Yes, @John was taking inflation into account when talking of negative interest.
Unfortunately some central banks would love to be able to enforce negative nominal interest rates on savers, on top of the inflation theyâre creating⌠hopefully that wonât be allowed to happen!
Time will tell, but if people are penalized I imagine people would take the majority of their money out of accounts and hold cash at home or invest most immediately.
Funny enough if you like interest rates you may find this interesting. I posted Ethereum to take a stablecoin loan out. You can use various dApps to do this instantly, no need to get qualified or wait on a banker or credit union. I posted 4x the USD value in ETH then that of the USDC loan I took. The way this system works is my ETH automatically gets liquidated to pay the creditor the unpaid USDC balance if the value of the collateral falls below a LTV threshold. As long as you have a healthy factor that is conservative enough to stomach a crypto swing you should be fine.
Generally this loan I took yields 2-4% APY overall for me as the ETH holding interest earns more USD value then Iâm paying for the USDC loan. Even if the interest rate is higher on USDC, its the fact that the ETH value is 4x then that of the loan.
But with the crypto bullrun we have been seeing last few days USDC rates have doubled as people have been pulling USDC out of the dApps to deploy in coins. Once things settle down I expect this to drop back to 3-6% which is consistent for the last year.
This is one of the fallacies of the free market. In UK weâve seen how few people seek out the best deals in any area. Time and again the government has tried to make this easier and yet people really donât have the time for this, and that suits the âfreeâ market just fine.
Of course some do, but it is not a good assumption that most, or even many will do this.
Free markets are those wherein a gun isnât being pointed at a trader.
If you prefer markets where people are being robbed of their sovereignty of choice at the point of a gun, then ⌠well, I find that bizarre.
If you expect outcomes to ultimately be better in unfree markets, then this seems like Stockholm syndrome to me.
Free markets are never perfect ⌠just the best thing humanity has to expand our options without parasitism.
It wasnt so long ago that you could pick a mortgage in Denmark with a negative interest rate.
Money for nothing! - Less than nothing!!
i tend to subscribe to the The Cantillon effect idea and find it explains a good chunk of the failure and wealth concentration. There is no trickle down economics to my mind , the opposite, its all movin on up to the 2% who own assets.
one area i find a tragedy is all the unclaimed benefits, its not only bad
for the potential recipient its bad for a local economy because less cash circulating.
For fun i also just pulled up a list of corporations which issued senior unsecured EUR bonds with a negative yield.
The lowest yield I found is a 5y Nestle: NESNVX 0 12/03/25 ( XS2263684180 ) which priced at 101.549 on 03.12.20 which gives a yield of -0.33%
Madness. Give Nestle EUR101.549, wait 5 years, get EUR100 back.
But it is good for the wealthy.
Universal Basic Income is all but proven to be more efficient at distribution and to have more and better outcomes. Take-up is increasing, but as with things like inheritance tax, the public mindset is that such things - that are good for almost everyone - are bad.
This is due to bank counterfeiting - f.r.b. (fractional reserve banking) money creation and interest on money created - which is all literally fraudulent, but allowed by the mafia/State.
The very wealthy connected class (oligarchs and their friends and supporters) have access to bank lending and get rates lower than the inflation rate --all of this counterfeiting. Ultimately all the wealth moves up the chain in this system, which is NOT free market at all as itâs built on the fraud of f.r.b.
When you take out a loan from a bank, they are creating this money - so itâs not a loan from the bank, itâs in fact a theft of money from all in society who have no clue that the value in their wallets has been reduced. In return for this âserviceâ, the bank getâs the right to claim real property if you fail to pay them the âinterestâ they demand for this public theft operation.
A solo thief points a gun or a holds a knife. A mafia thief keeps the gun in the holster and calls the theft a âtaxâ. A surreptitious thief takes the money out of your wallet and you donât even notice them doing it.
Negative interest rates are only being considered where/when âcashlessâ society has been achieved, as yes, people would just hold cash if it were an option.
Given that crypto will be an option for people, I think itâs less likely that central bankers will ever be able to enforce negative interest rates⌠but they may still try!
Defi allows some fantastic options with no hassle for KYC etc. Which platform is that you use? Itâs cool that you get interest on the collateral youâre borrowing against.
A tip to consider for future loans is swapping your ETH to WSTETH before borrowing against it - that way, you can get an additional ~3% APY on your ETH to counter the borrowing costs.
Of course that depends on what markets are available on the platform youâre using, but if staked ETH is an option, it makes borrowing against it even more affordable. Of course there are some risks in liquid staked ETH tokens, and some risk on DEFI platforms⌠so best to stick with solutions that have been around for a long time and are well tested.
Our bank accounts are allowed and do charge a monthly account keeping fee, typically 5AUD. The government has mandated that Banks have to allow certain classes of people to have one fee free savings account.
Its outrageous in my view when bankâs profit is 100 times or much more than all those fees added together on all saving accounts combined. The real cost to banks is cents a year with electronic banking now to keep an account.
Yep, and why in nearly all cases now giving tax breaks to the wealthy only enriches the wealthy even more allowing them to own more and harvest the population even more. Would happen even with almost all systems of finance. Its called greed. And the ones giving those tax breaks to the wealthy are the wealthy.
I think itâs (debt based curse ) the most insane thing i have discovered, become aware of in my life to date . Only thing to top it(fractional reserve scam and what not) might be if i had an extra-terrestrial experience 
The thing that i object to most though is the long term suppression, manipulation of precious metals which has allowed for, facilitated the low/negative rates, easy money policies without the public (everyday savers)having any say or escape exit due to the price of silver being derived from the paper derivative, rigged.
That dapp is Aave which has been along for a while. Yes I could swap for WSTETH but I donât want to as that could be considered a taxable event (lack of clairity/regulation right now) so donât wish to do so. I donât like staking due to security concerns of not having custody, but I donât yet have 32 ETH to run a node. That is one of my goals though. Get the node and keep the nest basket and use the earnings how I seem fit.
Some banks charge that in the US, but all of them will override it if you maintain a balance of X amount. In my experience this is generally $500 - $10,000 balance.
Different banks have different rules to reduce or zero the monthly fee. Some is deposit a certain amount each month (even if you withdraw). Some is keep a certain amount in account, some is always pay and some are no fees.
The point being this is one way that savings accounts can go negative by keeping your money in it.
We still have cash and so the banks still have to hold out those carrots to keep people using their accounts.
Once we go all electronic then it will be fees on every single transaction, monthly fees, etc etc and no one can do anything about it. And of course the Tax dept can track every cent of spending, income, etc
