= 27d567bc2d48d9f40e9ccc20ea370b15)
ChristianKl comments on Open Thread, January 4-10, 2016 - Less Wrong Discussion
You are viewing a comment permalink. View the original post to see all comments and the full post content.
= 783df68a0f980790206b9ea87794c5b6)
Loading…= b715d02e85f7b3b4ae65ca3d3e450868)
Subscribe to RSS Feed
Powered by Reddit
= f037147d6e6c911a85753b9abdedda8d)
You are viewing a comment permalink. View the original post to see all comments and the full post content.
Comments (430)
Who buys government bonds at sub-zero rates? Why can't those instiutions simply put the money into a bank tresor?
If I understand correctly, FDIC insurance costs more that way, so whatever you save in negative interest, you'd lose and then some on FDIC insurance.
Maybe the alternative to buying government bonds is putting the money in an account at the central bank, which has interest even more negative? Here is the ECB addressing the question of why a bank would be willing to pay interest to deposit at the central bank, rather than putting paper in a vault: because vaults cost money to build and operate.
Aren't the big banks publically traded and expected to grow by stock market analysts? How does that work when they get negative interest rates?
Banks have a variety of ways of making money besides collecting interest on deposits they make.
They get positive expected real interest from loans they give, but pay negative real interest on deposits they receive.
If a bank buys a government bond that's "giving a loan" and I understand that to give negative interest in certain cases.