Danish Bank offers negative interest rate mortgages basically paying people to borrow money to buy assets.
Jyske Bank, Denmark's third-largest bank offers 10-year fixed-rate mortgage with an interest rate of -0.5%.
The news:
A bank in Denmark is offering borrowers the chance to take out mortgages at a negative interest rate, effectively meaning that it will pay customers to borrow money.
Jyske Bank, Denmark's third-largest bank, said this week that customers would now be able to take out a 10-year fixed-rate mortgage with an interest rate of -0.5%.
Offering loans at a negative rate may seem counterintuitive. But some banks are content to take a guaranteed small loss rather than risk bigger losses.
Review
How can you “Wrap your head around that?”
Which is an American idiom which means can you think this through and understand it?
So to me this negative interest rate is an amazing validation or display of why Satoshi invented Bitcoin.
Follow me here:
👉 Money or Fiat is a depreciating asset.
👉 It loses value every year, so it buys less.
👉You invest it in appreciating assets to preserve your buying power, so you can feed, clothe and house your self in the future.
Now
👉 Appreciating assets are commonly gold, diamonds or real estate.
👉 They are dead things, we can’t eat them, wear them or live in them.
👉 But we feel they have value.
👉 In other words “people” give them value.
People give things value.
👉 One important thing I have learned from Bitcoin is “people” give things value.
👉 Bitcoin is literally “virtual” it doesn’t really exist in a physical form, it literally is “nothing” but it has value because the people give it value.
👉 Fiat is physical, although increasingly digital and becoming virtual. Historically it was backed by gold, something the people gave value. So this in turn gave it value. No longer, so it’s tied to our faith in our government.
👉 Hmmmm🤔🤔🤔
Conclusion
Is the Danish Bank telling you Fiat has little or negative value?
👉 Fiat has always been a depreciating asset.
👉 Now that Banks are providing loans on Appreciating Assets= Mortgages, at negative 0.5% mortgages interest rates in Denmark, they are illustrating in the clearest terms possible that Fiat depreciation is uncontrollable even by the Banks, so the banks would rather loan out Fiat at a fixed loss rate they can pick versus hold it and suffer a loss rate depreciation which they can’t control.
Hmmmm. 🤔🤔🤔
Stop and wrap your mind around that.
Banks would rather loan out Fiat at a fixed loss rate versus hold it and suffer a loss rate which they can’t control.
So the banks are exchanging their Fiat for assets! Shouldn’t you????
So should you sell your crypto for fiat or sell your fiat for crypto?
Watch the financial markets.
The people, who ultimately decide what has value are speaking with their actions.
What have the people decided are assets?
What are the people, rich and poor deciding has value?
Hold on to your popcorn folks. It’s about to get exciting!
✍️ by Shortsegments
Picture Credit
United States Geologic Society, public domain picture USA.
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What about the time value of the money? What if the customer pays in due time? Not sensible to me.
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Please explain the term “time value” of money. Sometimes definitions answer questions.
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Time value of money = Interest rate
Suppose interest rate for deferred account is monthly %2 in an economy. If you lend your surplus money to someone for a month and get the same amount in due time, this is not reasonable in the financial aspect.
Because if you deposited it in a deferred bank account, you would get %2 much more money at the end of the month.
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Good question.
I think that as long as the characteristic of a vehicle include capitol preservation and the interest you earn on loaned or invested capitol is greater then or at least equal to inflation, it’s a good investment.
Thank you for your comment. I think it’s an important one. The point is assets are not the only way to protect yourself from the depreciation in value of fiat. Investment vehicles which pay interest or earning greater then inflation or at least equal to inflation protect you from depreciation of fiat since inflation rate equals fiat depreciation unless other larger forces intervene.
Thank you, this is why we interact and engage: to share our knowledge and understanding of world events.
Thank you!
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