"Maybe at the end of the story, in three to five years, we will notice it was a historical mistake."
Well, it appears we are about to reach the vinegar strokes of that 'historical mistake', as Bloomberg reports, German banks are breaking the last taboo: Charging retail clients for their savings starting with very first euro in the their accounts.
While many banks have been passing on negative rates to clients for some time, they have typically only done so for deposits of 100,000 euros ($111,000) or more. That is changing, with one small lender, Volksbank Raiffeisenbank Fuerstenfeldbruck, a regional bank close to Munich, planning to impose a rate of minus 0.5% to all savings in certain new accounts.
Another bank, Kreissparkasse Stendal, in the east of the country, has a similar policy for clients who have no other relationship with the bank; and a third, Frankfurter Volksbank, one of the country's largest cooperative lenders, is considering going even further and charging some new customers 0.55% for all their deposits is considering an even higher charge.
"The floodgates are open," said Friedrich Heinemann, who heads the department on Corporate Taxation and Public Finance at the ZEW economic research institute in Mannheim.
"We will soon see a chain reaction. Banks that do not follow with negative interest rates would be flooded with liquidity."
It appears that European banks are coming around to the fact - and preparing for it - that negative rates are here to stay (especially under Lagarde who has already opined that there is nothing wrong with negative rates).
Bank CEOs across Europe have expressed their anger at the ECB's policy over the last few months.
The ECB's imposition of negative interest rates have created an "absurd situation" in which banks don't want to hold deposits, rages UBS CEO Sergio Ermotti, arguing that this policy is hurting social systems and savings rates.
"Negative interest rates are crazy. That means money is not worth anything anymore," Gruebel exclaimed.
"As long as we have negative interest rates, the [Ron: fraudulent, usurious, fiat debt token] financial industry will continue to shrink."
[Ron: Currency, ie USD and other fiat debt tokens, are worthless (being mere digits typed into computers) and should be seen as such. Ideally "money"should not be "worth" anything. Why? Because currency or other forms of money should not be issued at interest (usury) and used as a store of value which can be hoarded and used to control, manipulate or impoverish people.Money, in whatever form it takes, should be used as a tool to facilitate the creation and exchange of real wealth, namely goods and services, and NOT as a store of value. That means that "money"should not attract interest (usury) and hence it should not be accumulated and stored (ie taken out of circulation) excessively. IF communities and nations, as appropriate, properly issue and regulate the use of sufficient "money" to ensure that social intercourse and commerce is adequately catered for, there will be no need for privately owned Central and commercial banks as we know them. Banks will become more like post offices holding people's money in accounts for safe keeping only, and charging small fees for that service.
Ideally "money" issued by appropriate publicly owned authorities that are properly operated, controlled and audited, should only be issued and equitably distributed in such quantities as are needed to adequately use available human and physical resources.If that is done there would be NO inflation, ie NO devaluation of "money", and no need to hoard or gamble with it.
Negative interest rates are NOT crazy. They are a rectifying mechanism. They are the result of the fact that fiat "money" systems are PONZI schemes that have a limited viable life before they implode because of inevitable excessive debt loads preventing their continuance.
Ideally, to ensure that "money" circulates freely, ie at a high exchange velocity, currency should be issued with a 'use by' date such that its face value is reduced by a small annual percentage. This would increase its velocity of exchanga and prevent hoarding. in effect this mechanism would be the equivalent of a negative interest rate. Appropriate mechanisms for organisations needing to hold funds for lengthy periods to be able to recoup the full face value of monies being held beyond their 'use by' dates would also need to be available.
Negative interest rates signal that "money" should not be worth anything and presage the end of the current Central Banking fiat money system. When that happens the financial industry will not merely shrink, it will virtually disappear in its current form. In its current form, the banking cum financial industry is totally dysfunctional. Commercial banks are obtaining enormous amounts of fiat "money" from Central Banks at near zero or negative interest rates and using it to jack up stock market prices to ridiculous levels and gambling on futures and derivatives that have reached obscene levels.].
And finally, Deutsche Bank CEO Christian Sewing warned that more monetary easing by the ECB, as widely expected next week, will have "grave side effects" for a region that has already lived with negative interest rates for half a decade.
"In the long run, negative rates ruin the [Ron: fraudulent, usurious, fiat debt token based]financial system."
The German savings rate was around 10% in 2017, almost twice the euro-area average, but one wonders what will happen now that even mom-and-pop will have to pay to leave their spare cash in 'safe-keeping'. Will deposit levels tumble in favor of the mattress? Or, as some have suggested, gold will get a bid as a costless way of storing wealth