{"id":1205276,"date":"2020-09-01T14:28:29","date_gmt":"2020-09-01T19:28:29","guid":{"rendered":"https:\/\/dailyreckoning.com\/?p=109617"},"modified":"2020-09-01T14:28:29","modified_gmt":"2020-09-01T19:28:29","slug":"negative-interest-rates-have-arrived","status":"publish","type":"post","link":"https:\/\/juniorminingnews.com\/?p=1205276","title":{"rendered":"Negative Interest Rates Have Arrived"},"content":{"rendered":"

This post Negative Interest Rates Have Arrived<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n

We are often warned that negative interest rates are an approaching menace \u2014 not an immediate menace.<\/p>\n

Yet are negative rates already reality in the United States? Has the unholy day already arrived?<\/p>\n

Today we don the sleuth\u2019s cap, step into our gumshoes\u2026 and unearth evidence that negative interest rates are not the future menace\u2026 but the present menace.<\/p>\n

What is the evidence? Answer anon.<\/p>\n

Under negative interest rates…<\/p>\n

Your bank does not compensate you for stabling your money with it. You instead compensate the bank for stabling your money.<\/p>\n

A man sinks a dollar into his bank. Under standard rules he hauls out a dollar and change on some distant date \u2014 perhaps $1.05.<\/p>\n

These days he is of course fortunate to bring out $1.01.<\/p>\n

Yet under negative interest rates he endures a rooking of sorts. He pulls out not a dollar and change \u2014 but change alone. The bill itself has vanished.<\/p>\n

His dollar may be worth 97 cents for example. Thus his dollar \u2014 rotting down in his bank \u2014 is a sawdust asset, a wasting asset, a minus asset.<\/p>\n

Would you willingly hand a bank a dollar today to take back 97 cents next year? You are a strange specimen if you would.<\/p>\n

Yet that is precisely as the Federal Reserve would have it…<\/p>\n

The Federal Reserve wants your money eternally up and doing, searching, hunting, grasping\u2026 adventuring…<\/p>\n

It must be forever acquiring, forever chasing rainbows, forever upon the jump.<\/p>\n

That is, the Federal Reserve would not allow your money one contemplative moment to sit idle upon its hands\u2026 and doze.<\/p>\n

For a dollar in motion is a dollar in service \u2014 in service to the economy.<\/p>\n

The dollar in motion runs down goods and services. It invests in worthwhile and productive enterprises.<\/p>\n

The dollar in motion, in turn, sets other dollars in motion\u2026 as a careening cue ball sets a rack of billiard balls in motion.<\/p>\n

That is, the dollar in motion stimulates \u2014 unlike the dormant dollar snoozing in its bank.<\/p>\n

Thus the dollar in motion is an undiluted economic blessing.<\/p>\n

So runs the case for negative interest rates. Is this case sound?<\/p>\n

It is not\u2026 as our cold and calculating eye judges it. In these pages we have argued the case to pieces.<\/p>\n

We maintain that economic growth rises instead from a bedrock foundation of savings.<\/p>\n

An economy built atop this bedrock is a rugged economy, a durable economy.<\/p>\n

No passing blow will knock it over.<\/p>\n

And savings must precede consumption. Consumption is a consequence of savings.<\/p>\n

Yet many economists mistake the rider for the horse\u2026 and believe consumption is the way to prosperity everlasting.<\/p>\n

We believe it is not. But let it go for now.<\/p>\n

Let us instead revisit our question:<\/p>\n

Is the noiseless thief of negative interest rates already among us?<\/p>\n

A certain Vic Lederman \u2014 a financial analyst with Agora affiliate Stansberry Research \u2014 claims they are in fact among us:<\/p>\n

\u201cFolks, negative rates are here… in the U.S… today.\u201d<\/p>\n

But it is a secret jealously guarded:<\/p>\n

\n

The biggest banks and money managers have done everything they can to keep this under wraps. They know that seeing negative rates scares people.<\/i><\/p>\n<\/blockquote>\n

That fright is justified \u2014 if you cherish your dollars. But what is the evidence that negative interest rates presently exist? Lederman:<\/p>\n

\n

BlackRock. Fidelity Investments. J.P. Morgan Asset Management.<\/i><\/p>\n

These are some of the biggest names in finance. And they all share one thing in common now.<\/i><\/p>\n

These investment managers are all slashing the fees on their money market accounts. But don’t be fooled. They’re not doing this as a kind gesture.<\/i><\/p>\n

They’re cutting fees because if they don’t… their money market accounts would show negative yields<\/b>.<\/i><\/p>\n<\/blockquote>\n

There you have your evidence for the existence of negative rates, the freshly fired pistol billowing smoke:<\/p>\n

Reduced bank fees. More:<\/p>\n

\n

Simply put, the most basic form of cash savings in the U.S. has effectively turned negative… only to be saved by a cut in fees. That means U.S. rates have, in a practical sense, entered negative territory.<\/i><\/p>\n

Now, the big money managers sure as heck don’t want you to see this. That’s why they’re cutting fees.<\/i><\/p>\n

The goal is to make it look like your account isn’t losing money. But outside of this fee reduction, it is…<\/i><\/p>\n

The craziest part of this is that most mom-and-pop investors have no idea this is happening. And most folks believe that keeping a large chunk of their savings in cash is prudent.<\/i><\/p>\n

Yet can their smoke, can their mirrors, can their whimwham con us much longer?<\/p>\n<\/blockquote>\n

Fees can only be cut so far. So given the current trend in rates, actual losses are likely just around the corner.<\/i><\/p>\n

So here you have your negative interest rates \u2014 not in the future \u2014 but the present.<\/p>\n

And so there is less joy in heaven this day.<\/p>\n

How can you guard your wealth against the corroding acids of negative interest rates?<\/p>\n

Regards,<\/p>\n

Brian Maher
\nManaging editor, The Daily Reckoning<\/i><\/p>\n

The post Negative Interest Rates Have Arrived<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

This post Negative Interest Rates Have Arrived<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n

In today’s issue Brian Maher tells you why: The Federal Reserve will not leave your money alone…<\/p>\n

The post Negative Interest Rates Have Arrived<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n","protected":false},"author":16,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[484,3724,366,818,716,463],"tags":[2808],"class_list":["post-1205276","post","type-post","status-publish","format-standard","hentry","category-brian-maher","category-daily-reckoning","category-dailyreckoning","category-federal-reserve","category-jerome-powell","category-the-daily-reckoning","tag-negative-interest-rates"],"_links":{"self":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1205276","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/users\/16"}],"replies":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1205276"}],"version-history":[{"count":3,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1205276\/revisions"}],"predecessor-version":[{"id":1206701,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1205276\/revisions\/1206701"}],"wp:attachment":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1205276"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1205276"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1205276"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}