T Nation

Free Money!

"Nov. 7 (Bloomberg) – The age of free money may be at hand.

As major central banks slash interest rates with unexpected speed, benchmark borrowing costs are now below core inflation for the first time since the early 1980s, and policy makers are signaling they will go deeper.

Yesterday’s cuts by the Bank of England and European Central Bank, which came with the Federal Reserve and Bank of Japan on the cusp of zero rates, are a bid to shock life back into their recessionary economies and strained money markets. It may be an uphill battle as consumers and businesses show greater interest in saving than spending, and banks hoard capital rather than lend it.

It's the race to zero,'' said Stewart Robertson, an economist at Aviva Investors Ltd. in London, which manages about $230 billion.There’s no obstacle to more rate cuts.’’

http://www.bloomberg.com/apps/news?pid=20601109&sid=ayE0YPzpdD38&refer=home

This is so cool, I want everyone to see it, not just the PWI folks.

What does this mean? If you borrow money you get free money, no complications?

[quote]shoo wrote:
What does this mean? If you borrow money you get free money, no complications?[/quote]

You don’t have to pay interest on the money you borrow. BTW shoo, your avatar creeps me out.

[quote]tootles27 wrote:
shoo wrote:
What does this mean? If you borrow money you get free money, no complications?

You don’t have to pay interest on the money you borrow. BTW shoo, your avatar creeps me out.[/quote]

Yes. So you could borrow from the Feds, find someone who doesn’t know any of that, and lend it at x%. You’re collecting interest on someone else’s money! You get the interest for free!

What would be the real deal was if they actually pay YOU to take their money. Now that would be nirvana!

My avatar cree-… never mind. It rocks.

Sheer idiocy.

I just love the concept of the solution to a financial crisis caused by lending money to people who couldn’t really afford to pay it back being to stimulate people to borrow more money.

I think they are talking about the federal rates. This is the rate the banks lend each other monies for. This makes it possible for them to lend money to us for lesser rates.

It is not free money to borrow. Isn’t that the economic policy of Obama? Give free money to the peoples not paying taxes?
Robin Hood was a socialist you know…

[quote]jarc wrote:
I think they are talking about the federal rates. This is the rate the banks lend each other monies for. This makes it possible for them to lend money to us for lesser rates.

It is not free money to borrow. Isn’t that the economic policy of Obama? Give free money to the peoples not paying taxes?
Robin Hood was a socialist you know…
[/quote]

Since the banks won’t make loans and unemployed people usually don’t buy much, the day will come when everyone will get some sort of minimal dole, straight from the Fed. It’ll be like Social Security for everyone! Free money!!

[quote]Headhunter wrote:
tootles27 wrote:
shoo wrote:
What does this mean? If you borrow money you get free money, no complications?

You don’t have to pay interest on the money you borrow. BTW shoo, your avatar creeps me out.

Yes. So you could borrow from the Feds, find someone who doesn’t know any of that, and lend it at x%. You’re collecting interest on someone else’s money! You get the interest for free!

What would be the real deal was if they actually pay YOU to take their money. Now that would be nirvana!

[/quote]

You would be an unofficial bank, aka loan shark. This is nothing new and is possible even with out low fed rates.

A good credit score / personal cash piles would afford you an amount of money at a better rate than many, who you could then loan too.

The mob/bookies and banks for that matter do this all the time.

So did/do the Rockafellars, Rothchildes, JP Morgan etc, ultimately leading up to the modern banking system regulated by the federal reserve to maintain their monopoly on this very simple idea.

A system of debt free currency would be fantastic though. Unfortunately the two presidents who attempted to create this scenario, Lincoln and Kennedy, were both unable to finish the initiative.

[quote]jarc wrote:
I think they are talking about the federal rates. This is the rate the banks lend each other monies for. This makes it possible for them to lend money to us for lesser rates.

It is not free money to borrow. Isn’t that the economic policy of Obama? Give free money to the peoples not paying taxes?
Robin Hood was a socialist you know…
[/quote]

Discussing economic and financial theories / facts with head hunter is like explaining physics to a kindergardner.

You have already scratched through his basic understanding here and the rest of your correspondence will look like a ridiculous, circular, off base and irrelevent conversation.

[quote]tootles27 wrote:
shoo wrote:
What does this mean? If you borrow money you get free money, no complications?

You don’t have to pay interest on the money you borrow. BTW shoo, your avatar creeps me out.[/quote]

Noting weird about it, it’s just a cute chick. With a tight chain around her neck. And vaginal blood smeared all over.
Ok, maybe it’s a bit creepy.

[quote]Headhunter wrote:
tootles27 wrote:
shoo wrote:
What does this mean? If you borrow money you get free money, no complications?

You don’t have to pay interest on the money you borrow. BTW shoo, your avatar creeps me out.

Yes. So you could borrow from the Feds, find someone who doesn’t know any of that, and lend it at x%. You’re collecting interest on someone else’s money! You get the interest for free!

What would be the real deal was if they actually pay YOU to take their money. Now that would be nirvana!

[/quote]

Hmm, if you get the loans and paperwork fixed I’ll break their legs. And then we can bring sororities to Sweden and become gods amongst blond faggots. Do we have a deal?

[quote]FormerlyTexasGuy wrote:
jarc wrote:
I think they are talking about the federal rates. This is the rate the banks lend each other monies for. This makes it possible for them to lend money to us for lesser rates.

It is not free money to borrow. Isn’t that the economic policy of Obama? Give free money to the peoples not paying taxes?
Robin Hood was a socialist you know…

Discussing economic and financial theories / facts with head hunter is like explaining physics to a kindergardner.

You have already scratched through his basic understanding here and the rest of your correspondence will look like a ridiculous, circular, off base and irrelevent conversation. [/quote]

Well, learning to spell and write coherently might help you a little bit there, boyo.

You might have missed the playfulness of the thread — yes, its interest-free loans from central banks to commercial banks. No, they aren’t going to give private citizens free money — yet. However that is the ultimate outcome that logically follows from the paradigm.

God, you’re dumb. Why am I bothering? Get lost.

[quote]Headhunter wrote:
FormerlyTexasGuy wrote:
jarc wrote:
I think they are talking about the federal rates. This is the rate the banks lend each other monies for. This makes it possible for them to lend money to us for lesser rates.

It is not free money to borrow. Isn’t that the economic policy of Obama? Give free money to the peoples not paying taxes?
Robin Hood was a socialist you know…

Discussing economic and financial theories / facts with head hunter is like explaining physics to a kindergardner.

You have already scratched through his basic understanding here and the rest of your correspondence will look like a ridiculous, circular, off base and irrelevent conversation.

Well, learning to spell and write coherently might help you a little bit there, boyo.

You might have missed the playfulness of the thread — yes, its interest-free loans from central banks to commercial banks. No, they aren’t going to give private citizens free money — yet. However that is the ultimate outcome that logically follows from the paradigm.

God, you’re dumb. Why am I bothering? Get lost.

[/quote]

You may want to work on your punctuation before you try to criticize another casual internet post.

You meant to type it’s, as in it is interest free loans… not its, signifying ownership.

Either way your own grammar is off. We are talking in plural form here.

They are interest free loans would have been accurate.

Let’s not get testy (ha) here, boys. Take the high road. (^:

Here’s an idea.

For all you guys that haven’t played the market here’s your opportunity.

This is the time where you look to make money.

Go to low cost mutual fund and invest in S&P 500 index. If these companys go broke your money is no good any ways.

You can start an IRA for as little as $100.

The valuations are cheap on blue chip companies.

The interest rate being low isn’t helping the average consumer. Rates are high and availability restricted. It’s killing the auto industry.

[quote]daudowen wrote:
Here’s an idea.

For all you guys that haven’t played the market here’s your opportunity.

This is the time where you look to make money.

Go to low cost mutual fund and invest in S&P 500 index. If these companys go broke your money is no good any ways.

You can start an IRA for as little as $100.

The valuations are cheap on blue chip companies.

The interest rate being low isn’t helping the average consumer. Rates are high and availability restricted. It’s killing the auto industry.[/quote]

Actually, while there may be an intermediate minor bull within this major bear, the next 10 years or so is headed down. If you’re good at trading, go for it. If not, use money markets (fed gov’t is best) for a few years, THEN begin averaging back in.

[quote]Headhunter wrote:
daudowen wrote:
Here’s an idea.

For all you guys that haven’t played the market here’s your opportunity.

This is the time where you look to make money.

Go to low cost mutual fund and invest in S&P 500 index. If these companys go broke your money is no good any ways.

You can start an IRA for as little as $100.

The valuations are cheap on blue chip companies.

The interest rate being low isn’t helping the average consumer. Rates are high and availability restricted. It’s killing the auto industry.

Actually, while there may be an intermediate minor bull within this major bear, the next 10 years or so is headed down. If you’re good at trading, go for it. If not, use money markets (fed gov’t is best) for a few years, THEN begin averaging back in.
[/quote]

edit: The next ten years or so ARE headed down.

Prices are low right now. Buy in to secure the current low cost of stocks and add to the portfolio as the market continues to drop.

You will be buying discounted stock for an extended amount of time, effectively increasing your gains exponentially when the market comes around. There is zero sense in avoiding this opportunity. The longer it lasts the better.

Low interest rates doesnt mean free money.

Since the banks will not be making much profit they will be unwilling to lend to anyone but the very low risk types.

Money will be harder to get.

Anyone on variable interst rates loans RIGHT NOW will win. But my life just got harder if I wanted to buy a home to live in.

It is happening in Australia right now. Offical interest rates slashed:

5 Nov 2008 -0.75 5.25
8 Oct 2008 -1.00 6.00
3 Sep 2008 -0.25 7.00

But try applying for a loan. You’ll be told no.