An attractive offer from the ANZ

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Excerpted from Sovereign Man:

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If you’re looking around right now for a new bank account that pays a reasonable rate of return, ANZ bank has a hell of a deal for you: 0%!

That’s right. ANZ is offering its depositors absolutely zero interest.

Now, a bank paying 0% isn’t exactly abnormal in today’s banking environment. But what’s really strange is that ANZ actually took out an ad in an Australian newspaper to advertise this.

Yesterday’s page 10 of the Australian Financial Review (AFR) had a quarter-page ad from ANZ boasting about 0% interest rates for accounts denominated in number of foreign currencies, including Hong Kong dollars, Japanese yen, British pounds, and more.

Curiously, in order to qualify for this bargain 0% rate, you have to meet a rathersignificant deposit minimum.

For the 0% Japanese yen account, for example, you have to deposit 23.5 million yen (currently about $223,000 US dollars).

So basically some manager at ANZ actually thought that paying 0% interest on substantial account minimums would be an attractive offer… so attractive, in fact, that they should brag about it in the newspaper.

This is so completely ridiculous. But it really crystalizes what’s wrong with the entire financial system.

We’re told to keep our money in banks… that banks are safe. But the objective data tells a completely different story.

Holding money in most banks guarantees that you will lose money.

Adjusting for taxes and inflation, you’re losing at least 2% per year, even if you believe the governments’ notoriously understated official inflation statistics.

This level of absurdity pushes people into riskier and riskier assets, simply in an effort to avoid LOSING money.

Case in point– the government of Spain recently issued 1 BILLION euros worth of bonds that yield a paltry 4%. And they’re due in 2064.

Bear in mind, Spain is completely broke. And just two years ago the government had to pay 7.5% on ten year notes.

Now people are lending money to the Spanish government for 50 freaking years at just 4%.

This is insane.

May be useful for an Australian dollar play, though…

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.