Happy Friday everyone! Do you think the U.S. will adopt negative rates? Is this something you look forward to, or fear? Let me know!

@CocolinoFan

4 жыл бұрын

Hey Plain Bagel, I love your videos. Can you maybe make a video about the power of the Federal Reserve? (There is a good point made in this video: kzread.info/dash/bejne/n4WJyqyNqK6bnaQ.html ) I would love to see your take on the subject.

@alexqueranto861

4 жыл бұрын

It is still seems strange though. While I can surely understand that putting your money into cash isn't practical for banks, I still wonder why would any investor ever buy German federal bonds with negative yields... given that US bonds still have positive interests. The only argument I can assume is that some investment funds have kind of regulatory compliance. Still hard to believe that the only source of the demand for the security is regulation.

@ThePlainBagel

4 жыл бұрын

@@alexqueranto861 The explanation I've come across is that short-term, these bonds may increase further in price if rates go deeper into the negative territory. Bond prices are negatively correlated to interest rates, so you could make a profit off the shift. Still strange though, I agree.

@alexqueranto861

4 жыл бұрын

​@@ThePlainBagel thank you for making your videos, the best investment channel I've seen so far. Would be nice if you could launch a video series about monetary policy and macroeconomics as a whole, just to understand how the system works

@baseballfan9322

4 жыл бұрын

@The Plain Bagel Please do more 5 minute history lessons! The one on Greece was so good it gave me chills down my spine...

Who's watching this while the stock market is tanking?

@RandomRabbit007

4 жыл бұрын

Gotta read-up before the market bottoms and time comes to buy (I assume 6 months). Money invested in the coming months can double, quadruple in 5-10 years.

@xavierx1583

4 жыл бұрын

Yup down to 0% today

@Fabio-ns4ql

4 жыл бұрын

Me.

@jharryguevara1438

4 жыл бұрын

H G yes. So will the price of milk. Dumbass.

@hopelessdecoy

4 жыл бұрын

@@jharryguevara1438 Not necessarily dumb, if you have a stable career and extra funds now is a good time to buy low risk stocks, if you don't you should keep your money to balance the impact of the crash and buy needs like milk.

American savers have been dealing with a negative interest due to inflation. For example, having a rural bank cash deposit at 1% effectively means that at the time of maturity the investor is losing 1% of overall monetary value due to 2% inflation.

@terryhasan

4 жыл бұрын

Agreed. And I don't think the official inflation rate is an accurate measure of inflation. Lord knows where they come up with their "basket of goods" to measure inflation, but I can tell you, most people I know have experiences a much higher rate of price increases in their monthly budget than 2% each year over the last several years.

@bestaround3323

4 жыл бұрын

Honestly everyone but the government hates inflation.

@jlemusl

4 жыл бұрын

Thats a mighty optimistic inflation rate you put out there.

@stewiegriffin6503

4 жыл бұрын

@Josh N And European saver is loosing 2,5% due -0,5% interest rate PLUS 2% inflation.

@DarthRadical

4 жыл бұрын

Not the same problem. It's still better than putting it in your mattress. But still dumb - invest your cash!

Coronavirus has joined the chat

@MattChang16

4 жыл бұрын

so has the fed and infinite QE

@rocketbunny0989

4 жыл бұрын

boring line dude

German here. As far as I can tell, the negative rates had none of the effects it should have had or at least not to that extent. Banks just raised the fees and lowered saving account interests to near zero ( 0.01% ).Never heard of them giving out more loans than before or I missed that fact. Maybe something will change when the rates go even lower. I wish the banks would just pass the negative rates through to consumers. That would make it transparent and people would notice what's happening... instead they just charge higher and higher fees to counter their losses. You can escape negative interests by investing, but you can't avoid fees. There was a thing a while ago where you could get a 1000€ with negative interest, but that was just a marketing stunt. The people still keep most of their savings in bank accounts. If everything continues in this direction the banks might actually start to apply negative rates and the general public will be hit with it. We might get a tax on cash or something to avoid a bank run. It sure will be interesting what the future holds. I'm on the edge of my seat ;)

@ThePlainBagel

4 жыл бұрын

Interesting insight...thanks for sharing! I don't believe we'll see negative rates in the U.S. anytime soon, but these days anything seems possible...

@user-DongJ

4 жыл бұрын

Looks like rare/precious stones like diamonds, rare/precious metals like gold or rare/precious things like art, stamps, liquor, antiques, jewelry, etc. & even bitcoin could become demand items. Sadly these events like negative interest rates only affirms professor Kaku’s observations: As humanity progress to become a Тип 1 civilization, more problems/hardships/dangers are likely to emerge. Hopefully the shock/suffering will be limited.

@user-lt9zq6bn8g

4 жыл бұрын

I'd say it echoes more in the venture capital market, which has partly pension funds and insurance funds as general partners. Look at the amount of "unicorns" that are popping up and the value of ECB's interest rate.

@francescoazzoni3445

4 жыл бұрын

Negative interest rate may work to get to the targeted inflation rate, but they are putting a lot of stress on banks, who see their revenues shrink. European banks are already fragile and I'm worried about what could happen in case of a recession, with many European countries not fully out of the 2008 one (especially mine, Italy).

@luboremenar1667

4 жыл бұрын

about the tax on cash: blogs.imf.org/2019/02/05/cashing-in-how-to-make-negative-interest-rates-work/ This is one proposal for solving the "run on the banks" problem. To me, it seems just like another step towards eliminating cash and shifting to the digital and fully surveilled central economy. The proposal is that there would be a dual currency system: cash and e-money. E-money and cash would have an exchange rate based on the negative interest rates on e-money. So every time you will want to exchange your e-money (in the bank) to cash you will be buying the cash for an exchange rate that would be adjusted for the negative rates (or more probably, the rate would be a little worse to disincentivize people from using cash). The same goes for depositing cash. Instead of a deposit, it would be buying the e-money for cash.

7:43 "...There is no indication of a pending crisis." 2020: Hold my beer...

@musicoldies83

4 жыл бұрын

6 months later: Mr. Bagel, meet Mr. Corona. Mr. Corona, this is Mr. Bagel.

@christienamosley2799

4 жыл бұрын

Crazy right??? Just...WOW!

@undertaker11ism

4 жыл бұрын

2020: Hold my mask

@racrazavenshev1571

Жыл бұрын

2020 Jerome Powell: HOLD MY MONEY 💰

Last time I was this early, Housing was a a massive market.

@SerjEpic

4 жыл бұрын

I am no expert but I believe the market has fully recovered its 2008 loss and has gained value since then.

@MrAdhito

4 жыл бұрын

HAHAHAH nice pun

@akamuzz84

4 жыл бұрын

SerjEpic no, the markets problem has been papered over with low interest rates, money printing and government false inflation reports. This has just kicked the can down the road. The next recession will be stagflation and the crash of the USD.

@KraftyDubstep

4 жыл бұрын

martin sutcliffe can i have your crystal ball?

@akamuzz84

4 жыл бұрын

Alex L yep, it’s called common sense, no saver should pay a borrower to use their savings. Unless the government is involved artificially manipulating the economy.

Very interesting. Recently read an article about how German banks started to charge negative rates on accounts that have 100,000 Euros in them

@roakes1956

4 жыл бұрын

German banks earn -0.5% on amounts in their clearing accounts with the Bundersbank/ECB, so there is no incentive for them to raise deposits if they can't use the money.

@davelowe1977

4 жыл бұрын

Angelo Schulz I'd be keeping my liquid assets in cash, gold or bitcoin. I'd only be using fiat if absolutely necessary as electronic currency.

@Joe--

4 жыл бұрын

@@davelowe1977 Generally curious, what are your thoughts on XRP instead of BTC?

@davelowe1977

4 жыл бұрын

@@Joe-- Honestly, I'm somewhat suspicious of it but I'm not sure why - probably because the legacy banking system seems keen on adopting it and I REALLY don't like the escrow system which smacks of some small elite group making themselves very rich. However, it has a limited supply so it can't be inflated to infinity and its utility seems high in terms of speed so it's probably good. What do you think about it?

@rob28803

4 жыл бұрын

@@davelowe1977 "Legacy" lol. When I sell my legacy car, or legacy house, or cash out my legacy shares, i'll be accepting legacy dollars only. None of your new-wave ponzi nonsense.

The day I have to deal with negative interest rates is the day I buy a safe.

@commonsense7803

4 жыл бұрын

But that's exactly why the diabolical central bankers plan to do away with cash ASAP...so we can't escape!

@ronburgandy1475

4 жыл бұрын

@@commonsense7803 you can escape my friend 🤫 Gold, silver, bitcoin.(especially if you understand it leads to so many other options for exit).. Fiat can be mushed into any of these real assets of long term value storage 👍 But I agree they are definitely trying to trap citizens.

@Joe--

4 жыл бұрын

@@ronburgandy1475 I'm interested in last one. What are your thoughts on XRP instead of Bitcoin?

@ronburgandy1475

4 жыл бұрын

@@Joe-- honestly I'm not sure. It's a good question and I wish I had a better answer or opinion to offer. I used to work in the financial sector, and the one thing I *know is certain* is that any "bank based" token or bank used token" needs to be stable *not volitilie* For example this is why even with ALL THE BANKS RippleLabs has onboard, none are actually transacting with the XRP token in an *open market* . Ie. It's bank to bank at a fixed price or just an asset the bank was given when signing up with RippleLabs X amount of free XRP for buying the XCurrent platform, they don't use XRP and use XCurrent/XRapid instead. To me this is no different to just using Tether USD (but with LESS backing), or something similar. Russia and China use a lot of Tether token. (I believe somewhere around $900million USDT between those 2 nations per month). So XRP is almost the freebie they throw in when someone actually buys the REAL products, to me not a business model that would see that token last 10 years from now as we move into a decentralized world. But that said JP Morgan are making their own XCurrent, so is the CIIB and many other banks to replace the USD so who knows?🤷‍♂️ All I know is if banks use it for batch transfers, they *DEFINITELY won't want it to go up or down even by 1c* but rather remain stable, like XCurrent/XRapid not like XRP token🤷‍♂️ So what that means for XRP I'm not sure sorry, I wish I had a better answer? If it helps I sold out of XRP and Stellar last year, and have just held BTC, I think too many Alts are going to die out over the next 3 years or less. I mean you have the world's largest computer for hire in Golem and that project is up and running and it's not even doing very well. BAT has better centralised versions without a token, and tether imho is simply the exchanges way of making XRP, except they are backing it partially at least 🤷‍♂️ What's your thoughts? Always happy to get other ideas!😎👍🙏

@ronburgandy1475

4 жыл бұрын

@Aaron H LoL 🤣 I think you are spot on! Just look at the industrial revolution (we're heading into an AI revolution!) Or the 1929 crash (we're heading into the biggest crash since the inception of capitalism). Both of these make for probably the biggest *global* uprising for change the world has ever known... *I give it 2-10 years tops* . Both the previous took about 15 years but they weren't connected globally like we are online today 👍 Buy a safe, save what you can off grid (ie. rare commodities, Btc, gold, silver, food, water backups, or something you can trade for those items. etc) and if your country allows it a gun definitely isn't going to hurt for safety.

Leave the rates alone and let the recession happen. They're already too low as it is. At some point the economy has to recede in order for it to keep expanding in the long term.

@TykoBrian7

4 жыл бұрын

Agreed

@OopsFailedArt

4 жыл бұрын

@TheStefaner Nail on the head. This has been plaguing all of my macroannalysis since in theory we need rates to expand but that could lead to a depression we can't handle. We all remember how well the last depression ended for man kind *distant nuclear blasts ringing in my ears*

@jc.maccount5945

4 жыл бұрын

You just saying this because you waiting for the wave of tide happen, You want to position yourself eh?

@OopsFailedArt

4 жыл бұрын

Haha real investing isn't about what you want or hope but positioning for likelyhood

@shadowninja6689

4 жыл бұрын

@TheStefaner Oh you mean like the way the government let the Housing crisis get worse and worse until it got so bad it exploded in the worst recession since the Great Depression in 2008? Yeah, not buying your argument. the longer we put off a recession by cutting taxes or lowering the interest rate the worse it's going to be when it finally hits.

"There are no indicators of a pending crisis" Oh 2019, we were so young

"I'll gladly pay you Tuesday for a hamburger today."

@jsallerson

4 жыл бұрын

You’ll gladly pay more on Tuesday for a hamburger today is what you mean. Because as the purchaser of goods, prices rise with inflation caused by negative rates, which means you pay more tomorrow than you would today.

@zachzimmermann5209

4 жыл бұрын

@@jsallerson Or you pay on credit. The issue of a dollar being worth less tomorrow than today is only an issue in a fiat system, which is arguably inferior to a security-backed one. Regardless, for the vast majority of transactions you can delay the payment by up to a month without penalty.

@jsallerson

4 жыл бұрын

Zach Zimmermann that’s assuming your banks stay solvent long enough to utilize the measure of extending available credit to the point of allowing you to do so. In a fiat currency system, of which inflation (and as inflation increases with negative rates exponentially accompanied with further currency market injections from the central banks) drives prices ever higher, banks and credit are not isolated or separate from said fiat system.

@zachzimmermann5209

4 жыл бұрын

@@jsallerson You're right, I didn't consider the larger system's impact on an individual service. But, because the service is depended upon by so many people it seems unlikely that it'll go away. Throughout history there have been various "creditors" or "lenders". Those historic lenders weren't necessarily tied to banks and actually predated banking as an institution. Because the service of a credit line is valuable to society it will always exist, even if it is detached from the Federal Funds/Discount rates. Many people seem to forget that economic systems functioned long before the advent of an authority manipulating certain supplies and rates with some outcome in mind. If I recall correctly, that is a central bit of Austrian economic theory, no?

@jsallerson

4 жыл бұрын

Zach Zimmermann let’s put it this way, capital always exists and credit is a form of receiving the means you need to obtain the results you seek... usually with the promise to pay extra for the time and risk incurred by the lender. In today’s world, such credit is loaned by banks because they have the means in the form of currency, of which they have a monopoly on and are the only group with the rights to produce and create it. However, in past systems, in non fiat systems, metals or commodities have ruled supreme, and those in charge and ownership of those items become the lenders. There will always be a form of credit extension.. at least theoretically, but that next form exists only after the meltdown and collapse of the current system.. which in some cases could happen overnight or could take a decade to occur and complete. It really depends on the people of the system to place enough stock and faith in their credit and monetary system in order to determine the outcome.

Savings accounts already LOSE money via INFLATION!!!

@ricardoh87

4 жыл бұрын

savers are losers

@jerkin2200

4 жыл бұрын

better to invest

@lightzpy8049

4 жыл бұрын

@@jerkin2200 In a manipulated market with bubble ups and downs. Buy commodities and spend fast, inflation will steal it away and next will be a digital currency that blocks you from spending on certain things within a certain time. Controlled economy and controlled currency is called the SDR

Boy am I glad I subscribe to this channel. This is the video that I've been waiting for for a long time. Governments that irresponsibly went into massive debt now want to play with fire again. What could go wrong. :-) And this video doesn't even delve into the moral and ethical issue of again stealing wealth from responsible people (savers) and forcing them to adjust their spending habits to become more impoverished. Kind of makes you wonder what happened to the "Free Market" aspect of Capitalism. Thank you Plain Bagel........

@WillEberli

4 жыл бұрын

It died when the FED did away with the Gold Standard. The FED has been on a greed fueled race to the bottom ever since. It's unsustainable, but they're too drunk on greed to see that we're all going down with the sinking ship together. Absolute fools! #Bitcoin is the best that I can figure... Learn some survival skills while you're at it too.

@Ryan-gz6ym

4 жыл бұрын

Bolsheviks and Zionists control the money.

@MrZozue

4 жыл бұрын

"Free Market" is a lie.

Basically it's pushing all the problems onto future generations.

@Ndasuunye

4 жыл бұрын

That's why I hate old people in government. They are going to die before anything negative happens and they know it so they make no efforts to give a fuck to make corrective decisions to make the country better for future generations. Just themselves and maybe their families

@monsterboomer8051

4 жыл бұрын

Yeah, stupid boomers and their welfare. It is the same here in Europe.

@james-jd3rk

4 жыл бұрын

Edgy Doge wait what?

@WillEberli

4 жыл бұрын

We're at Generation Z.... Just saying. It's the end of the line.

@donman92

4 жыл бұрын

Then we'll just keep pushing it too

I can see the point of negative interest rates after you explained them, but just something about them makes me feel uncomfortable.

@user-go7mc4ez1d

4 жыл бұрын

A lot of something makes me feel uncomfortable about them. If I can theoretically earn a salary by borrowing vast amounts of money, then I would do. So would everyone else. From my perspective you get two scenarios: 1) Neg interest rates for banks, positive rates for consumers = banks get crushed (happening right now) 2) Neg interest rates for banks, negative rates for consumers = runaway debt bubble and hyperinflation as everyone abandons saving and take on huge, money-earning debts.

@BigHenFor

4 жыл бұрын

Negative interests rate are a vain attempt to stave off the inevitable crash for the Banks. Just because the Federal Reserve pushes interest rates to Zero or less doesn't mean consumers will get negative interest rates. Look at the interest rates on credit cards right now. And it's considered a temporary measure, so it's not good that returns on pension investments will fall when the demographics point to more older people are going to reach retirement soon. This is a dumb experiment carried out on everyone, the vast majority whom will not be able to take the hit when it goes badly wrong. Chernobyl anyone?

@Doso777

4 жыл бұрын

We have them in Europe for quite some time. You get used to the 0,01% interest you get on your saving accounts eventually.

@correctionguy7632

4 жыл бұрын

@@Doso777 eurozone* I enjoy my 2.3% savings account.

@Nestoras_Zogopoulos

4 жыл бұрын

@TheStefaner yikes

Thanks for this! Was just chatting with my dad & with my friends to better understand it.

Congratulations, Richard! Shocked (and happy) for the tremendous evolution of Plain Bagel. Keep it up to the moon and beyond x)

@ThePlainBagel

4 жыл бұрын

Thank you!

I *really* enjoy the quality and variety of educational videos on this channel. All I can say is *keep* *it* *coming* ! :)

Great video bro, answers a lot of questions I have been having

Good one man. Really interesting topic.

"something we don't fully understand" and yet you explain everything completely.

This video answered almost all of my questions regarding the effect of interest rates on a macro level. Your explanation of the effect of IOER on the overnight lending rate, inflation, and strength of a currency was brilliant and easy to understand. Keep it up!

Nice one Plain Bagel .Keep making such good and informative stuff.

Negative interests rates, what an unthinkable disaster. Me: *laughs in European*

@CrystalMaidenFeetLover86

4 жыл бұрын

Let's just wait until the current recession turns into a market crash and then we'll see

@miniaturesandstuff5209

4 жыл бұрын

We'll see... You know what they say: "He who laughs last...."

@yes5937

4 жыл бұрын

K P *Article 13*

@WillEberli

4 жыл бұрын

Ja ja ja

@djtdjt8921

4 жыл бұрын

K P Switzerland! The riches county in the world, Switzerland, have negative interest rates!

Negative rates only work if a country like the U.S. has positive rates for their bondholders and insurance companies to park their cash. If the U.S. ever went negative, then Canada, Australia, New Zealand would all go negative as well. There would be absolutely nowhere outside of risky stocks for those companies to park their money. There would be a huge international pension, insurance, and bond problem. You may even see companies parking money in developing countries like Brazil, or Indonesia with positive bond rates, but they're very risky as well.

awesome video, love this channel!

Thanks for the excellent explanation. Keep it up the good job man.

I think that lots of people make the mistake of assuming that the price of money (an interest rate) is the principal factor rationing credit. This simply isn't true. Banks are constrained in their lending by the amount of excess regulatory capital they have on their balance sheets. Reserves (or, more correctly, uninvested clearing account balances) are not regulatory capital. In the absence of surplus capital banks can only make loans (or buy assets) that have a zero risk weighting under the Basel Capital Accords. So they are limited to holding cash, buy treasuries or making loans against collateral that is zero risk weighted. So low or negative interest rates will not in themselves generate more lending, investment or economic growth...

This sounds like a greatest thing ever!! What could possibly go wrong

@nateisawesome766

2 жыл бұрын

Coronavirus: Hold my beer

Informative. I think I am enlightened. I'LL get back to u on that. Thank you.

Great explanations. Thanks!

Thank you for covering this topic, Richard.

Welcome to the USA, where we encourage debt and don’t know how to save money.

@ethanlai1044

4 жыл бұрын

Buy,buy,buy,buy,buy...

@l.s.1235

4 жыл бұрын

@MrBigEnchilada More spending means bigger economy. The more you spend the bigger economy grows. Saving money means you are taking money out of circulation and of economy.

@akal1236

4 жыл бұрын

MrBigEnchilada it sure does. A stimulated economy is one where the consumers spend the money they earn, not save it.

@almeida8x

4 жыл бұрын

ak Al A free society is one where the consumer does whatever the hell they want with their money. The government shouldn’t be financially extorting consumer money with negative interest rates. That’s huge government and quite frankly authoritarian. You guys are just as bad as the commies.

@akal1236

4 жыл бұрын

@@almeida8x First of all I have nothing to do with the US lmao I'm European. Second of all, the fact that it is immoral is a whole other argument, you can't dispute the fact that it's an effective way to stimulate the markets because it does work. Then in the long run it might not be a fully functional thing to do but it works.

Thank you Richard! Good video.

Very well said. Liked and subscribed!

Screams financial crisis to me a lot of debt seems to be how a lot of financial crisies start

@LoFiAxolotl

4 жыл бұрын

Neither financial crisis happened because of debt... the 2008 crisis happened because there was too much money riding on debt... CDO's were so far disconnected from actual debt you couldn't even see it with a magnifying glass... the problem in 2008 was that on one loan of very little value... there were bets in the millions maybe even billions... if you go out and bet $5 on a coin flip... and i bet $5 billion on you winning that bet.... if you have the $5 doesn't really matter.... if those $5billion dollar i bet don't even actually exist and nobody can pay for it.... and there's other bets even higher on my bet where the money also doesn't even exist... then there's a problem The loans are always backed by money... a bank can't loan money that they don't have... the problem is when we play with money that doesn't exist and isn't backed by shit

@simplefolk8991

4 жыл бұрын

@@LoFiAxolotl Bank can't loan money they don't have sure, but part of their money does come from customers who deposit/store savings then comes whacky ol FRB where if they banks don't make buck back on loans or if suddenly all savers cashed in they are fucked.

@musictosoothe

4 жыл бұрын

banks always loan money they don't have.

Well, We're entering a recession now. So, we'll see what happens.

Great rundown

This channel is amazing. 10/10

Denmark here: everyone says to you to buy a house because of the negative rates, then you check the prices of houses affordable to people with average/slightly above average income levels and you discover you are in the bubble you mentioned.

@kaibaCorpHQ

4 жыл бұрын

All Dem rich ass people buying them up to rent them out cuz they get back less money than they put in for the mortgages. You can never buy anything easy that's on your level, because someone above you will buy them all because they can.

@drjp4212

4 жыл бұрын

Conclusion: it leads to inflation, both for house rent and houve buying. That's the purpose.

Negative interests is madness. Period.

Decent video. Thanks!!

Thanks mate...great explanation of negative rates

But why would a bank store money with the Fed if they have to pay? That's stupid. Why not save the money aka some digital number in their own server?

@wcoenen

4 жыл бұрын

In this context, I think the only server is the one of the Fed. This money can only be moved from one Fed account to another. *edit*: apparently money on a Fed account can also be converted to cash (and vice versa), so that's one way to escape the negative interest rate. But then the bank still has the cost to secure that cash, and the inconvenience of not being able to transfer it digitally. www.frbsf.org/education/teacher-resources/what-is-the-fed/payment-services/

@Icarus1234

4 жыл бұрын

Altough bank transcations are indeed just numbers, at the end of the day it does represent actual money. The reason why most trascation are the addtion and subtraction of numbers is because most of the money for each bank is stored at the federal reserve. Banks would need to spend a lot of money if they all started storing the cash in their own vaults.

@user-DongJ

4 жыл бұрын

Looks like rare/precious stones like diamonds, rare/precious metals like gold or rare/precious things like art, stamps, liquor, antiques, jewelry, etc. & even bitcoin could become demand items. Sadly these events like negative interest rates only affirms professor Kaku’s observations: As humanity progress to become a Тип 1 civilization, more problems/hardships/dangers are likely to emerge. Hopefully the suffering will be limited.

@y2kblackout

4 жыл бұрын

They need to keep a certain amount with the Fed.

@tylergaye303

4 жыл бұрын

@@Icarus1234 92% of all cash is fully digital with no physical bill representation. The idea that the banks use 0s and 1s because "all the cash is sitting with the fed" is just as incorrect as the idea that we still have a pile of gold backing our bills.

Great job!!! Can you explain the Interbank Overnight Market in a separate video??thanks.

Great explanation. Thank you.

Great video as always

7:40 and now we're at the steps of such a case...

“Monetary policy can only do so much”, “there is no free lunch in economics”, “negative rates is a desperate tool”... and yet no signals of an incoming crisis are observed? How in the world were the current ATH asset prices and debt levels reached, if not by artificially low interest rates? Negative rates are desperate, but it's not like slightly positive rates, kept artificially low by almost a decade of QE and expansive monetary policy is healthy either. If the economy is so strong, then why if the Fed dares to rise rates, the financial world and stock markets panics?

@lainiwakura44

4 жыл бұрын

@dskmb3 I totally agree. What I don't agree with is people telling to keep putting money in an overpriced market which is due for a severe withdrawal, just because "dollar-cost-average and you will be fine"

@DrDD-pw8wn

4 жыл бұрын

When companies are allowed to buy back their stock and send the stock higher... What do you think happens when they can no longer do that and large players exit the market? The 401Ks of regular worker gets wrecked, because you can't get out without a hefty penalty. They tell you to keep feeding the "Creature", and it all work out in the end. BS.

@lainiwakura44

4 жыл бұрын

@dskmb3 because the oxygen left for buybacks is running out

@DrDD-pw8wn

4 жыл бұрын

@dskmb3 It inflates the stock price. This is what also partly caused the 1929 stock market crash. It was illegal after the crash and was reinstated by Ronald Reagan when he became president. Take a look at this and do your own search about it. kzread.info/dash/bejne/p5lhlNunZtmykdY.html

@lainiwakura44

4 жыл бұрын

@dskmb3 Cash ('oxygen' = cash). They already spent a lot in buybacks, then management cashed out after the price raise, but much less was spent on R&D > hence less innovation > hence less competitive > hence less revenues. Now prices are high (ATH) but companies do not have higher productivity so where do you take the money to finance the next round of buybacks? More debt, maybe. www.cnbc.com/2019/10/02/the-bull-market-is-losing-one-of-its-most-powerful-backers.html

New subscriber here...just wanted to say great videos! Love the presentation style and how you break things down in your explanation. Keep up the good work!

I absolutely love your videos. You’re fantastic! Keep it up!

As of 11/21/2019 The Raiffeisen co-operative bank in Fuerstenfeldbruck, in Bavaria, will impose a 0.5% negative interest rate even to the smallest saving accounts

Anyone else here mid-March 2020 after the market crash and the rate sank to near 0% again? GM announced today that they're offering 0% for 84 months on new vehicles, with deferred payments. What a crazy world!

@justmyopinion9883

4 жыл бұрын

There is NO WAY I would take out a 84 month loan to buy a car. That's crazy!

@gl1500ctv

4 жыл бұрын

@@justmyopinion9883 Think about it though. 0% APR., deferred payments. I agree that I don't like really long loans. But nothing says you can't make extra payment each month and pay it off whenever you want.

@justmyopinion9883

4 жыл бұрын

@@gl1500ctv That's true, Stephen Furr. I guess I'm just old fashioned when it comes to owing debt of any kind.

@gl1500ctv

4 жыл бұрын

@@justmyopinion9883 I like loans like that because I'll pay say a 48 month payment and pretend it's a 4 year note. If something happens, say I have to get a new job with less pay, I can drop down to the lower 84 month payment. Remember it's free to use money since it's 0% APR.

@jneusbaum3697

4 жыл бұрын

@@gl1500ctv You still have to stay in front of the depreciation curve on that new vehicle. Be careful. It's a losers game unless you own a company that can write that off as an expense.

This is top content!!! Keep going I love your videos. Thank you

thank you for your clear explanation

Expect harder assets to benefit from this. Gold, Bitcoin, and real-estate will all increase, because they're all wealth-stores.

@kirilmihaylov1934

4 жыл бұрын

Bitcoin no....

@TROOPERfarcry

4 жыл бұрын

@@kirilmihaylov1934 You can short it if you actually believe that Bitcoin's price-per-dollar is decreasing.

@miguelpereira9859

4 жыл бұрын

@@kirilmihaylov1934 Bitcoin will absolutely take off with the coming recession BUT it is a very volatile asset, there might come a day when Bitcoin comes crashing down to nothing

@kirilmihaylov1934

4 жыл бұрын

@@miguelpereira9859 Bitcoin cannot be money

@miguelpereira9859

4 жыл бұрын

@@TheDifferenced Yeah...no.

Lol who’s here after corona virus

Great video! Thanks

Thank you very much! I finnaly understood the answer to the question after seeing several videos because they just mentioned safety and liquidity.

Exactly what Trump wanted, just five months later. Intreset rates are zero now

@guitardzan5641

4 жыл бұрын

BULLSHIT!

@jneusbaum3697

4 жыл бұрын

Way deeper than that...Dont forget...Obama had QE1 QE2 QE3 and QE4. It will continue be tougher to keep all the balls in the air to support the dollar. Put a trillion on the national debt out of thin air...now interest is due on that too. Here comes inflation. The dollars buying power just goes down again. Their is no way out because the US is insolvent. The only stability the dollar has is that it's backed by the Petrodollar. If that ever changes...it's game over.

Fed just lowered rates to zero on sunday.

Man. I love you. Contemporary investing info minus the gimmicks and the fluff. Subscribed.

Great vid, keep up the good work

No indicators of a pending crisis.... That comment aged well, considering that the video was posted just a few months before the coronavirus pandemic. Would love to see an updated video about how negative interest rates have fared during the pandemic. (I am fully aware that the plain bagel had no way to know that a global pandemic was coming).

If we are going to lose money on lending, why would anyone lend. It's obvious why countries like Japan experience deflation and slow growth rate.

@Ndasuunye

4 жыл бұрын

And if no one lends, less businesses can thrive or build up or expand. Soon we'll be threatened by monopolies and not great innovators. Or at least in a timely manner

@LeVezz

4 жыл бұрын

@Ronove They're trying to make a single global money . Money is power . Power is war .

@ozymandias8523

3 жыл бұрын

@@LeVezz that’s already the dollar bro

@LeVezz

3 жыл бұрын

@@ozymandias8523 No , already there's usa dollar, canadian dollar , Australian dollar, Euro etc etc

@ozymandias8523

3 жыл бұрын

@@LeVezz i mean usa dollars

Awesome explanation!

Awesome content, as always!

this destroyed japans economy, and it will collapse the financial system. You should buy gold and silver right now.

@scottyhaines4226

4 жыл бұрын

fear japanfear Japan does not have a booming birth rate. They have the oldest country in the world.

that shit is going to be our next economic coffin.

@djtdjt8921

4 жыл бұрын

Erik Silva Switzerland! The riches county in the world, Switzerland, have negative interest rates!

@Truid312

4 жыл бұрын

@@djtdjt8921 Well yeah, negative rates after they were already a wealthy country. It's going to plummet the wealth of savers, it's theft from savers. Only reason why they are in negative rates is to sustain the zombie economy.

@eriksilva631

4 жыл бұрын

@@djtdjt8921 Great, now no one wants (in theory) put their savings on banks which won't have money to lend and will eventually crash. For me it's a good thing, now the peer to peer lending will trample the old bank system.

@cesartorres3189

4 жыл бұрын

Around 65% of Americans don't even have savings anyway. Most people live paycheck to paycheck. This will help them out. Negative interest rates will benefit the ones who need it most. I have a hard time feeling sorry for the banking system who has to pay 0.1 percent to store their billions.

@westcoaststacker569

4 жыл бұрын

It hurts those trying to buy real assets like homes. It drives the price of real things up keep them out of their reach. Also means those who saved money for retirement have it stolen by the government, or forced to invest into the market bubble to lose it.

Like your Videos so much its Realty educational related in economics

Great explanation!

The reason the government loves inflation so much, is that it’s essentially a wealth tax on all money, and it allows them to not be buried quite as quickly 😂 by debt from their overspending

And here we are today at zero.

I really appreciate you!

"No indicators of an impending crisis." Umm, $23 trillion in debt (growing faster than ever), a sluggish economy despite insanely low interest rates, and a stock market bubble that is about to implode aren't signs of an impending crisis?

@drjp4212

4 жыл бұрын

Economy is a drunken man who can't get any drunken, despite larger and larger doses of alcohol. Death is the only path from this moment on.

Hey, thanks for the lessons. A lil suggestion though, perhaps you can slow down when you are talking. I came from Indonesia, and English is not my native language. I got some difficulties understanding the topic and translating what are you saying. Anyway, all and all, ur video presentation is staggering extraordinary ~

@Luca-ob7tg

4 жыл бұрын

Marcel Angir fuck off then go watch Indonesian videos instead

@Mark-oc9gz

4 жыл бұрын

Just adjust the speed of the video to slow it down

@WillEberli

4 жыл бұрын

Negative Rates = Bad Buy Bitcoin ;)

Great video

Great job!

2:40 Time to get all my cash out of the bank and hide it under my mattress!

@LeVezz

4 жыл бұрын

That's why in Europe they put laws so you can't buy anything with real money over 3000 euro. Everything is planned.

@highbrass3749

4 жыл бұрын

Remi Vézina Europeans are such rule followers. 🤣

5:02 there is more to this story. It seems that the whole mortgage system in Denmark is different that the rest of Europe (and I think also the US). I hope I say it correctly, but investors finance the mortgage, not the bank. So the mortgage is comparable to a bond.

@KY-dg8gp

4 жыл бұрын

@TheStefaner I understand what you are saying, but it's different.

@LoFiAxolotl

4 жыл бұрын

@TheStefaner Not every bank is a publicly traded company... Especially in Europe... 2/4 of Germanies biggest banks for example are not traded at any Exchange and not privately owned... Disabuse yourself of the notion that every entity works the same as what you think...

@LoFiAxolotl

4 жыл бұрын

@TheStefaner ALso only half true and the conclusion is completely wrong.... most of the money banks loan are from each other.... because they need money quick and only for a short while... but yes banks also loan money from the central banks.... that's one of the central banks jobs... i don't know what "predicament" you mean by that.... but if you don't have billions you could lend the banks they don't really have any other option than going to the central bank for big loans... if a bank can't loan money your bank account with them would dissapear very very quickly and they couldn't lend money to anyone... which would grind the global economy to a halt, destroy the US education system, destroy the global car and real estate sectors and we would probably end up back in the dark ages....

Very interesting video. This would hurt me. Thanks for this great info.

An excellent explanation of a negative interest rate, many thanks.

First comes deflation, the central banks react too late and due to money printing follows Inflation.

@LeVezz

4 жыл бұрын

- Oh we sold money that we don't have? No problem print some. - Actual banks over the world.

@LoFiAxolotl

4 жыл бұрын

@@LeVezz That's not really how it works.... or what central banks do..... and i don't know any country that have private banks that print their currency.... inflation and deflation are important tools to regulate the economy...

@Ryan-gz6ym

4 жыл бұрын

You think the central banks are just making mistakes? No, they're just fleecing us.

@Ryan-gz6ym

4 жыл бұрын

@@LoFiAxolotl The federal reserve decides how much is printed.

@LoFiAxolotl

4 жыл бұрын

@@Ryan-gz6ym that's partially true... but not really how it works... the Fed and most other central banks don't just print money willy nilly... and they don't just decide how much is printed... it's a tiny bit much more complicated than that

When taking the new "fee" I pay at my local bank I am paying 1% negative interest rate at my local bank. Its the Sparkasse in germany. Older people need to pay even more - they pay 2-3% negative interest to the Sparkasse. Thats really cruel. They invented a lot of fees to suck out money - and their balance sheet looks great. Rising winnings even with negative interest rates. For example they make a lot of money with real estate, up to 5% commision what they require you to be paid.

@Redskies453

4 жыл бұрын

So go buy some bank stock.

Very good. Ty

Thanks.

Negative interest rates in US will destroy the banking system; as we currently see in Europe.

@LoFiAxolotl

4 жыл бұрын

Europe is a very diverse landscape and economy... you can't really generalize such a statement... what's true in Poland might not be true anymore just across the border... There's no unified economy... While a lot of banks have had a hard time... the big old ones are staying strong... Deutsche Bank germanies biggest bank for example while still in the red is recovering... while Commerzbank germans second biggest bank is heading in the other direction... it's not an easy good or bad in economy

@kirilmihaylov1934

4 жыл бұрын

They might yes

Theft, it's called theft

@LeVezz

4 жыл бұрын

Yeah, modern slavery. Organized modern human money farm.

@Shaker626

2 жыл бұрын

You mean taxes?

Can you do a video on the value added tax and how it’s different than the regular sales tax? Love your vids!

Could you cover negative interest bonds too? Great stuff!

And now Trump is talking negative rates,get ready to pull all your money from banks.

Sounds like a way to try and prop up a broken financial system and "everything bubble".

Is love to see you cover modern monataty polocy as well as floating exchange vs fixed!!

Just gotta say great intro

U.S.A. here. We need to go back to the gold standard and abolish the federal reserve.

@joebot9309

4 жыл бұрын

Their will be a new world wide single digital currency within two years and it won't be backed by Gold (as current currencies are now).

Solution: buy gold and bitcoin

@alezacrespublik6655

3 жыл бұрын

How about storage, it's costly tho, electrical or physical

Revisiting this video...very refreshing...watching the US markets carefully......likely to slip into negative interest rates shortly...very shortly so...

Beep beep, another Plain Bagel video for the weekend, watching it in a café in Germany, whilst eating an avocado+hummus Bagel. WIN!

If inflation goes negative, would returning to a gold standard be logical?

@LeVezz

4 жыл бұрын

Absolutly , but the current system is no longer based on real value. Money is worth basically just paper since 1971. I wonder if there would be enough gold on earth to equalize all the numerical digits over the world

@Ledabot

4 жыл бұрын

@@LeVezz surely not the entire worlds economy but just the countries with negative inflation would be plausible maybe?

@LeVezz

4 жыл бұрын

@@Ledabot Behing in negative means that you are far past your Gold/Money referencial. The current money is worth so nothing that they must pick in people's bank account to pay back what they don't have.

@LoFiAxolotl

4 жыл бұрын

@@Ledabot The gold standard is incredibly bad... since Gold is an extremely volatile market.... much more volatile than for example the USD... and it's a very limited market... negative inflation isn't the end of a currency or the end of the world economy or the world as we know it... it's a tool to soften or prevent recessions... it has a very different effect in Germany and Denmark because neither of those economies rely heavily on loans... The EU&USD are extremely stable currencies (That's why they're the 2 predominal reserve currencies) also Gold Standard has nothing to do with inflation... other than it would stress the central banks even more because they'd have to bank the inflated money with more gold.... that's exactly the wrong direction to go...

@Ledabot

4 жыл бұрын

@@LoFiAxolotl thanks for the clear explanation :)