Negative base rates incoming

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UndercoverElephant
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Negative base rates incoming

Post by UndercoverElephant »

https://www.bbc.co.uk/news/business-54314971
A Bank of England (BoE) policymaker has defended the potential use of negative interest rates, which could take the cost of borrowing below zero.

Silvana Tenreyro told the Sunday Telegraph that evidence from other countries was "encouraging".

On Tuesday, the BoE governor played down the prospect of taking rates below zero, insisting it just needed to make sure it could do so if needed.
Last edited by UndercoverElephant on Sun Sep 27, 2020 1:50 pm, edited 1 time in total.
Little John
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Post by Little John »

The unambiguous, undisguised and unmitigated end of life as most people understand it is very close now.

And most people now know it.

They may only know it in their bones even though they do not really know what's going on. Or they may have a short to medium term grasp of the severity of things like the "economy" all the way through to understanding that, below everything, is the limits to physical growth on a finite planet.

But most people know the 250 year old party is well and truly over.
stumuz1
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Post by stumuz1 »

This may warrant a thread for itself.

Everyone will want to escape from cash. BUT, when a currency and financial system reset, wealth is NOT destroyed, MERELY, transferred.

We need to very careful going forward so we do not become one of the banking industries victims.
Little John
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Post by Little John »

stumuz1 wrote:This may warrant a thread for itself.

Everyone will want to escape from cash. BUT, when a currency and financial system reset, wealth is NOT destroyed, MERELY, transferred.

We need to very careful going forward so we do not become one of the banking industries victims.
Wealth is not destroyed. That is indeed true. What is also true, however, is that fake wealth is destroyed and, let's face it, a large portion of so called "wealth" at the moment is fake wealth.
vtsnowedin
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Post by vtsnowedin »

Little John wrote:
stumuz1 wrote:This may warrant a thread for itself.

Everyone will want to escape from cash. BUT, when a currency and financial system reset, wealth is NOT destroyed, MERELY, transferred.

We need to very careful going forward so we do not become one of the banking industries victims.
Wealth is not destroyed. That is indeed true. What is also true, however, is that fake wealth is destroyed and, let's face it, a large portion of so called "wealth" at the moment is fake wealth.
While a lot of wealth is just ones and zeros inside a computer somewhere quite a bit is in physical assets which would retain their true value reguardless the numbers used. Suppose for example the government by edict halved the value of every house. acre of land ,and commercial building over night along with your bank account.? All that would really happen is the value of the £ would double. Never happen you say? I seem to recall France lopped off some zeros off the Franc after WW2.
stumuz1
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Post by stumuz1 »

Little John wrote:
Wealth is not destroyed. That is indeed true. What is also true, however, is that fake wealth is destroyed and, let's face it, a large portion of so called "wealth" at the moment is fake wealth.
Agree.
But when people 'cotton on' that currencies (£$EYen) are being debased through hidden inflation and holders of currency (not money, money=gold, silver, land, physical goods, commodities,) are being punished for holding currency by negative interest rates, they will then get rid of currency into money.

This will cause hyperinflation, which will wipe out private debt, which will get rid of government debt.

Those holding money, (gold, silver, land, physical goods, commodities) will become very wealthy on the transfer of wealth cycle. Eg 5oz of gold may well buy a family home after hyperinflation has done its worst. It costs 150-200 oz now.

That's when the transfer takes place.
stumuz1
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Post by stumuz1 »

vtsnowedin wrote: ]While a lot of wealth is just ones and zeros inside a computer somewhere quite a bit is in physical assets which would retain their true value reguardless the numbers used. Suppose for example the government by edict halved the value of every house. acre of land ,and commercial building over night along with your bank account.? All that would really happen is the value of the £ would double. Never happen you say? I seem to recall France lopped off some zeros off the Franc after WW2.
Yes. In times of financial resets, land gold silver commodities become money.

It is the amount of currency (units of exchange) that's chases money that becomes the salient issue.
vtsnowedin
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Post by vtsnowedin »

I worry about those ones and zeros that are stock prices and share counts. We watch Bezzos ,Zuggerburg and company have their wealth go up and down by billions from minor fluctuations in the market price of their companies stock but at the same time the retirement funds and 401ks that provide me and many of you retirement funds have major slices of those companies so when the big dogs lose we lose with them.
A major market crash is much more likely and worrisome then some move away from cash or dollar reevaluation.
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UndercoverElephant
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Post by UndercoverElephant »

https://www.bbc.co.uk/news/business-54506853
The Bank of England has written to UK banks asking them how ready they are if interest rates were cut to zero or turned negative.

The UK would be following countries such as Japan and Switzerland if it cut borrowing costs to such a low figure.

"We are requesting specific information about your firm's current readiness," the bank's deputy governor, Sam Woods, said in the letter to banks.
Just asking....for a friend.
"We are also seeking to understand whether there may be potential for short-term solutions or workarounds, as well as permanent systems changes," he said.

The past few years have been marked by outages and other problems with the computer systems of various British banks.
In other words "please make sure your computer systems don't crash when rates go negative."
vtsnowedin
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Post by vtsnowedin »

Unlike the millennial bug that worried programmers and code writers computers handle negative numbers quite well. For example crude oil futures went negative back in April and the speculators that made the wrong bets took a bath but the computers had no trouble telling them how much they lost. :?
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PS_RalphW
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Post by PS_RalphW »

Negative interest rates are a very special case of negative numbers. Banks are notorious for retaining decades old software at the core of the systems because it would be too disruptive to update the entire setup which has evolved over decades as more and more features and connections to other systems were added.

The quality of coding 30 years ago left a lot to be desired and most of it was written in Cobol or even more archaic languages, with very few programmers not retired still understanding the languages, let alone the under-documented systems.

Introducing a negative exponential would reverse money flows between accounts which would probably be forbidden by the business rules of the software, and the computer language may not even support the concept.

Banks do not code in Fortran. (nor have i for 30 years)
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