"Negative interest rate" is such an Orwellian term. Let's just call it what it is, the government penalizing you for not spending your own money as fast as they think you ought to.
Yes, and the reason they can't make enough is because central banks are pushing down interest rates in order to nudge people into spending vs. saving. If central banks were not acting as a lender of last resort (at record low interest rates no less), the cost to borrow would be higher, and savers would likely be seeing higher interest rates.
Also, central banks have a mandate to be the lender of last resort. It’s one of their most fundamental duties and they’ve been doing it for as long as they’ve existed.
We don't know that, do we? It depends on the supply and demand for savings.
Positive interest is compensation for delaying spending and a fee for staying in debt.
Negative interest is a fee for delaying spending and compensation for keeping others in debt.
It's not about "governments thinking", it's about maintaining the balance of supply and demand between debt and credit.
The fact that you desire to hold onto money at 0% just shows how profitable it is.
No, its not.
The Fed Board of Governors (like other independent federal agencies) is independent within the government; which is a term of art for executive-branch agencies with leadership board/council/commission that have terms (both length and staggering, usually) and partisan composition rules which prevent them from being reshaped over a short term to reflect the partisan interest of the current President and/or Senate majority, even when those are aligned.
Because its powers are assigned by Congress under law and freely changeable by Congress through new law, it is not and cannot be independent of government (even of by “government” you mean only the President and Congress.)
I am not familiar enough with the federal reserve to say how similar they are.
This verges on pedantry in this context. Banks are required to have a certain amount of capital in reserve to make loans (the reserve requirements and capital adequacy ratios set by central banks). Deposits from consumers give the banks the reserve capital they need to make those loans.
Without a way to use the deposits to make money the banks would just as soon not have your money.
Those are 0% or effectively zero in most developed nations.
Not if these loans are secured then they can make as much money as they want from thin air.
> Deposits from consumers give the banks the reserve capital they need to make those loans.
No. At least in the US, they just need to secure the loan with an asset that can be held from the dealers. Most of the time, if you got your mortgage from a bank, they'll just liquidate for real cash.
> Without a way to use the deposits to make money the banks would just as soon not have your money.
Which is why, in this new system, banks have become hostile to customers. Banks are no longer in the business of helping customers but trading money market funds.
Banks grant credit (bank money) when debtors promise to work.
Your money is effectively a share in the bonds that banks hold onto. In other words, the point of banks is not for people to store their money and earn interest, it's to provide liquidity and a trusted intermediary. When the bank pays interest it basically tells you to keep your money to make room for the investment spending. You and a company want to buy a car, you say the company should go first and you wait until the next car is produced.
In theory you could do the same thing without the bank by writing an IOU saying you work x hours and then use that as money. The problem is that people have to trust you and the IOU is not fungible (it may be worth $4k when all you want to buy is $50 worth of groceries).
There is just SO MUCH cash right now in the hands of the wealthy classes and it's just sitting there in bank accounts not being circulated.
The only outrageous wealth you listed was real estate because of the land component. Nobody gets hurt by stocks. People get hurt if money ceases to circulate because money is needed to pay incomes, taxes and debts. If all the money piles up in one bank account everyone stops working. Meanwhile if one person owns all the stocks people can still work and be happy.
I know you didn't mean it quite so literally, but this paints a rather dystopian picture: a single person holding effectively all the material wealth while everyone else happily shows up every day to work for them
Note that low interest rates affect those with money (i.e. not poor) much more than those without much money.
I also didn't say the purpose is screwing poor people, but like many other things like car emissions caps, they introduce new regulations and laws and bullshit without thinking the poor are often disproportionately affected by them.
I disagree, wealthy people (even middle class) don't hold cash, they invest it