Would you accept 0% interest for 100% security

1694

If the govt offered a 100% secure instant access cash account but with 0% interest would you use it?

What about if you look at it like this:
The treasury can then use that money as a deposit and then fractional reserve itself 9 times this amount.
Lend the fractional reserve money to the commercial banks to free up their liquidity.
Charge the commercial banks interest.
Use the interest to pay off the National debt

Then income tax will fall and public spending will rise.

Long term you benefit?

Rember the alternative is, leave your money in commercial banks they demand a bailout form the govt to pay there creditors (inc you, yes you lend your money to the bank). The govt borrows from a different bank to bail support your bank. You get your 4% interest, but the government is charged god know how much interest on its huge loans so taxes go up 6%

MrOrchard

No, you may as well keep cash if you're not going to get a return that's at least equal to Inflation less Tax

1694

Is 4% interest worth loosing the lot?

chardir

No, the government already offers 100% secure accounts with interest.

MrOrchard

1694 wrote: »

Is 4% interest worth loosing the lot?

Please note that I said "cash" nothing risky about that. I'm not talking about any savings account.

genny

What on earth would be the point, loss to inflation, and if you save with NS+I and other government backed banks, then you are 100% protected anyway.

To all other UK banks you are protected to £50,000.

Absolutely pointless thing to do.

It certainly wouldn't be safer under the floorboards either, risk of fire, theft, and deflation.

1694

Should have made a differnt poll what interest would you accept
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2
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etc.

Can you edit polls?

1694

genny wrote: »

What on earth would be the point, loss to inflation, and if you save with NS+I and other government backed banks, then you are 100% protected anyway.

To all other UK banks you are protected to £50,000.

Absolutely pointless thing to do.

It certainly wouldn't be safer under the floorboards either, risk of fire, theft, and deflation.

Banks savings as secure as the confidence in them from saying they are secure.

Many people are withdrawing cash to keep at home. So if you had 60G in wobbly RBS and the govt said you can have the same bank account with them but 100% secure and 0% interest?

MrOrchard

I'd accept interest that was at least a little better than Inflation less Tax. I don't see anyone else accepting a lower rate as they'll essentially lose money whilst it was in an account that paid them less than that.

Assume inflation is 5%, and that I pay 20% tax.on my interest earned. How much interest is required just to ensure that my money buys me the same number of Mars bars next year as it did this year?

MrOrchard

1694 wrote: »

Banks savings as secure as the confidence in them from saying they are secure.

Many people are withdrawing cash to keep at home. So if you had 60G in wobbly RBS and the govt said you can have the same bank account with them but 100% secure and 0% interest?

0% interest means that your money is worth LESS than when you put it in. This is because inflation pushes the cost of living up year on year.

player

MrOrchard wrote: »

No, you may as well keep cash if you're not going to get a return that's at least equal to Inflation less Tax

Keeping cash in your house is hardly 100% secure.