Economist: U.S. Banks Preparing to Charge Customers For Deposits

[Freewill]

I looked at my credit union interest rate and joked with them and asked when were they going to start charging me to keep my money. Oops, spoke too soon apparently it may happen.

Honestly folks how bad does the Obama economy have to get until the left turns on him? The left makes light of Reagan yet his policies ushered in the greatest peace time expansion of the economy in history. What has Obama's done?

» Economist: U.S. Banks Preparing to Charge Customers For Deposits Alex Jones' Infowars: There's a war on for your mind!

In the week that the European Central Bank cut its deposit rate for banks from zero to -0.1%, economist Martin Armstrong warns that negative interest rates are coming to the United States, meaning that Americans will be forced to pay just to keep their money in the bank.

 

[OKTexas]

I'm no economist but to me this doesn't make sense. The central bank loans money to the banks, if they are charging a negative interest, essentially the central bank is paying the banks to increase their cash on hand so there in no increased cost to pass along to the customers. Where am I wrong?

 

[Freewill]

I'm no economist but to me this doesn't make sense. The central bank loans money to the banks, if they are charging a negative interest, essentially the central bank is paying the banks to increase their cash on hand so there in no increased cost to pass along to the customers. Where am I wrong?

I am not sure I understand either. What I know is that the bank always paid some interest although not a lot.

This is something I have never seen and I think it has something to do with money supply. Banks don't make money by keeping money they make money by lending money. I believe they entice people to save money in order to have money to lend. So if they have so much money to lend they don't need people saving money it becomes a liability because they can no longer lean the money that people save. I don't pretend that is right but it makes sense to me.

 

[The Rabbi]

I'm no economist but to me this doesn't make sense. The central bank loans money to the banks, if they are charging a negative interest, essentially the central bank is paying the banks to increase their cash on hand so there in no increased cost to pass along to the customers. Where am I wrong?

OK, this is how it works. The Fed wants banks to make loans, not hold cash. They cannot reduce the rates they pay (banks deposit money with the Fed) so now they will start charging to hold the money. The EU central bank announced they would do this, or were looking at it.
That said, it won't happen here for a variety of reasons and shame on anyone who quotes Infowars as a source. It's like the Daily Kos of the right.

 

[Erand7899]

I'm no economist but to me this doesn't make sense. The central bank loans money to the banks, if they are charging a negative interest, essentially the central bank is paying the banks to increase their cash on hand so there in no increased cost to pass along to the customers. Where am I wrong?

Not wrong, just missing the point. The banks don't need your deposits at the present time, and therefore, they don't mind making you pay to keep it. They get all the money they can use from the Fed for free.

 

[HenryBHough]

The "negative interest" idea has been around for a long time. It was seriously proposed in Germany about three years back. Idea was to force people to take money out of savings and spend it, getting it into circulation.

Then somebody figured out that people would do a run on banks and withdraw everything, stuffing it in mattresses and burying it holes in the ground (in the form of gold or silver).

The idea died.

Then along came a "financial transaction tax" that works this way:

You cash a paycheck - financial transaction - pay 1/2 of 1 percent.
You deposit some of the cash - financial transaction - pay 1/2 of 1 percent.
You write a check to pay your ever-growing electric bill - financial transaction - pay......
You pay your rent - financial transaction - p......
You withdraw cash with your ATM card - financial transaction -

The rate is small but the bite adds up. This idea is not dead. Look for it to become law, probably first applied only to stuff like purchase/sale of stocks so it seems only to apply to "fat cats". Like the income tax was ever gonna do....just apply to the rich.

Buttonwood: The taxman blustereth | The Economist

 

[william the wie]

I'm no economist but to me this doesn't make sense. The central bank loans money to the banks, if they are charging a negative interest, essentially the central bank is paying the banks to increase their cash on hand so there in no increased cost to pass along to the customers. Where am I wrong?

Not wrong, just missing the point. The banks don't need your deposits at the present time, and therefore, they don't mind making you pay to keep it. They get all the money they can use from the Fed for free.

No matter where they get the money it counts against their capital ratios. Performing loans - deposits, which includes money from the Fed = bank capital. Bank capital - bonded debt = bank equity. Since the amount of equity required by the Basel agreements is going up the amount of deposits have to go down.

 

[OKTexas]

I'm no economist but to me this doesn't make sense. The central bank loans money to the banks, if they are charging a negative interest, essentially the central bank is paying the banks to increase their cash on hand so there in no increased cost to pass along to the customers. Where am I wrong?

OK, this is how it works. The Fed wants banks to make loans, not hold cash. They cannot reduce the rates they pay (banks deposit money with the Fed) so now they will start charging to hold the money. The EU central bank announced they would do this, or were looking at it.
That said, it won't happen here for a variety of reasons and shame on anyone who quotes Infowars as a source. It's like the Daily Kos of the right.

Thanks I guess I misread the article.

 

[Freewill]

I'm no economist but to me this doesn't make sense. The central bank loans money to the banks, if they are charging a negative interest, essentially the central bank is paying the banks to increase their cash on hand so there in no increased cost to pass along to the customers. Where am I wrong?

OK, this is how it works. The Fed wants banks to make loans, not hold cash. They cannot reduce the rates they pay (banks deposit money with the Fed) so now they will start charging to hold the money. The EU central bank announced they would do this, or were looking at it.
That said, it won't happen here for a variety of reasons and shame on anyone who quotes Infowars as a source. It's like the Daily Kos of the right.

Here is part of the story from the BBC, it is happened there it could be only a matter of time.

Asia stocks mixed after unprecedented ECB actions

I would think a run on the bank would be one problem that may stop them from doing so. But I am thinking they will only limit the amount you can withdraw.

 

[kiwiman127]

I'm no economist but to me this doesn't make sense. The central bank loans money to the banks, if they are charging a negative interest, essentially the central bank is paying the banks to increase their cash on hand so there in no increased cost to pass along to the customers. Where am I wrong?

OK, this is how it works. The Fed wants banks to make loans, not hold cash. They cannot reduce the rates they pay (banks deposit money with the Fed) so now they will start charging to hold the money. The EU central bank announced they would do this, or were looking at it.
That said, it won't happen here for a variety of reasons and shame on anyone who quotes Infowars as a source. It's like the Daily Kos of the right.

Here's an article, is this what you're referring to Rabbi?

European Central Bank Chief Looks for Silver Bullet
FRANKFURT — Mario Draghi might feel like a doctor trying to treat a chronically ill patient with unproven medicines.
Consider one of the remedies that Mr. Draghi, president of the European Central Bank, is widely expected to announce on Thursday as part of an increasingly urgent effort to prevent the euro zone from falling into deflation.
As one of its prescriptions, the E.C.B. is expected to start charging banks interest to keep money at the institution, a so-called negative deposit rate meant to weaken the euro and discourage investors from hoarding cash. Such action, meant to stimulate the economy, is almost certain after inflation in the euro zone fell to a 0.5 percent rate in May, far below the target of 2 percent.
The risk of applying a negative deposit rate, though, is that it has rarely been tried before. The most recent test case is Denmark, which has 5.6 million people.
That country, which is not a member of the euro zone but pegs its currency closely to the euro, employed a negative deposit rate from July 2012 until this past April to discourage foreign investors from piling into the country as a hedge against global turmoil.
http://www.nytimes.com/2014/06/04/b...-bank-chief-looks-for-silver-bullet.html?_r=0

Oh and your last paragraph was right on.

 

[R.C. Christian]

LOL, nothing like charging fools to make money. If this is true then it really should be the last straw. I would expect riots and lynchings of bank executives etc.

As a tangent, I would suggest that sooner or later they'll socialize 18 trillion in 401K's to help balance the US debt so they can fund more wars. Will you lay down and take tyranny?

 

[Moonglow]

Considering that the Bank Of America is owned by a man in Europe, I guess we all better get used to the idea that many banks are not US banks..

 

[Rozman]

Chase was going to charge me a fee for making too many transfers between accounts.
I was transferring money from checking to savings.It seems they allow like 6 transfers a month.

 

[Steven_R]

OK then I won't use the damn banks. I prefer cash anyways. Wal Mart cash's checks for 3$ no matter the amount.

You obviously don't work at a place that only pays via Direct Deposit.

The banks can only push so far before people get fed up with this kind of stuff and start hanging bankers from streetlights.

 

[ScreamingEagle]

I'm no economist but to me this doesn't make sense. The central bank loans money to the banks, if they are charging a negative interest, essentially the central bank is paying the banks to increase their cash on hand so there in no increased cost to pass along to the customers. Where am I wrong?

OK, this is how it works. The Fed wants banks to make loans, not hold cash. They cannot reduce the rates they pay (banks deposit money with the Fed) so now they will start charging to hold the money. The EU central bank announced they would do this, or were looking at it.
That said, it won't happen here for a variety of reasons and shame on anyone who quotes Infowars as a source. It's like the Daily Kos of the right.

If the banks are holding excess cash instead of loaning/investing it....does this mean the stock market has reached its peak....?

 

[NYcarbineer]

Chase was going to charge me a fee for making too many transfers between accounts.
I was transferring money from checking to savings.It seems they allow like 6 transfers a month.

Then you should be in a credit union.

 

[Toro]

Considering that the Bank Of America is owned by a man in Europe, I guess we all better get used to the idea that many banks are not US banks..

Er, what?

 

[Zander]

At this point the negative rate is only being charged to the BANKS. Not depositors. They want to spur banks to loan money.

 

[william the wie]

Considering that the Bank Of America is owned by a man in Europe, I guess we all better get used to the idea that many banks are not US banks..

Er, what?

NC has been redefined as Europe.

 

[SteadyMercury]

Source = inforwars, who ironically make money by frightening chicken littles.

Carry on.