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Riksbank Commits To Stimulus As Inflation Far From 2% Target

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http://www.bloomberg.com/news/2014-02-13/sweden-s-riksbank-keeps-rates-unchanged-as-economy-gathers-pace.html

Sweden’s central bank kept its main interest rate unchanged and signaled rates won’t increase until early 2015 to allow for inflation to pick up amid a tepid recovery in the largest Nordic economy.

The Riksbank left its repurchase rate at 0.75 percent, the Stockholm-based bank said today in a statement, as predicted by all 20 economists surveyed by Bloomberg. The bank sees the rate at 0.72 percent in the second quarter, compared with 0.71 percent earlier, 0.89 percent in the first quarter of 2015 and 2.1 percent in the same quarter of 2016.

“The repo rate needs to remain at this level until inflation picks up and the recovery is on firmer ground,” the bank said. “As before, the repo rate is not expected to be raised until the beginning of 2015.”

Everyone is seeking inflation in the central bank world, it's as if they don't want people to have purchasing power.

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Sweden Slides Further Into NIRP, Cuts Rates To -0.50%

Krona.png

The currency wars continue unabated as does the developed world's experiment with negative rates as the Riksbank moves further into NIRP, cutting the repo rate by 15 bps to -0.50%. "Uncertainty regarding global developments is still high, with low inflation and several central banks pursuing more expansionary monetary policy [and] Swedish monetary policy must relate to this," the bank said.

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Correct me if i'm wrong, but if you spend your money then doesn't then new owner of said money have to bank it?

This is like inflation, but without prices going up.... the destruction of the value of money.

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Correct me if i'm wrong, but if you spend your money then doesn't then new owner of said money have to bank it?

This is like inflation, but without prices going up.... the destruction of the value of money.

Plus, money in the bank is used to form a capital base, leveraged by the banking system to extend bank credit. Or at least, that's how it's supposed to work.

Forcing money out of savings is just going to affect the capital base of the bank and its ability to safely lend. And imposing negative interest rates on money in the bank essentially destroys an amount of money equal to the interest deducted.

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Riksbank Says It's Time To Prepare For Helicopter Money Skingsley.jpg

it will not be possible, in the future, to conduct monetary policy in the way and with the impact we have previously been accustomed to. And this is something for which we need to prepare ourselves. She notes that, alongside cutting the policy rate to below zero and purchasing securities, so-called helicopter money could provide a hypothetical path to take to increase scope for monetary policy.

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Riksbank Says It's Time To Prepare For Helicopter Money Skingsley.jpg

it will not be possible, in the future, to conduct monetary policy in the way and with the impact we have previously been accustomed to. And this is something for which we need to prepare ourselves. She notes that, alongside cutting the policy rate to below zero and purchasing securities, so-called helicopter money could provide a hypothetical path to take to increase scope for monetary policy.

Well,it'sworked out so well in Venezuela.

https://notayesmanseconomics.wordpress.com/2016/05/19/venezuela-plumbs-the-economic-depths-of-hyper-inflation-and-depression/

'Yet even it is being thrust aside as the worst economic case right now by the crisis which is enveloping Venezuela. No doubt you have read about the various shortages of which the lack of toilet rolls was the most publicised. Well according to France 24 the state of emergency which has been imposed has now led to shortages in an even more basic commodity food.

The BBC reports that this situation has come about because of this.

Lopez described herself as a former partisan of the socialist “revolution” started by late leader Hugo Chavez and continued by Maduro.

“Here in Guarenas there were revolutionary supporters. But now the people no longer want revolution — what they want is food,” she said.

“The people are going hungry. We are tired of lining up, of killing ourselves for just a carton of eggs or some bread,” she said.

Apart from the hunger issue no economy can function if its citizens are having to spend so much time queuing for basic necessities. So what has gone wrong?'

With subsidised goods becoming increasingly scarce, many Venezuelans have been forced to queue for hours to get the essentials.

When a sought-after staple such as cornflour arrives at a supermarket, the word will spread quickly over social media and hundreds of people will queue to get it.

Edited by Sancho Panza

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