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Old Yesterday, 04:10 PM
 
10,025 posts, read 10,320,160 times
Reputation: 5361

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Trump tweets that he favors zero or negative interest rates in order to prevent a recession. While these rates are popular in Japan and Europe, they have never been tried in the USA.

Negative interest rates, in particular, frighten many Americans because they fear that the commercial banks will increase fees on savings account to pass on the costs.

The 10,000 JPY banknote worth $92.75 in USD is extremely popular in Japan because they can keep their wealth in home safes. Circulation of these banknotes is between 9 and 10 billion notes for a population of roughly 126 million.

While the FED reports that there are 13.435 billion $100 banknotes are in circulation as of the end of 2018 for a population of about 330 million, upwards to 75% of the Benjamins are believed to be in circulation in foreign countries.

Will Trump's tweet cause a bank run on $100 bills? Will calls for the government to re-issue the $500 banknote increase?
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Old Yesterday, 04:52 PM
 
Location: On the road
6,215 posts, read 3,033,444 times
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Trump wants to goose the economy to have tail winds leading into the election cycle, and he tries to accomplish things by applying pressure on entities he can't control via media like twitter. I don't think his latest in a never ending string of rhetoric will cause a bank run on $100 bills.
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Old Yesterday, 05:07 PM
 
10,025 posts, read 10,320,160 times
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Quote:
Originally Posted by lieqiang View Post
Trump wants to goose the economy to have tail winds leading into the election cycle, and he tries to accomplish things by applying pressure on entities he can't control via media like twitter.
I think that it is true that the FED is not going to pay attention to his tweets, but a big percentage of ordinary men do pay attention. A bank run on $100 bills is not going to be done by executives, but by blue collar workers.

I read that the average ATM withdrawal in the USA is roughly $100 in $20 bills, but the average teller withdrawal is about $700.

The last completed series of color $100 bills was divided up to the Federal Reserve Banks. Numbers are in skids where a skid is about 1400 lbs of banknotes numbering 640,000 notes.

3,435 New York City
1,755 Atlanta
1,465 San Francisco
980 Dallas
805 Richmond
720 Chicago
625 Cleveland
445 St. Louis
360 Boston
300 Kansas City, MO
260 Philadelphia
205 Minneapolis

Commercial banks in central USA don't have the need for large numbers of $100 banknotes.
The distribution of $20 bills (in skids) is different.
990 New York City
970 Richmond
920 San Francisco
720 Atlanta
650 Chicago
540 Philadelphia
510 Cleveland
400 Dallas
290 Boston
280 Kansas City, MO
240 St. Louis
80 Minneapolis

Last edited by PacoMartin; Yesterday at 05:23 PM..
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Old Yesterday, 06:00 PM
 
Location: On the road
6,215 posts, read 3,033,444 times
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Quote:
Originally Posted by PacoMartin View Post
A bank run on $100 bills is not going to be done by executives, but by blue collar workers.
I'm skeptical that your average blue collar worker will see a tweet by Trump about interest rates and decide they need to go hoard $100 bills.
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Old Yesterday, 06:13 PM
 
2,704 posts, read 718,216 times
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Gold bars are pretty easy to obtain and are quite liquid.
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Old Yesterday, 06:25 PM
 
Location: Oregon, formerly Texas
5,515 posts, read 3,849,051 times
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Quote:
Originally Posted by lieqiang View Post
Trump wants to goose the economy to have tail winds leading into the election cycle, and he tries to accomplish things by applying pressure on entities he can't control via media like twitter. I don't think his latest in a never ending string of rhetoric will cause a bank run on $100 bills.
This is pretty much it.

That said, the chatter is that the Fed is going to "slash" interest rates, which I take to mean probably 100 basis points. So Trump probably is foreshadowing a significant drop in interest rates.

How this short term thinking is going to screw us is:

When there is an actual recession, the Fed will have no more arrows in its quiver to respond. Regardless of the outcome of the 2020 presidential election, we are very likely to have divided government - the Senate will probably stay Republican and the House Democratic. That means the government will be dysfunctional and powerless to provide any stimulus.

The Feds QE provided the stimulus that the government could not after 2010. They should have increased interest rates back to at least the 4% range in the mid-late 2010s, but they never got that far.

So we are expending all our economic ammunition before the real battle commences.
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Old Today, 01:45 AM
 
18,011 posts, read 4,286,045 times
Reputation: 5773
Quote:
Originally Posted by PacoMartin View Post
Trump tweets that he favors zero or negative interest rates in order to prevent a recession. While these rates are popular in Japan and Europe, they have never been tried in the USA.

Negative interest rates, in particular, frighten many Americans because they fear that the commercial banks will increase fees on savings account to pass on the costs.

The 10,000 JPY banknote worth $92.75 in USD is extremely popular in Japan because they can keep their wealth in home safes. Circulation of these banknotes is between 9 and 10 billion notes for a population of roughly 126 million.

While the FED reports that there are 13.435 billion $100 banknotes are in circulation as of the end of 2018 for a population of about 330 million, upwards to 75% of the Benjamins are believed to be in circulation in foreign countries.

Will Trump's tweet cause a bank run on $100 bills? Will calls for the government to re-issue the $500 banknote increase?
I think rates need to go up to get ready for the incoming recession.Im worried about the possiblity of negative rates.
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Old Today, 05:01 AM
 
Location: Central CT, sometimes NH.
3,529 posts, read 5,199,239 times
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The president's call for zero or below interest rates is reckless. Given that pension funds are required to have certain percentages of their assets in fixed income securities a move lower makes it more difficult for pension funds to cover unfunded liabilities exasperating the problems that many private and public pensions are facing. Additionally, the move to zero or below will lead to significant additional costs for depositors in the form of fees and charges. It is a stupid move and makes one question what exactly is going on behind the scenes.
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Old Today, 06:28 AM
 
3,995 posts, read 2,264,799 times
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He wants to get re-elected and the economy not being in recession would be a big factor in getting re-elected.
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Old Today, 06:59 AM
 
Location: Cleveland, Ohio
11,659 posts, read 13,805,311 times
Reputation: 7912
Quote:
Originally Posted by lieqiang View Post
I'm skeptical that your average blue collar worker will see a tweet by Trump about interest rates and decide they need to go hoard $100 bills.
Agree. I don't get the connection at all?!?!
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