European Tribune - Comments - European Salon de News, Discussion et Klatsch

European Salon de News, Discussion et Klatsch - 4. December | 108 comments (108 topical, editorial, 0 hidden)

Hmmm. Ok, but if the banker DID loan, he would make the same amount of money. So the problem is to get out of the deflationary stalling of the economy, which is exactly the problem today. To do so, one tries

Case 5: Inflation rate is -10%, interest rate is now adjusted by the government to -10%. I loan $100, get back $90. I have lost $10 of cash, but have gained $10 in value due to inflation. Net gain of $0 and there is risk. So I don't make loans in this case, either...

Hmmm.

by asdf on Thu Dec 4th, 2008 at 11:51:58 AM EST
[ Parent ]

Re: Negative rates (none / 0)

No. In case 4, if the banker loans, at the end of the period, he has €95 ; if he doesn't, he has €100

Un roi sans divertissement est un homme plein de misères

by linca (antonin POINT lucas AROBASE gmail.com) on Thu Dec 4th, 2008 at 11:54:49 AM EST
[ Parent ]

Re: Negative rates (none / 0)

Even if you could force the bank to loan you wouldn't get out of it, since the money would not then be spent. It would be held, to benefit from the negative interest rate.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Thu Dec 4th, 2008 at 12:11:01 PM EST
[ Parent ]

European Salon de News, Discussion et Klatsch - 4. December | 108 comments (108 topical, 0 editorial, 0 hidden)

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