How Stupid Are Americans & News Media on Negative Interest Rates?

I don't think the average American has a clue what is about to happen in our banking system.  Banks could soon start stealing your hard-earned savings deposited on the premise that negative rates are to stimulate the economy.  The news media will just cover the unprecedented bank thievery as the "right thing to do" for our economy.  Just more bank fraud if you ask me!

Here is a Google Trends search for "negative interest rates" and you can see that the average American is completely clueless what is going on in the central banking system.  Google Trends is an insightful way to see what people are searching for when new events and things happen in society.  There

"Negative Interest Rates" Searches on Google

Here are some topics that are being searched on negative interest rates below.

Most people who have saved money their entire lives have no clue that the banking system is about to start taking it from them slowly but surely.  Yes that is correct, the banking system is about to penalize you for being a responsible saver.  Here is an overview of what has been happening with negative interest rates around the globe and why you should be concerned.

Negative interest rates seem like a counterintuitive, if not downright crazy for banks or the Federal Reserve.  Why would a money lender or bank be willing to pay someone to borrow money, considering the lender is the one taking the risk of the loan default?  Why would anyone deposit savings in a bank that would take more of your money the longer you had it in the bank?

Central banks have been lowering interest rates for decades to 0% trying to stimulate economies.  They have run out of policy options to stimulate and are turning to desperate measures of negative rates to steal your money now.  With negative interest rates, cash deposited at a bank yields a storage charge, rather than the opportunity to earn interest income.  The idea is to incentivize loading and spending, rather than saving and hoarding.

In recent years, several European and Asian central banks have imposed negative interest rates on commercial banks.  How has that works out?  Complete failure.  With negative rates, cash deposited at banks yields a storage charge, rather than the opportunity to earn interest income.  By charging European banks to store their reserves at the central bank, the policyholders hope to encourage banks to lends more.

Negative interest rates are not only an unconventional monetary policy too, but they are also a recent one.  Sweden's central bank was the first to deploy these rates: In July 209, the Riksbank cut its overnight deposit rate to -.25% and the European Center Bank (ECB) followed suit in June 2014 when it lowered its deposit rate to -.1%.  Other European countries and Japan have since opted to offer negative interest rates, resulting in $9.5 trillion worth of government debt carrying negative yields in 2017,

How much Government debt has been issued at negative interest rates?

About $15 trillion of government bonds worldwide, or 25% of the market, now trade at negative yields, according to Deutsche Bank.  This number has nearly tripled since October of 2018.  CNBC article from August 7, 2019.

On Thursday, May 7, 2020 an unprecedented event took place after a violent repricing in the Eurodollar contracts as near as November 2020, for the first time ever the market was pricing in that negative interest rates are not only coming to the USA, but would arrive sometime around the Presidential election.

The Bank of England or United Kingdom just sold its first negative-yielding Government bond on May 20, 2020.  In an auction Wednesday, the U.K. Debt Management Office said it sold £3.8 billion ($4.66 billion) worth of three-year gilts at a yield of -0.003%. This negative-yielding bond means the British government is effectively being paid to borrow. Investors will get back slightly less than they initially paid if they hold the bond to maturity, such is the demand for shoring up money in bonds.

I have not doubt in my mind the US Central Bank will also issue negative interest rates on or around the November election.  The US Central Bank will use the Coronavirus shutdown crisis as an excuse for why they are doing this to justify taking your savings to the American public.  The government won't let this crisis go to waste to continue its debt Ponzi scheme fraud.

Why would you pay the Government to hold your money? What does this mean for savers?

Why Are Banks Taking 1% to 5% in Fees to Process No Risk Loans?

Some of the public companies, listed in order of their market value, who have received loans from the Paycheck Protection Program set up to help small businesses

For every Government backed loan transaction made, banks took in 1% to 5% in fees, depending on the amount of the loan, according to government figures. Loans worth less than $350,000 brought in 5% in fees while loans worth anywhere from $2 million to $10 million brought in 1% in fees.  Are there any ethical banks that are processing loans for free and waiving fees?

For example, on April 7, RCSH Operations LLC, the parent company of Ruth's Chris Steak House, received a loan of $10 million. JPMorgan Chase & Co., acting as the lender, took a $100,000 fee on the one-time transaction for which it assumed no risk and could pass through with fewer requirements than for a regular loan.

Banks handling the government's $834 billion loan program for small businesses made more than $10 billion in fees — even as tens of thousands of small businesses were shut out of the program, according to an analysis of financial records by NPR.

Loans are then funneled up to the SBA Administration to process. The banks took in the fees while processing loans that required less vetting than regular bank loans and had little risk for the banks, the records show. Taxpayers provided the money for the loans, which were guaranteed by the Small Business Administration.

One law firm, the Stalwart Law Group, filed five class action lawsuits this week — four in California and one in New York — alleging that banks processed clients with larger loans first because they stood to generate more money in fees. By the time the banks tried to process loans from their smaller clients, the lawsuit alleges, the program had run dry.

Banks dispute these allegations. JPMorgan said it handled the applications fairly.  Banks stood by the fees, telling NPR that the program had “significant vetting requirements” such as “collecting, personally examining, and storing data” that’s needed for the applications.

Some banks might now be waiving fees as this bad loan fee publicity has made its way through the media.  Do a page search for "fees" on this Bankrate page for more details on what each bank is doing.   There are 5 banks listed on this page that are waiving fees.

Scams Are So Bad The FTC Made A Bingo Card

Things have gotten so bad that the FTC has experimented with other ways to get people to pay attention: like a scam bingo card.  So far in 2020, the FTC has seen 7,800 Coronavirus complaints as of April 1, 2020.  As soon as Government restrictions were put into place the scam complaints were coming in at several thousand per week.

Most of the country in quarantine advised to practice social distancing measures, the risk of scams has spiked. Already, Coronavirus related robocalls have gotten worse as scammers have pivoted to use fear and isolation to their advantage.

The FTC has already slapped companies on the wrist for misrepresenting products with false claims about how they can treat coronavirus. It has also warned nine internet phone companies (VoIP) to stop “assisting and facilitating” illegal coronavirus telemarketing.

 However, that’s only the tip of the iceberg of robocalls and malware — two of the most critical vectors for scammers and fraudsters targeting individuals, according to the ID Theft Center.

The FTC’s current data say that total losses are around $4.77 million, with a reported median loss of $598.

Aristides Pereira, a spokesperson for the District of Columbia, told Yahoo Finance, that the District’s Department of Insurance, Securities and Banking has found 14 cases of fraudulent financial activity related to the coronavirus pandemic.

Many people – especially older Americans, who are more likely to be scammed – don’t report fraud because they’re embarrassed they got duped. So these numbers are likely to be far higher.

There are all sorts of frauds from “banks,” “governments,” and more. It’s even more complicated because some municipalities use robocalls to get information to their residents, like school closings. But there are a few things to know when it comes to money-related things.

Here are some tips:

• No bank will ever call you or email you for information.
• Don’t send money to someone else if someone sends you money and asks you to pass it on.
• Don’t be a victim to “urgent” requests.  Evaluate & think before you act 
• Only transact with businesses you trust.
• Report fraud.

Small Business Lending Fraud

With roughly 26 million Americans filing jobless claims over the last two weeks, and millions of small businesses seeking government aid to stay afloat, the need for the government to immediately push out money to Americans and into the staggering economy could hinder efforts to filter out efforts from potential fraudsters to seek relief funds.

How can 3,500 SBA employees possibly handle 20+ million small business loans?  The SBA just wasn't setup for this administrating disaster relief loans of millions.  

“Everybody’s acceptance of some or a lot of fraud is going to have to be high, because it’s going to happen,” said Earl Devaney, who served as the top watchdog of the Recovery Accountability and Transparency Board, which tracked the stimulus spending following the Great Recession in the late 2000s. Read article. 

This mentality that fraud will be accepted is just wrong. Though the legislation mandates multiple oversight bodies, if even a small percentage of the funds are misused, it could mean fraud on the scale of potentially millions, if not billions, before there are any efforts to recoup losses, according to experts.

They see the $834 billion in funding earmarked for small businesses in the form of forgivable loans as particularly susceptible to abuse. Millions of small business owners began applying to banks for the loans on Friday, though many applicants and lenders experienced problems with the program's rollout.

Other veteran investigators are concerned that the review process, which leaves it up to banks to vet potential borrowers and applicants to attest to their eligibility, doesn’t give authorities enough time to effectively weed out potential fraud.

The $2.2 trillion, 880-page CARES ACT approved by Congress last week included oversight provisions, modeled after some of the safeguards implemented to track the financial system bailout and stimulus money after the Great Recession.

Lawmakers and coronavirus stimulus watchdogs won’t just have this historic $2.2 trillion coronavirus package to police. Conversations have already started on Capitol Hill around a fourth phase of relief funding, including more money for small businesses.

The SBA's directives could create a more equitable distribution of lending power across the industry and get more loans in the hands of businesses, though it's likely that applicants will still struggle to secure them.

The changes mean that the biggest banks may not be able to dominate lending through the PPP, creating an opening for smaller banks. During the first round of PPP fund distribution, more than 25% of the total funding went to fewer than 2% of firms that got relief, in part because banks prioritized existing customers and larger loan applications to yield higher fees — both of which triggered lawsuits — even though the program was supposed to operate on a first-come, first-served basis.

The SBA's new directives mean that some big banks are likely nearing their lending capacity, which could lead some applicants to turn to smaller banks instead, relieving some pressure on application pipelines. And pacing applications could prevent big banks from flooding the SBA with applications, making it less likely that any one lender will receive a disproportionate amount of the available funds. Smaller banks can therefore take advantage of this opportunity to establish relationships with small businesses that were shut out of PPP loans elsewhere.  Read More