Denmark's Jyske Bank lowers its negative rates on deposits • Hacker News Board

Re: Denmark's Jyske Bank lowers its negative rates on deposits

#51

Post by mrep » Sat, Sep 21, 2019, 1:59 PM UTC

sword_smith wrote: post #4

When people borrow money for a house, they only consider the monthly payments for the mortgage and not the absolute amount of money they are borrowing. This means that low interest rates are the main reason behind surging house prices and is why people have to spend decades paying back loans and being vulnerable to a drop in house prices. It creates too much debt in society and generally makes the economy more fragil…

That's really only the case when you have regulation limiting supply growth upwards, and/or limited amounts of land you can sprawl outwords. I grew up in chicago and we love to build high rises (chicago engineers were the ones that designed the Burj Khalifa to give you an example of our love for architecture), and we have hundreds of miles of farmland we can sprawl out to forever increasing supply of homes.

Re: Denmark's Jyske Bank lowers its negative rates on deposits

#52

Post by Yetanfou » Sat, Sep 21, 2019, 1:59 PM UTC

bboygravity wrote: post #23

samsonradu wrote: post #19

Earlier quoted context omitted.

You kind of described Japan’s economy.

Japan's a known potential model of the future of the European economy as they're demographically about 15 years ahead of Europe. Would make sense to some extend.

Japan has close to zero immigration where Europe has a large migration from countries with a much higher birth rate. For Japan this implies that their population will shrink while staying ethnically homogeneous while the European population is likely to increase and diversify. Europe will see more ethno-religiously motivated conflict, Japan will suffer from having a decreasing work force which needs to take care of an increasing number of people in need of care. If Japan continues on this path they'll eventually dwindle as a country and stand the risk of being conquered by one of its more populous neighbours. Europe should have a long hard look what happened in Lebanon when that country was torn apart by a civil war [1] between different ethnic and religious groups.

[1] https://en.wikipedia.org/wiki/Lebanese_Civil_War

Re: Denmark's Jyske Bank lowers its negative rates on deposits

#53

Post by firebacon » Sat, Sep 21, 2019, 2:00 PM UTC

sword_smith wrote: post #47

firebacon wrote: post #24

Earlier quoted context omitted.

In most places, except the obvious exceptions, the government can also create new land for construction.

Absolutely. But not all land is created equal, most people want to live near a big jobs market, meaning near a big city. So the price of this land will inevitably go up.that being said, I am sure there is a lot municipalities could do to make housing more affordable.

True. Still, one alternative model to consider is one where the recent trend of opportunity concentrating in a few big cities could reverse. Either due to market forces (cheaper everything outside of the big cities), remote work becoming more prevalent, or both.

Re: Denmark's Jyske Bank lowers its negative rates on deposits

#54

Post by roenxi » Sat, Sep 21, 2019, 2:01 PM UTC

ta1234567890 wrote: post #50

paulpauper wrote: post #12

Earlier quoted context omitted.

>When people borrow money for a house, they only consider the monthly payments for the mortgage and not the absolute amount of money they are borrowing. That is how borrowing works. Otherwise the lender would not make a profit. >It creates too much debt in society and generally makes the economy more fragile than it has to be. and yet the post-2009 economic expansion is the longest ever, and this is in spite of all t…

> and yet the post-2009 economic expansion is the longest ever, and this is in spite of all the anxieties over tariffs and trade wards and the fed raising rates. A crisis is not an economic fact that magically happens when some predetermined values for some set of indicators are reached. A crisis is a mix of two things: 1) a big financial/economic issue that affects an important sector of the economy, 2) widespread p…

Actually 'crisis' just means 'decisive change is impending'. There doesn't have to be panic.

Coordinated or systemic movement of money in any form can be a crisis. There doesn't have to be reporting or emotion for the situation to spiral out of control. That is to say, the panic can follow the crisis.

Re: Denmark's Jyske Bank lowers its negative rates on deposits

#55

Post by fartcannon » Sat, Sep 21, 2019, 2:02 PM UTC

esotericn wrote: post #25

parasight wrote: post #6

Earlier quoted context omitted.

Honest question: how should people seeking to enter the market behave in such a situation?

I honestly don't know what the answer is. I've resorted to moving way out. I'm probably going to buy a house somewhere I can work remote from. I'm not paying 300K+ for a small home near a city with jobs, sorry, it's just not happening. Whether I can afford it or not is irrelevant, the value just isn't there other than as a proxy for "this now allows me to get higher paying jobs in the city and... continue the cycle?"…

You're not paying 300k+?

Clearly I live in the wrong city. 300k would get you a leasehold to someone backyard with a tent in it where I live.

I need to move.

Re: Denmark's Jyske Bank lowers its negative rates on deposits

#56

Post by rosege » Sat, Sep 21, 2019, 2:03 PM UTC

hourislate wrote: post #37

bboygravity wrote: post #17

Earlier quoted context omitted.

IMO this is the end game. Scenario 1: If interest rates go up significantly this would bankrupt entire nations such as Italy, France and Greece (again) + runaway deflation. Conclusion: interest rates cannot and will not go up. This would be political suicide. Also deflation is the number 1 enemy of central banks and the economy in general. Scenario 2: Lowering interest rates causes rich people, businesses and governm…

We can add Canada to the list. If Interest rates were to rise just a few percent, it would bankrupt the entire country.

And Australia

Re: Denmark's Jyske Bank lowers its negative rates on deposits

#57

Post by dybber » Sat, Sep 21, 2019, 2:05 PM UTC

sword_smith wrote: post #4

When people borrow money for a house, they only consider the monthly payments for the mortgage and not the absolute amount of money they are borrowing. This means that low interest rates are the main reason behind surging house prices and is why people have to spend decades paying back loans and being vulnerable to a drop in house prices. It creates too much debt in society and generally makes the economy more fragil…

In Denmark, we have introduced regulation that limits buyers to only be able to borrow 4 times their yearly household income, when buying a house in the largest cities. That puts a limit on how much the house prices can rise.

Re: Denmark's Jyske Bank lowers its negative rates on deposits

#58

Post by erk__ » Sat, Sep 21, 2019, 2:08 PM UTC

roenxi wrote: post #39

wrycoder wrote: post #34

Earlier quoted context omitted.

Negative interest rates indicate deflation. In deflation, cash is king - people are willing to hold cash rather than make investments or buy stuff. This generally reduces economic activity and also makes it difficult for governments to stimulate by reducing rates. (In an inflationary environment, the wise thing is to put your cash into hard assets, since it will be worth less in the future. Deflation in the opposite.…

Interest rates are being set/managed by small technocratic committees in pretty much every country I've looked into. I'm a cynic and I don't believe they are as politically independent as most claim to be either. Interest rates set in that manner don't indicate anything about the underlying real economy. EDIT And as I'm arguing elsewhere in the thread, they measure inflation and it is positive.

As far as I am aware the danish national bank have needed to print more money to devalue the danish krone because it is by law pegged to the euro, but as there is more trust in the krone they have needed to print more to make it within the 1% of the euro.

Re: Denmark's Jyske Bank lowers its negative rates on deposits

#59

Post by dev_dull » Sat, Sep 21, 2019, 2:14 PM UTC

ta1234567890 wrote: post #50

paulpauper wrote: post #12

Earlier quoted context omitted.

>When people borrow money for a house, they only consider the monthly payments for the mortgage and not the absolute amount of money they are borrowing. That is how borrowing works. Otherwise the lender would not make a profit. >It creates too much debt in society and generally makes the economy more fragile than it has to be. and yet the post-2009 economic expansion is the longest ever, and this is in spite of all t…

> and yet the post-2009 economic expansion is the longest ever, and this is in spite of all the anxieties over tariffs and trade wards and the fed raising rates. A crisis is not an economic fact that magically happens when some predetermined values for some set of indicators are reached. A crisis is a mix of two things: 1) a big financial/economic issue that affects an important sector of the economy, 2) widespread p…

> If someone like Trump can continuously interrupt the media, they effectively control it through disruption, and then the media cannot focus for long enough on anything for people to fully panic and cause a full blown crisis.

Coming out of two straight years of one collusion “bombshell” report after another I agree with you. I avoided the markets when I was unsure if what was being said was true (it definitely seemed true to me).

Now it seemed to be largely politically motivated and I’m totally “insensitive” to the MSM reports on Trump and I’m ready to make long term investments in the country again. Too bad I stayed out of the markets for the last year because those looked to be good times.

Re: Denmark's Jyske Bank lowers its negative rates on deposits

#60

Post by dev_dull » Sat, Sep 21, 2019, 2:19 PM UTC

JamisonM wrote: post #48

It strikes me that with an absurdly low debt-to-gdp ratio of 34% and negative interest rates maybe the Danish government should invest more money in their economy. Maybe leverage the market to build the enormous amount of green infrastructure they and the world needs, the returns don't need to be that high to pay off.

Denmark has high oil and gas reserves, which partly is why their debt-to-gdp is so low. Why would they benefit in green energy infrastructure?