European Bank Fights Deflation By CHARGING for Saving Accounts

[icenine]

In other words they are trying to force banks to lend money to businesses and investors so as to fight a feared recession:

http://www.bbc.com/news/business-27717594

it would be like our Fed charging private banks to hold money in the Federal reserve system.

[donquixote99]

Souinds like the idea of taking the discount rate to less-than-zero.

[BlueStreak]

Rapid deflation is worse than inflation, or so I've heard.

[icenine]

Originally Posted by donquixote99

Souinds like the idea of taking the discount rate to less-than-zero.

exactly

it has never been done before.

[donquixote99]

Originally Posted by BlueStreak

Rapid deflation is worse than inflation, or so I've heard.

Hell yes it is. Shuts production down, economy goes into death spiral.

[4-2-7]

This is an extremely desperate move and will lower the backing the banks hold. They have in the western banking system been trying to get banks to have more capital to be able to pay off losses. I know they're trying to increase money velocity but trying to force it will be a disaster. We already know what happens when loans can't get paid back and bubbles you create with cheap money.

Anyway the western banking system is all interconnected anything bad that happens to the Euro will hit our shores. Stay vigilant and don't believe the MSM hype, you will not be informed by them.

[4-2-7]

Oops Gold and Silver liked the news.

[Tom Joad]

Originally Posted by donquixote99

Hell yes it is. Shuts production down, economy goes into death spiral.

All I know is that the last time we had deflation was during the great depression of the 1930's.

I guess that means it's not a good thing.

[donquixote99]

With inflation, people try to get rid of cash. With deflation, it's stuff that's dropping in value, so people try to get rid of inventory. This basically means not making anything--no one likes making stuff that's going to drop in value. people get laid off left and right, which drives down demand, so there's more downward pressure on prices, and more layoffs.

This was the great depression. Death spiral.

[merrylander]

Originally Posted by Tom Joad

All I know is that the last time we had deflation was during the great depression of the 1930's.

I guess that means it's not a good thing.

Take my word for it - it sucked big time.