Upside-down Economics

Japanese families seem to have a sudden affinity for home safes. According to the Tokyo-based manufacturer Eiko, shipments have doubled since last fall. And in Germany, insurer Munich Re has stashed some 10 million euros (US$11.4 million) worth of its own cash into vaults. Why the squirreling? One possible reason is the creeping imposition of…

via Welcome to the sub-zero club: The upside-down world economy where savers are penalized and borrowers get paid — Financial Post – Top Stories

I have previously written about negative interest rates, see my blog:

Eye Crosser #15: Negative Interest Rates

This article from the British financial newspaper, The Financial Times, discusses negative interest rates. Negative interest rates are being “used” by a couple of countries and central banks but NOT by the U.S. Federal Reserve Bank…yet. This is yet again a very complicated and confusing monetary “tool” that a “central bank” can use to control its country’s sovereign currency.

A “central bank” is defined by

What is a ‘Central Bank’

A central bank, or monetary authority, is a monopolized and often nationalized institution given privileged control over the production and distribution of money and credit. In modern economies, the central bank is responsible for the formulation of monetary policy and the regulation of member banks.

The central bank of the United States is the Federal Reserve System, or “the Fed,” which Congress established with the 1913 Federal Reserve Act.

The plot thickens! The U.S. stock market soars! But are negative interest rates perhaps in our near future?



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