Negative interest rates is a term that refers to a scenario when banks actually charge the depositor a fee to have their money in the bank. Central banks tend to raise and lower interest rates in an effort to control the economy. Negative interest rates were first implemented in Denmark in 2012 followed by other central banks in Europe in 2014 and Japan two years later. The effect is generally thought to encourage people to spend their money into the economy rather than hoard it. This becomes a problem for people with savings as, in addition to losing value through inflation, they would also have to pay the rate of negative interest imposed by the bank. Of course depositors could simply withdraw their money from the bank but then the problem of what to do with it complicates the situation and they might be subject to robbery if they keep it at home. In many cases, depositors would just choose to just pay for the security of having their savings in the bank, however, as we saw in 2008 -2009 starting with the fall of Lehman Bros. collapse many investors lost money nevertheless.
As of this writing in 2019, Deutche Bank, the world’s fifth largest bank has announced layoffs in the thousands and some depositors are withdrawing their funds from the bank in fear that the bank is going the way of the dinosaur. It has been more than ten years since the recession of 2008 – 2009 and many analysts are predicting some hard times ahead. Will President Trump keep the system afloat until after his election bid by printing yet more fiat money? Only time will tell. It might be wise to get yourself a wood stove if that is practical where you live and start prepping for what is likely to be a wild ride.
Disclaimer: I am not a financial advisor and nothing I write in this article or on this website should be taken as advice. Do your own research.
