Get Ready for NEGATIVE Interest Rates

This sounds insane, but it’s likely to start today…

The European Central Bank is expected today to cut interest rates and force Europe into NEGATIVE interest rates for the first time in the eurozone’s history.

Imagine paying a bank to hold your money for you.

Who would want to place their money in a bank to earn a NEGATIVE interest rate?

But that is the likely outcome of today’s central bank decision.

Europe has been stuck in a deflationary nightmare and the central bank is resorting to desperate measures to bring about inflation by cutting rates and devaluing the Euro .

What are the consequences of negative interest rates? Let’s see:

1. Savers are going to get slaughtered. People who have retired will lose money on their savings. It’s awful.
2. People go into more debt by borrowing more (because it’s extremely cheap to borrow).
3. Price of assets go up as people use their “cheap money” to buy.

You may be thinking that no country would be crazy enough to try negative interest rates. Think again.

Denmark has already experimented with negative interest rates since 2012. They are still below zero.

And it should be no surprise that people in Denmark are in considerable debt.

Unfortunately that is what happens when central banks artificially set interest rates below zero. It leads to debt, inflation and bankruptcy.

So what does this mean for the Euro currency? Take a look at this chart:

EURUSD before ECB Decision on rate cut

The Euro has already began to price in the rate cut by the European Central Bank. This explains the strong selloff since May as the Euro lost 3 cents.

As we head towards the ECB decision today, we could see the Euro move slightly higher into resistance near 1.3655 and 1.3677.

If the ECB does not disappoint expectations and announces the rate cut, we will most likely see the Euro head down towards 1.33 support (green line on the chart) in the coming weeks and months.

However, if the ECB decides to leave rates unchanged, then expect the Euro to rally higher and potentially test the trendline near 1.38.

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  1. Hi Alessio,

    Followed your Lead and sold euro after the news when price went upto 1.3623, already made 60 odd pips. targeting 1.34xx

  2. The June 5, 2014 Mario Draghi ECB Announcement of NIRP and Targeted LTROs, produced a stunning moral hazard based prosperity in fiat money, and produced the zenith of liberalism, defined as freedom from the state, as investors drove World Stocks, VT, Nation Investment, EFA, Global Financials, IXG, and Dividends Excluding Financials, DTN, to produce peak Equity Wealth, while Peak Currency Wealth, DBV, and CEW, was achieved in the third week of May 2014, and Peak Credit Wealth, AGG, was achieved the week ending May 30, 2014.

    The age of currencies and the era of credit came to an end the week ending June 6, 2014, as stock investors drove Equity Investments to their grand finale finish, manifesting as three long white candlesticks in the weekly chart of the S&P 500, SPY, at a time when the bond vigilantes, called the Interest Rate on the US Ten Year Note, ^TNX, higher to 2.59%.

    Peak Equity Wealth is seen in the chart of World Stocks, VT, relative to Aggregate Credit, AGG, that is VT:AGG, rising parabolically, and then peaking in value in the week ending June 6, 2014.

    The Mario Draghi ECB announcement of NIRP and targeted LTROs produced a blow off stock market top on Friday June 6, 2014, and at the same time has birthed the Beast Regime, to replace the Creature from Jekyll Island, which ruled in liberal policies of investment choice and in schemes of credit. Soon out of the waves of Club Med sovereign, banking, and corporate insolvency, it will rise to rule the world in authoritarianism, specifically in policies of diktat in every one of the world’s ten regions, and in schemes of totalitarian collectivism in all of mankind’s seven institutions.

    The age of diktat and the era of debt servitude commenced on the June 5, 2014, with the mandate of Mario Draghi for a 0.1% surcharge on money held overnight at the ECB. His word, will and way, will compel the debt serf, to experience economic life in regional fascist leader’s policies of regional economic governance, which establish regional security, stability and sustainability.

    Thus the Mario Draghi announcement of NIRP and targeted LTROs was both a climax event, one of peak wealth. and also a genesis event, one of the beginning of a new economic age of authoritarianism.

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