Magazine article The New American

Setting Negative Interest Rates, European Central Bank Plots Heist

Magazine article The New American

Setting Negative Interest Rates, European Central Bank Plots Heist

Article excerpt

Under the guise of seeking higher inflation to "stimulate" the economy (and erode the value of people's savings even more quickly), the European Central Bank (ECB) on June 5 announced negative interest rates on deposits held at the bank--the first time a major monetary authority has ever set the rate below zero.

At a press conference announcing what many analysts said was the "historic" development, ECB boss Mario Draghi noted "the rates we've changed are for the banks, not for the people." In other words, everyday Europeans will not be charged interest merely to deposit funds at the bank--at least not yet.

What the negative deposit rates mean, essentially, is that commercial banks will be penalized for accumulating reserves rather than loaning out all of those fresh euros into the supposed "real" economy. The idea, at least according to the central planners at the ECB, is to force banks to loan out more of the funds to businesses and consumers. That is somehow supposed to translate into more "economic recovery." Apparently creating vast new quantities of currency out of thin air and using those euros to I gobble up government bonds was not enough. …

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