Where do these negative rates come from?
Negative rates have been implemented by several large central banks such as those of Denmark, Japan, Sweden and Switzerland, not to mention the European Central Bank (BCE).
This Kafkaesque monetary policy is a sign that the modern banking system is reaching its limits. Indeed, the purpose of negative rates is to force private banks to lend, at all costs! To understand this cause-and-effect relationship, we must start by saying two or three words about money:
The system of monetary creation is thus made that private banks have minimum reserves with their central bank: the central currency. Finally, “currency” is a big word. It is a simple game of entries between central accounts through which banks are forced to go to transfer money. It is a so-called “scriptural” currency, like bitcoin for the rest (Merkle tree).
It is as if there is a universal currency – the central currency – that the banks use between themselves, and a counterfeit currency worth absolutely nothing outside the brand that created it (in the form of loans to its customers). This fake currency is the euros BNP or Societe Generale that we have in our bank accounts.
The money of private banks is therefore only a shadow of real money, the central currency. A very big shadow because a private bank only needs to borrow one euro of central currency to be able to lend / create in return up to 30 euros of counterfeit money.[Soit dit en passant, 98 % de la monnaie n’existe que sous forme de jeu d’écritures. Les billets et pièces ne représentent qu’une infime portion de l’argent en circulation.]
So what does this have to do with negative rates?
When central banks set negative rates, it is precisely these mandatory reserves of central money that they tax.
Very good. But why ?
You see, since the 2008 crisis and peak conventional oil, the banks have become more and more cautious. And that’s a big deal.
The reason being that the system of money creation by debt accompanied by interest is an exponential headlong rush. Stopping lending is just not an option. It would be as if a cyclist stopped pedaling.
You have to constantly water the ponzi by making new debts in order to be able to repay the previous debts plus their interest. Otherwise, it is recession assured.
Unfortunately, getting into debt requires borrowers. And for there to be borrowers, we need growth prospects. In other words, you need energy and raw materials. 60% of the oil is used by the transport sector on which depends the growth necessary to repay the debt. Without rolling trucks, no growth, no debt repayment. CQFD.
The banks have understood that growth will never come back because no source of energy can replace oil. The energy density of gasoline is 100 times greater than that of a lithium battery… Bankers know that our ability to transform and move things (growth) is diminishing day by day. They see it in the payment defaults which have continued to increase since 2008.
The king is naked. He is petrified at the idea of stopping the infernal machine and admitting that his ultra-liberal ideology is leading us straight to collapse. He prefers to force private banks to lend by setting a negative rate on their reserve requirements.
Thus, a bank that refuses to increase its loans would gradually get stunted because of the ECB’s negative rate of 0.50%. To avoid this pitfall, the banks do not have 36 solutions. Either they lend more (which ultimately allows them to recover central money), or they pass these negative rates on to their customers.
Here we are…
Negative rates, end of cash and Bitcoin
In Denmark, the Danske Bank – recently pinned for having laundered hundreds of billions… – will impose a negative rate of up to -1% on accounts of more than 100,000 crowns (13,450 euros). 35% of deposits will be affected …
In France, online banking N26 now collects 0.50% on accounts over 50,000 euros. Ditto across the Rhine where some banks tax on the first cent. Other banks do the same in a more devious way, collecting a fixed sum every month.
Same price for Swiss banks. UBS has informed its clients that the negative rates of the central bank will be passed on to accounts over 250,000 francs, against 500,000 francs previously. We were at a million two years ago.
In other words, it is only a matter of time before all the accounts are tapped. Hence the need to eliminate cash or limit the amounts that can be withdrawn from distributors …
This is the real purpose of Christine Lagarde, the president of the ECB, when she talks about Euro Digital. This currency will aim, among other things, to prevent people from withdrawing their money in the form of notes to avoid the negative rate.
In China, such a currency is already being tested and it is perishable. It disappears after a while if its owner waits too long to spend it …
It is the reverse of bitcoin which is an immutable store of value and on which no one can tap a negative interest rate. It is the antidote to a breathless debt system that threatens to collapse on itself in the first oil shock.