The Great British Withdrawal

[DeppityDawg]

And it is a sign of desperate measures that this is even considered an option.

Its another signal that will escape most peoples attention. Coronavirus killing umpty nine million is the only show in town right now.

[B0ycey]

And because the biggest bank in the UK is HM Treasury, we will moan and groan, but accept their crap interest rates because the alternative is worse.

Sure. But will people keep their money in a bank where you pay them? At best they will hide it under their beds. Worse they will send it abroad. Either way, a bank without a fractional reserve is no bank at all. And a country that relies on finance for its GDP requires banks that work.



As I said, if this is even being considered, then I suspect the government are desperate to find some way to pay for their Covid clusterfuck.

[Borchester]

The government interest rate is money they pay for you lending them money. Money is an IOU.  So a negative rate means you pay them.

I think that was the point I made. As the great Heinlein so often said, there ain't no such thing as a free lunch. We pay the banks to guard or money because (despite all the huffing and puffing) we trust them to do a better job of it than we can. And because the biggest bank in the UK is HM Treasury, we will moan and groan, but accept their crap interest rates because the alternative is worse.

[Baff]

Funnily enough, Northern Rock helped us buy the rural slum. The company had been punching above its weight for years and the market was very leery of it. But then in (i think) 2006 the markets threw their shoes over the moon, the shares went ballistic and a good few shillings were made by all.



A lot of countrries, particularly the successful ones, have negative interest rates. The markets always bellyache about this but since the alternative is to keep the money under the bed, they still buy government bonds.

Not quite.



It is a legal requirement for insurance companies, pension funds and banks etc to keep their assets in certain approved investments. And certain quota's on each type are in place.



So they are only allowed to by a certain % of gold.

A certain % of stocks.

A certain % to be kept in cash.



Predictably a certain % of their assets and legally required reserves must be kept in government bonds.

So even though this negative returning investment costs them money, they still have to do it.



It is by no means always a volunatery decision on thier part.

Not a choce they necessarily make on the basis of safety or economic prudence.

[B0ycey]

Actually Boysie, you pay the interest rate, negative or positive.



Let us assume that the bank is offering 6% interest. That looks good but they are only doing that because inflation is higher. So the bank takes your money and invests in stocks and shares and women and drink and sometimes makes a profit. Not always. About the only folk who have unswerving faith in the financial cunning of bankers are lefties, but be that as it may be, the average account holder loses money. The difference between the interest rate and inflation is the fee we pay the banks to guard our money.



It is an oddity of the left that while they complain bitterly about the Capitalist system, they are about the only folk who believe that the banks are there to give them something for nothing.  

The government interest rate is money they pay for you lending them money. Money is an IOU.  So a negative rate means you pay them. Inflation is what someone is prepared to exchange for Sterling. That is you have too much of it, you over supply the market with it and it has a lower exchange value. So they are not the same.

[Borchester]

The government buy their own glits!



It really depends on who pays for the negative interest rate though doesn't it? And it is a sign of desperate measures that this is even considered an option.

Actually Boysie, you pay the interest rate, negative or positive.



Let us assume that the bank is offering 6% interest. That looks good but they are only doing that because inflation is higher. So the bank takes your money and invests in stocks and shares and women and drink and sometimes makes a profit. Not always. About the only folk who have unswerving faith in the financial cunning of bankers are lefties, but be that as it may be, the average account holder loses money. The difference between the interest rate and inflation is the fee we pay the banks to guard our money.



It is an oddity of the left that while they complain bitterly about the Capitalist system, they are about the only folk who believe that the banks are there to give them something for nothing.  

[papasmurf]

Cant see it myself .  If they are charging me to keep my cabbage its going in the safe at home .  



Discount for cash sir , thanks very much .

I have to admit to being puzzled given the state of the country's finances that my wife has just got an open market impaired life annuity paying her at 10% interest.

[Streetwalker]

Cant see it myself .  If they are charging me to keep my cabbage its going in the safe at home .  



Discount for cash sir , thanks very much .

[B0ycey]

Funnily enough, Northern Rock helped us buy the rural slum. The company had been punching above its weight for years and the market was very leery of it. But then in (i think) 2006 the markets threw their shoes over the moon, the shares went ballistic and a good few shillings were made by all.



A lot of countrries, particularly the successful ones, have negative interest rates. The markets always bellyache about this but since the alternative is to keep the money under the bed, they still buy government bonds.

The government buy their own glits!



It really depends on who pays for the negative interest rate though doesn't it? And it is a sign of desperate measures that this is even considered an option.



Nonetheless a national that relies on finance as a key article to their GDP, this is perhaps more risky for us than for most nations. Especially if people take their cash out of banks and put it under their beds because they don't want to pay £2.50 a month.

[Borchester]

https://www.bbc.co.uk/news/business-52772950">//https://www.bbc.co.uk/news/business-52772950



So the Bank of England are looking at Negative Interest to pay for the Covid response. Meaning you will pay the banks to keep your money with them. If they think this is a good idea then they clearly have forgot what happened to Northern Rock in 2008.



We really do have clowns running government and we haven't even seen anything yet I suspect. Covid19 is the single biggest act of self harm in political history and I can only see the nail in the coffin for Capitalism now.

Funnily enough, Northern Rock helped us buy the rural slum. The company had been punching above its weight for years and the market was very leery of it. But then in (i think) 2006 the markets threw their shoes over the moon, the shares went ballistic and a good few shillings were made by all.



A lot of countrries, particularly the successful ones, have negative interest rates. The markets always bellyache about this but since the alternative is to keep the money under the bed, they still buy government bonds.

[B0ycey]

https://www.bbc.co.uk/news/business-52772950">//https://www.bbc.co.uk/news/business-52772950



So the Bank of England are looking at Negative Interest to pay for the Covid response. Meaning you will pay the banks to keep your money with them. If they think this is a good idea then they clearly have forgot what happened to Northern Rock in 2008.



We really do have clowns running government and we haven't even seen anything yet I suspect. Covid19 is the single biggest act of self harm in political history and I can only see the nail in the coffin for Capitalism now.