Negative interest rates and what it means
August 26th, 2016 at 7:18:09 PM permalink | |
Pacomartin Member since: Oct 24, 2012 Threads: 1068 Posts: 12569 |
In the USA it is still mostly restaurants and high end retail locations. In Denmark they won't to do away with the legal requirement to accept cash at gasoline stations, many clothes shops, as well as high end dining. |
September 7th, 2016 at 12:34:41 PM permalink | |
Pacomartin Member since: Oct 24, 2012 Threads: 1068 Posts: 12569 |
http://www.investopedia.com/terms/d/deflationary-spiral.asp http://www.cnbc.com/2016/06/14/why-negative-rates-are-a-big-deal-and-the-feds-hands-may-be-tied-commentary.html http://www.riksbank.se/Documents/Pressmeddelanden/2016/prm_160907_eng_2.pdf These articles about deflationary spirals are very frightening. It's like a death spiral. On 14 September Sweden has elected to keep their negative interest rate at -.5% which it has been since February 17, 2016. Swedish banks are introducing "contactless" cards with RFID chips which will not require a PIN for purchases under 200 SEK (US$23.70). Swedes are already at 270 card transactions per per person per year, possibly three times what is the norm in Euro zone. It should allow the government to reduce the cash supply even further.
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December 16th, 2016 at 10:20:38 AM permalink | |
Pacomartin Member since: Oct 24, 2012 Threads: 1068 Posts: 12569 |
The 50 pound note was reintroduced in 1983, but it has still not become as universal as it is in other countries. Twenties outnumbers fifties (as of end of 2015) 8.1 to 1 in Britain (UK) 5.4 to 1 in USA 3.9 to 1 in Canada 1.7 to 1 in Switzerland Fifties outnumbers twenties 2.4 to 1 in European Union 3.9 to 1 in Australia For the sake of the huge expense of processing cash, the USA and Canada should try to get much closer to the equivalent number of $20s and $50s circulating, or at least to equivalent value (2.5 to 1). I don't think the culture will ever change to the point that $50s outnumber $20s like they do in EU or Australia. The lack of even an estimated year to convert the 50 pound note to polymer has led to further speculation that it may be demonetized within the decade. As 20 GBP ~ 510.7MXN (Mexican Peso) and the highest denomination Mexican banknote in common circulation is a 500 peso banknote, that would be quite a bold social statement. But the British government has distrusted large value banknotes since their currency was compromised by Germans in WWII with Operation Bernard. I know that was a long time ago, but the social stigma seems to remain. |
December 16th, 2016 at 11:08:50 AM permalink | |
AZDuffman Member since: Oct 24, 2012 Threads: 135 Posts: 18209 | People in the USA just dont like $50s and there is little reason for that denominatolion. It's weird. Same as the JFK halves. The President is a fink. |
December 16th, 2016 at 11:41:49 AM permalink | |
Pacomartin Member since: Oct 24, 2012 Threads: 1068 Posts: 12569 |
The $50 is the lowest circulation banknote denomination except for the $2. Only the British use the fifty even less than the USA. As I said, the 50 pound note was only reintroduced in the UK in 1983 after all denominations larger than the 5 pound note were discontinued after the war (because of fear of counterfeits). To give you an idea how rare the 50 pound note is, on Feb 28, 2015 after 32 years and three version there were still only 235.76 million fifty pound notes circulating. Now multiplying by 5x to account for the population of USA being 5X the population of UK we get 1179 million. In 2015, the USA was circulating 1150 million $2 bills. So the 50 pound note in the UK is circulating at about the same rate as the $2 bill is in the USA. Partly, it was because the traditional ATM only dispensed a single denomination, and people got accustomed to the $20. But inflation has taken it's toll, and producing truckloads of $20's is kind of stupid. In the EU the fifty is by far the dominant banknote. I am not expecting that to happen in the USA, but the traditional ATM was limited to forty banknotes or $800 in $20 bills. That is basically ridiculous, and the $50 should become more commonplace. The prospect of printing 10 billion Tubmans may be so overwhelming, that the government may encourage banks to start putting the $50 into ATMS. That will no doubt result in charges of racism by the PC police. The fifty cent piece is probably too heavy for practical use. The dime, quarter, half dollar, and Eisenhower dollar were all designed so that 1 pound of coins would be worth $20. Pennies and nickels could not be made to follow that principal as pennies would weigh less than 1 Japanese yen coin, which can float on water. |
December 17th, 2016 at 12:29:19 AM permalink | |
TheCesspit Member since: Oct 24, 2012 Threads: 23 Posts: 1929 | Handled plenty of fifty's in the building suppliers I worked in as a teenager. Seemed to be the currency of choice... same way as you'll see plenty at the on-race course bookmakers. I often get handed 50 pound notes when I go to get currency for trips back to the UK... and always ask for 20's instead, as you never can spend a fifty in the pub. Or at least never used to be able to. It is said that your life flashes before your eyes just before you die.... it's called Life |
December 17th, 2016 at 6:06:30 AM permalink | |
Pacomartin Member since: Oct 24, 2012 Threads: 1068 Posts: 12569 |
Circulation of the Wren banknote never got higher than 1 note per capita. So I assume you are talking about the Houblon banknote introduced nearly 23 years ago. 50 GBP banknotes Mar 20, 1981 Sir Christopher Wren introduced Apr 20, 1994 Sir John Houblon introduced Sep 20, 1996 Sir Christopher Wren demonetized Nov 2, 2011 Matthew Boulton & James Watt introduced Apr 30, 2014 Sir John Houblon demonetized As of Feb 29, 2016 there are 263.14 million 50 GBP banknotes circulating, which is still not very much for a population of almost 60 million. The £50 note may be taken out of circulation after Bank of England says there are 'no plans' to introduce new plastic notes http://www.telegraph.co.uk/news/2016/06/02/plastic-5-notes-featuring-sir-winston-churchill-that-are-unteara/ |
December 17th, 2016 at 7:00:41 AM permalink | |
TheCesspit Member since: Oct 24, 2012 Threads: 23 Posts: 1929 | Nope the Wren was what I saw bundles over in the builders hands. By 1994 I was studying and seeing a fifty was like seeing unicorn poor. It is said that your life flashes before your eyes just before you die.... it's called Life |
December 17th, 2016 at 8:47:55 AM permalink | |
Pacomartin Member since: Oct 24, 2012 Threads: 1068 Posts: 12569 |
Looking at statistics, I see that Brits go to the ATM nearly every week (47 times per year to withdraw an average of 67.6 pounds per capita). That is far more often than Americans, who go to the ATM 18 times per year to withdraw an average of $108 (per capita). Numbers are skewed because at least 20% of the population doesn't use an ATM. But Americans withdraw more money from teller counters than they do from ATMs. The average withdrawal is between $700 and $800. I don't know if Brits go to the teller very often. I suspect not. Can you get 50 pound notes from a cash point? The Curse of Cash (new book in 2016) by Rogoff http://www.npr.org/2016/09/01/492288888/the-curse-of-cash-makes-case-for-a-world-without-paper-money ROGOFF: So what I propose is very slowly phasing out the larger bills - the hundreds, the 50s, eventually even the 20s - over say 10 to 20 years and leaving, you know, $10 and below so that people who do every day transactions - and lots of surveys and studies show that most legal, tax-compliant transactions are pretty small. And yet making it difficult to run a wholesale business with cash. Cash is very easy to hide. It's easy to hoard. It's easy to move, especially these large bills. And so I'm trying to find a middle ground. What about poor people - people who don't have bank accounts? ROGOFF: That's one of the most important things to take into account. And so my proposal not only calls for leaving around the $10 bills, but in providing for financial inclusion by giving free debit accounts to low-income individuals. The Nordic countries have done this. A lot of countries have. It doesn't cost much, but that's something absolutely you have to pay attention to. |
December 17th, 2016 at 8:53:45 AM permalink | |
AZDuffman Member since: Oct 24, 2012 Threads: 135 Posts: 18209 |
Use in the USA might be low because of the high fees. $4 to get my own money? No way. The President is a fink. |