2 Ingelesez: “ECB vice president Vitor Constancio (…) and then Constancio once again spoke up and demonstrated that the ECB really has no idea what is going on!”

3 Ingelesez: “Pointing out that structural reforms tend to be deflationary in the first instance, he states: “Structural reforms are essential for long-term potential growth, but it is difficult to see how they could spur growth significantly in the next two years, especially when the current problem is lack of global demand”.”

4 Ikus http://www.internationalman.com/articles/why-negative-rates-cant-stop-the-coming-depression.

5 Ingelesez: “… the coming financial collapse will be worse than the market crashes in 1987, 2000, and 2008. But this time, he says, it will affect everything from your portfolio…to your bank account…to the cash in your wallet.”

6 Ingelesez: “A borrower takes your money and uses it. He doesn’t just store it for you; that is what safe deposit boxes are for.

When you deposit your money in a bank, it’s the same thing. You are making a loan to the bank. The bank doesn’t store your money in a safe on your behalf; it uses it to balance its books.

If something goes wrong and you want your money back, you can just get in line behind the other creditors.

The future is always unknown.”

7 Ingelesez: “Inflation, defaults, depression, war, and revolution all raise bond yields because all increase the odds that you won’t get your money back.

That’s why countries with much uncertainty – such as Venezuela – have higher interest rates than countries, such as Switzerland, where the future is probably going to be a lot like the past.

Venezuelan 10-year government bonds yield 11%. The Swiss 10-year government bond yields negative 0.3%.

The interest you earn on a bond is there to compensate you for the risk that you won’t get your money back. Or that the money you do get back when the bond matures will have less purchasing power than the money you used to buy the bond in the first place.

You never know. Maybe the company or government that issued the bond will go broke. Or maybe the Fed will cause hyperinflation. In that case, even if you get your money back, it won’t buy much.”

8 Ingelesez: “With interest rates at zero, lenders must believe that the future carries neither risk. (…)

As unlikely as that is, negative interest rates take the absurdity to a new level.

A person who lends at a negative rate must believe that the future is more certain than the present.”

9 Ingelesez: “The logic of lowering rates below zero … boneheaded [ergela] (…).

Economic growth rates are falling toward zero. And at zero, it normally doesn’t make sense for the business community – as a whole – to borrow. The growth it expects will be less than the interest it will have to pay.

(…)

Because the Fed only has direct control over the roughly 20% of the overall money supply. This takes the form of cash in circulation and bank reserves. The other roughly 80% of the money supply comes from bank lending.

If people don’t borrow, money doesn’t appear. And if money doesn’t appear – or worse, if it disappears – people have less of it. They stop spending…the slowdown gets worse…prices fall…and pretty soon, you have a depression on your hands.”

10 Ingelesez: “If you believe the myth that the feds can create real demand for bank lending by dropping interest below economic growth rates, then you, too, might believe in NIRP (negative-interest-rate policy).

(…)

Negative interest rates are like backing up. They give borrowers the illusion of forward motion…even if the economy is standing still.”

11 Ikus http://www.zerohedge.com/news/2016-03-12/jpmorgan-ecb-could-purchase-equities-next.

12 Ingelesez: “To the extent this week’s ECB decision marks a shift towards private sector asset purchases, the ammunition the ECB has expands hugely.

Assuming the ECB will be willing to navigate eventually into other private sector asset classes, the asset universe for QE purchases could expand to include uncovered bank bonds, bank loans and equities.

Will the ECB buy equities outright? Of course: (…) They will try anything, including what until just years ago was considered absolutely insanity: buying stocks outright.

Incidentally, the ECB is already buying stocks, only indirectly for now.“

13 Ingelesez: http://www.zerohedge.com/news/2016-03-12/deutsche-bank-negative-rates-confirm-failure-globalization.

14 Ingelesez: “Negative interest rates may or may not be a thing of the past (many thought that the ECB had learned its lesson, and then Vitor Constancio wrote a blog post showing that the ECB hasn’t learned a damn thing),…”

15 Ingelesez: “For an economy that suffers from deficient demand, lowering interest rates doesn’t work …”

16 Ingelesez: “In a Keynesian world of deficient demand, the burden is on fiscal policy to restore demand. Monetary policy simply won’t work if there is a liquidity trap and demand for cash is infinite. Interest rates cannot be reduced any further to stimulate demand.”