some money
to people __*

Getting funding to start a business in Japan is rather hard. The good old
fashioned way was to get a loan from the bank. Japanese banks simply prefer to
avoid risk at all costs, deposit a pile of cash with BOJ and collect almost 0
interest :) Better than those risky loans.

 __* and of course it doesn 't hurt to weaken the currency while at it.
Everyone and their dog are doing this and it is getting really hard to be the
one weakening the currency the hardest.

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wheaties
But it has the opposite effect. Banks tend to lend less the lower interest
rates go. There are other risks that have to be balanced which in a negative
world forces their hand.

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kbart
" _Were interest rates negative enough for long enough, specialist security
firms would emerge that would build vaults to store cash "_

I see this speculation from time to time, but no data to back it up. I wonder,
who benefits from such rumors? To my limited understanding in economics,
negative interest rate is to encourage lending vs hoarding, so while money is
moving, you don't actually "lose" them?

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redwood
The idea is that just as you're supposed to want to lend... you might also
choose to stockpile cash. Both strategies potentially mitigate the negative
interest. In tho regime, banks pay the central banks less in the future for
money they take on loan now. The common sense assumption is that this means
money will be worth more in the future. Therefore you may want to invest in
cash. At a point, this makes cash like gold traditionally and hence
stockpiling aka fort Knox. But that's why you can go negative...you just cant
go negative enough such that folks start stockpiling. Iraw expensive to
stockpile

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thomasahle
Negative interest rates are interesting. In Denmark many banks actually closed
down for a while, due to the negative rates crashing their software.

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eaandkw
I guess when all of the people and businesses start putting money in their
mattresses the government will just ban paper money in general. Then there
would not be anywhere to hide money.

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repomies691
I don't think it will be ever very easy for goverments to ban owning physical,
valuable things. If they don't issue their own paper currency, someone else
will.

I think this fantasy some people have of banning paper currencies pretty well
points just out that the people who propose the banning, have no idea how the
world works.

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emsy
Placeholder comment for people who thought this was an article about Nirvana.

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Saanti
Or rather Radiohead....?

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catmanjan
Nope that's definitely Nirvana!
[https://www.youtube.com/watch?v=-5ijtz6Du_s](https://www.youtube.com/watch?v=-5ijtz6Du_s)

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ubersync
Bitcoin, once more popular and stable, will make it hard for these regressive
plans to be implemented.

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ucho
Will it ever be more popular? EU is recently thinking about banning crypto
currencies. This might end with ID verification requirement for all exchanges.
Then Visa and other CC issuers will ban anything related to BitCoin, just like
PayPal did and whole market will be dead.

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HappyTypist
Bitcoin commerce is surprisingly resilient. Sites like LocalBitcoins
facilitate in person cash trades.

As long as you can barter things of value, like a brand new Macbook for
bitcoins, bitcoin will survive.

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mryan
> Sites like LocalBitcoins facilitate in person cash trades.

Sites like LocalBitcoins would very quickly cease to exist if there is a
concerted government effort to ban Bitcoins.

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repomies691
Or move to anonymous networks or more relaxed jurisdictions. Usually countries
fail to unite on this kind of topics, I'm pretty sure jurisdictions like Hong
Kong will allow always cryptocurrency trading sites.

