Just scant weeks after the European Union floated the proposal to set negative interest rates for its institutions, there are reports that some American banks threatening to impose the same for depositor accounts should the US Federal Reserve step back on its programme of buying assets—that massive lienholder effort on the part of the US government that has been keeping up appearances for months.
Unlike the thinking-out-loud on the part of the EU, which hoped that making hoarding money less attractive by degrees and encourage people to park otherwise idle money in other vehicles, or what the central bank of Japan has already implemented, US policy is rather being ransomed by banks poor-mouthing about the costs that they'll have to pass along to the small-holders to offset losses elsewhere. Encouraging savers to sacrifice to the markets, toss their money into the ring, however, is not a good plan either—since that system is too propped up by the same shaky scaffolding. What dictates that certain balance-sheets can only trend upwards at the expense of everyone else? There are administrative costs of course with keeping open a de minimis account, but this seems to me like a bluff, since any holdings a bank can claim grows exponentially with the amount it is allowed to lend at a premium, but I guess also that's the point of this concurrent stimulus, urging people—though in a back-handed way, to put their money to good use rather than keeping it in their coffers.
