negative intrest

[Horse]

Does anyone understand how this works and what is the reasoning behind it. I heard on the radio germany and other countries are doing this and they charge you to keep your money in thier banks. Is the point to get you to spend? Or make it more profitable for the crooks that look under your matresses?

[cottonpicken]

Negative real rates have been with us a while,its a well known(maybe not) way countries deal with sick debt leveraged economies.If your inflation rate is 3% and your fed funds is 1,volia,in as few as words as possible.

In germanies case there around -.25 on deposits over a certain amount,the ****ed thing about europe is they share a common currency but the bonds of countries are still sovereign.

I'm guessing but alot of internal capital flight is taking place within erope and heading toward the perceived safety of germany and its bonds and banks,ephizised(sp) "perceived".

It would take very little to start toppling their banking system(they never recapped),so they need to dissuade capital movement,coming to a town near you soon.

So the war from 1914-45 was won but 70 years later germany ends up with europe anyway,probably should not say that on a day like today.

[errolanderson]

Horse . . . deflation creates negative rates.

Europe is in a huge battle with this as this means their wealth is shrinking.

Believe that there is a possibility that the Bank of Canada may cut rates as Canada's recession deepens through 2015.