Negative interest rates

[oneoff]

Well maybe hundred dollar bills in a safety deposit box is preferable to having deductions from a bank balance.
That move, by a large enough group of depositors might have more effect on banks, regulators and bankers attitudes than some might imagine.

A whole lot like grain marketing systems where farmers are super pleased at 5 cents more per bushel at any given marketing day. As if that is significant; and makes much difference when thousands and hundreds of thousands are lost (or could be wone) in other transactions and input costs etc

[errolanderson]

Tom. . . and for the U.S. Fed to go it alone on a rate hike while all other central banks are cutting rates in this global deflationary and disinflationary environment is insane.

If the decision turns into a bad experiment, the U.S. economy could quickly stall forcing even the Fed to head for negative rates within the year.

[sumdumguy]

I suspect, not going to happen.

[errolanderson]

Sumdum . . . you may be right

Citibank warning of pending U.S. recession . . . .

http://www.cnbc.com/2015/12/09/citi-seven-warnings-signs-for-stocks-in-2016.html

[SASKFARMER3]

This worries me. Big time.

[farmaholic]

What rattles me is everyone talks about the potential danger ahead but no one talks about what they've done to prepare. So the "herd" just quietly grazes away until one spots the danger and begins to run, then the rest try to follow. Which actually escape the danger, the ones who ran or the ones who stayed and quietly continued to graze away. What have you done to preserve capital and value? How will commodity grain values be affected? Cash deposits? High debt on prone assets? I've done nothing out of the ordinary.

[errolanderson]

farmaholic . . . trying not to sound too blunt but, economies have already hit the brick wall, a long time ago.

We are now in the picking-up-the-pieces era even though central bankers are doing whatever possible to buy time without any solution or economic benefit.

Commodities on-the-other-hand, have no central banker manipulation. As a result, the commodity washout is a true reflection of what's going on globally.

You raise a good point, but the horse has long left the corral (IMO). There is a lot of financial pain ahead before the green buds of economic recovery re-appear.

[farmaholic]

Thanks for the response Errol, I'm just wondering what to expect, if anyone knows!

I am so "not in the know" when it comes to this stuff. I've never had any "formal" education in economics. Always ever only been a production oriented grain producer.

[cottonpicken]

Big war then control print button.

If japans rates move less then 2 percent,then 100% of tax revenues goto debt service.

Call me crazy but i think that little factoid is incredible.

The loss of control happens when they need external funding in the capital markets then the swaps move against them and the worlds third largest economy incinerates.

So now imagine what the the little shit provinces did to us like greece,cyprus,iceland.

Its not doom and gloom or end of the world as Sum likes to accuse me of,but i don't see it as pragmatic to ignore these things.

[farmaholic]

Then answer my questions in the above post. Or are you acknowledging the facts and staying the course(yours). I think we have it pretty good owning land and own a necessary commodity. Not saying they won't go down, but it might be the stuff to own

[cottonpicken]

kind of thought i talked to much about this stuff and people where sick of it.

if your a little old lady in an apartment building i'd say get yourself some gold and silver coins.

if your a farmer keep doing what your doing,it may end up being the best thing i don't know,i see a few other things

the debt thing is hard,i've read the history,when germany restructured it was indexed to gold,i don't see a clear path of how it is handled,i have suspicions but nothing concrete enough to say or argue in point

the main point would be to see things for what they are,a cattle heard,a welder and a man who can fix anything,the seamstress who fixes his clothes,gold is worthless ok go dig an ounce out the ground for me then tell me what you want in trade

o you got paid 2 dollars a day,so that was ten days for an ounce of gold,o 50 cent grain so 40 bushel got you an ounce of gold and now its 200?

everything is relative and there ends up being no magic at the end of this rabbit hole,you end up knowing what you did at the start,just maybe with a little more conviction.

[cottonpicken]

If you want to here things in the more complicated end of the spectrum.

these negative rates are destroying the capital base of the economy

you can kind of compare yourself and farm to it,sort of a base and build

every once in a while the people and government go full retard,its like lets just have everything now,stadiums,roads free health and education fighter jets parked overseas

it only works up until a point

there are certain economic laws that are like gravity

people got us fixed in the early eighties,barley,that play book got thrown out the window

they are scrambling to contain this

they are now trying to reduce economic costs on populations in a last ditch effort to revive growth

the capital base was blown out a while ago

the bond market is in liquidation,sure you can buy 13% energy related stuff or 1% sovereigns or 13% brazillion,then back it with a credit default swap who nobody now believes has a value because well that market is approaching a quadrillion,makes tulip mania look like romper room

[farmaholic]

My biggest concern would be capital preservation. I never bought any high priced land and I can't see it collapsing to the point of what I paid for it. If I missed anything it would have been the opportunity to capitalize on it's appreciation by selling. Then what do you do with the money

Cash in the bank, well.... Am I supposed to sink it into a hard asset and operate on credit? Seems to be the thing to do.

Securities held as Stocks and Equity mutual funds.... could be an ouch

Commodity grain stocks.... prices seem to be on the rise, canola out to July is creeping up to $11.00, my quality of HRSW is creeping up to $7.00 for July. Lentils are at historical highs, some other grain prices are doing good as well.

As much as I hate farming at times... I think it may be one of the best places to be in these uncertain times.