Bill Evans: Cut interest rates negative

Bill Evans from Westpac trying give himself a new purpose:

 

David Llewellyn-Smith
Latest posts by David Llewellyn-Smith (see all)

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  1. Australia. A place where savers have to pay to have their money in the bank and those most in need are billed and threatened by Centrelink…. and home renovations by rich fat boomers with multiple properties are subsidised by tax payers, many of whom are struggling to pay their rent.

    • Bingo – I’m not lieing I feel that sick I’ve done myself a mischief and am currently laying down wired caffeinated state wishing I could have nap.

      Contacted my supplier doubled this weeks meds – no spin for me Harry.

    • MountainGuinMEMBER

      Australia. Where after years of demanding a royal commission into the banks we got weak terms of reference, little action following scathing findings and now savers need to pay banks for sitting on their money.
      Go long mattresses…..

      • Ukraine fnMEMBER

        Remember the old $10,000 cash ban thingy is still simmering in the back ground and will be back on the table as soon practical.

        The Gov will need this in place if they are going to try to go NIRP. Get your money out of the banks now .

        • Copy that Ukraine.Am thinking same.

          But then what? We won’t be able to use our cash on anything over $10k.

          • Ukraine fnMEMBER

            $10,000 is only the start , look at every other country that has implemented a cash ban .
            Worked it’s way down to between $1000-$2000 . India got rid of their $20r notes as this was main cash in hand note, people had to deposit into bank by certain date before the became null and void which was a great way for authorities to ask “where did you earn that from ?” I would ween out $100 notes in our case.
            Barter system may return ?

  2. At some point we need to stop listening to economists employed by banks telling us what is in the interests of their employers and their preference for a privatised public monetary system.

    Rather than inducing more people to go deeper into debt to speculate on house prices, the government should raise the tax free threshold by $10,000 as that will instantly leave more wages in wallets each week and fund it by selling bonds direct to the RBA rather than via the private banks who take a slice on the way through.

    More money in working families wallets on payday is what the economy needs.

    • This is one of the most sensible ideas I’ve heard recently.
      Help those who need it most.

      • Should be framed as we could increase the tax free threshold or we could take that tax and give it the landowning class to refresh the kitchen. Harvey Norman commercial are ‘thank you government’. And the rest of you plebs can go eat sh1tt

        • Yes – a temporary increase in the tax free threshold by $10,000 will reduce tax each week for everyone by about $50 (roughly 25% of $10,000 / 52).
          That is a lot of spending power remaining exactly where it should be.
          In the wallets of those who earned it.
          Not difficult to reverse it either.
          Fund this measure specifically by having the RBA buy bonds from the AOFM.

          It is a load of rubbish that when the RBA buys bonds in the secondary market from the banks that bought them from the AOFM it is NOT money printing but if it were to buy them directly from the AOFM it would be.

          There is absolutely NO legal impediment that I am aware of that prevents the RBA buying a government security directly from the AOFM. That the Governor went to the trouble of saying the RBA would not do it makes it clear that it could do it.

          The RBA serves one master.

          The interests of the private banks.

          • Jumping jack flash

            “The RBA serves one master.

            The interests of the private banks.”

            Bingo. The same is true for all the central banks.

  3. The only case for negative interest rates are to keep already grotesquely high asset prices high. What a shill.

    • Kodiak,

      It wont work.

      We are in a multi year structural decline in both banking and property (commercial & resi property)
      For those of you who are waiting to buy, don’t even bother worrying about it.
      Nominal rental cost is falling significantly, so if they do increase property prices with their scams rental yields will be 1 to 2%
      Just rent and use your stamp duty to buy gold.
      In 5 years time, the stamp duty amount now in gold, will buy you half if not more towards the house you would have bought.

      You mark my words on that prediction.

      *stamp duty and land tax
      *body corp and rates
      *higher interest rates
      *80+% chance of negative equity.

      Just relax

      Rent
      Gold
      Freedom
      Happiness

      Don’t buy into it…….They are trying to get you to be the greater fool.

      Out of everything i have said in the last couple of years, this is the one I am most certain about.

      • I would sooner leave the country than buy property here. No amenity. No more family. Work is overseas. I’m being emotionally blackmailed into staying. Otherwise I’d be long gone.

    • DominicMEMBER

      Yes, indeed.

      To be fair though, ‘true believers’ in contemporary economics i.e. anyone earning a living as an economist today actually think that there is nothing fundamentally wrong with negative rates. Literally, their ‘models’ and theories say it’s fine.

  4. elasticMEMBER

    Bill has seen an opportunity for his bank to make money holding your deposits as well as selling you debt.

  5. Negative rates will be like low rates.

    No help to the AUD, no help to manufacturing. A disaster.

    • Dahls ChickensMEMBER

      I thought you were ultimately in favour of an Armageddon-style (not the movie) scenario and economic reset, Peachy? Isn’t this just one more necessary step on the road to the promised land?

      • DC, what I am in favour of (or not) is quite separate from my predictions of what is likely to happen.

        Negative interest rates, I predict, will be a big fat flop in terms of lowering the AUD exchange rate and stimulating manufacturing/export industries. Because the value of the AUD is supported by commodities.

        This is what I predicted lowering teh rates from 5% (or whatever) to ~0% would do, too.

        Now, would I enjoy Armageddon? Yes, I like it when funny stuff happens. And yes, I think that a PRODUCTIVE Armageddon can only happen after we reach peak stupid, not before.

        • Blottridesagain

          ALL true peachy but you missed one important aspect – according to me! 🙂
          “Because the value of the AUD is supported by commodities”
          The value of the A$ is fundamentally based on our absolute desire to sell any and all assets and resources to foreigners in order that we can ‘all’ (the vast majority – ‘ particularly of urban dwellers) live beyond our means and have no serious inconvenience in our lives.
          Next is actual commodity prices etc

          • Yes. If the only thing for sale were commodities, AUD would be shot.

            But everything is for sale, from farmland to urban land to 50% of Qantas.

  6. DingwallMEMBER

    The future looks even more bleak with all these parasite lobby groups never getting told no………

    • DominicMEMBER

      It’s the era of bailouts and handouts – everyone wants in.

      And these days it’s just expected.

  7. The FallMEMBER

    Hasn’t it recently been said that Australian banks I.T. systems were not built to cope with negative interest rates? It’s not a trivial thing to change it if they are not. It’s more like a multi-year multi-billion dollar Y2K type problem.

    • Ukraine fnMEMBER

      Correct ! Lot’s of system software/hardware upgrade’s are now definitely on the back burner this might explain why Mr Lowe doesn’t want to go negative.

    • I’ve heard lots of people complaining about the y2k fix. not happy with 4 digits in the date..

    • happy valleyMEMBER

      Bank CEOs will make fixing their IT systems to deal with negative rates, the no. 1 priority as the CEOs will then be able to skim part off part of the negative rate as an increased bonus?

  8. Charging people to put their money in a bank? Every day I think I’ve seen or heard the craziest of sh1t, and then comes a new day. This really is a corrupt clown world.

    • If they could count, negative compound interest eventually wipes out all the money in the bank….
      People will take the money out anyway.
      Don’t worry they are idiots if they go to negative interest rates.

    • DominicMEMBER

      When rates went negative in Europe, large cash-rich institutions decided they’d take their cash out physically and have it vaulted somewhere so they weren’t ‘clipped’ by the bank — the authorities quietly kyboshed that objective and told them to behave. This drove sovereign rates bond rates negative as corporates decided that sovereign risk was safer than bank risk. The whole thing is complete lunacy as you suggest because no one in any rational scenario would be prepared to pay to lend money out.

      What this does is shine a rather unwelcome light on modern economic theory, but sadly, like immigration policy here, there are not enough voices to call this sh1tfvckery out.

      • Blottridesagain

        “What this does is shine a rather unwelcome light on modern economic theory,”
        You can have all the light you want however there is none so blind as them that will not see. There is now impossibly too much invested in the current system. It is not just the banks et al but the whole economic intellectual structure. For change to occur, every Economics professor and lecturer in the Western world 9probably bar a few in Germany) would have to resign and admit they were just a bunch of narcissistic lying scumbags. Not going to happen!

        • DominicMEMBER

          Agreed on all points — too many vested interests outside of economics too.

          The show must go on — all the way to the bitter end.

    • happy valleyMEMBER

      Nah – whether or not Bill is a happy clappy, he would hold the SFM happy-clappy view that if people have to put things on a credit card, they deserve everything they get?

    • Blottridesagain

      Germany and Japan have the luxury of being able to make rates whatever they want – at least in the short term. When we increase consumption that means more debt and sales of assets and resources into foreign ownership.

  9. happy valleyMEMBER

    Bill, an angel of death for savers, urging the chief angels of death for savers, the RBA happy clappies, to take interest rates for savers negative? No surprises there?

  10. When you take all the BS fees into account, deposit rates have been negative for years. But the boiling frogs lap it up.

  11. UpperWestsideMEMBER

    Yeah, no!. Negative interest rates will destroy the banks, increase mal investment and do nothing to solve the underlying’s problems of growth. Everyone spends less , invests less and goes into austerity mode.
    Before the zero bound you need to transition to fiscal solutions. Blowing asset bubbles with stupidly low rates doesn’t get you anywhere good.

  12. Jumping jack flash

    Negative interest rates will only work if it improves debt eligibility, and makes people eligible for more debt while incomes will never rise due to the “quest for debt” absorbing any and all capacity that could be used to raise incomes.

    In this environment debt eligibility is the only thing that matters. Can Bill show that if he gets NIRP then his bank will create and distribute a stack more debt to everyone who needs it?

    If the banks get NIRP and don’t lend out their debt then our masters may as well have done nothing at all, from an economy perspective. All they did was make the banks a little more rich. But I guess that’s all that matters to a banker.

    The same goes for QE. At least the government got a stack of wage subsidy from the banks to dole out due to their QE effort. I suppose that’s something. The people didn’t get much extra debt to attach to houses, though, and it shows.

    Bill is quietly exposing his agenda, of course, to anyone who cares to take a look.

    Don’t forget the fact that debt is already profitable for the banks. 2.4 trillion debt dollars gets them a fair whack of interest, more than 100 billion dollars every year, more or less guaranteed! They don’t really need IR manipulation, NIRP nor QE to be profitable. They just need these things to lower their bar for debt eligibility so the debt can continue to grow and with it the economy.