It's likely that central bank would get money back from corporates.
I heard that local banks added 1% on top of discount rate by the BoC (Bank of Canada) for their jobs, i.e. 0.75% + 1% = 1.75%. This is a dream rate for business as the rate is current set at 0.75% by BoC.
Btw, BoC could increase interest rates to 1.5% with 0.25% in each meeting. This would send a clear message to real estate gamblers that the rate would increase eventually. They have speculated that the super low rate would stay forever. This was a reason why housing market was over heated and waited to crash.
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2015-07-14
Doing QE or investing during trouble times to kick start the economy or job creation. Using QE money to buy government bonds, so government would spend to create jobs?
- Government is not good at business and isn't allowed to do so.
- Having extra cash to accumulate huge public debts would draw lots of complains, too [they had speculated countries with huge debts bankruptcy -> higher borrow rates]. It's not good to pay only interests on huge debts.
- Greece is a huge example of government bad spending.
Using QE money to buy fixed term corporate bonds should be a better option. Corporates would use low interest funds to expand business or start hiring. Corporates are better in doing business.
Central bank can't do business neither? Then central bank could pass on jobs to local banks, which are used to lending money as well as investment for buying qualified fixed term corporate bonds. Btw, central bank didn't want to lose money neither.
-> Local banks have offices in all cities. It's visible and accessible. I have no ideas where about of venture capitalists or BDC, i.e. local bank's network is preferred.
-> Central bank has to withdraw money and retire later to avoid criticism. This the fixed term of bond investment could be limited to a maximum of 5 years.
Local banks have network of branches across our country. People knew exactly where a branch office was near them. Local banks are familiar with investment in stocks, bonds, etc. This is part of their daily activity. Seriously banks are not very greedy as compared to other investors, thus their picks would be more conservative, i.e. unlikely losing money of investment. Of course, if local banks proposed to back a 10% for total investment loss would be better as a motive for banks doing a better screening.
· Local banks could propose buying either corporate bonds or preferred shares in return for investment in a company.
· Loans in this form must come with an interest rate, i.e. yearly term based on rate set by central bank or a 5-year term.
Getting loans done by a capitalists or venture capital would be slower as they don’t have many offices. Many of us didn’t know where those offices located neither.
Doing QE or lowering interest rates by central would result in lowering the exchange rate of its own currency. However super low interest rates would trigger rising housing prices and trouble time for pensioners, i.e. income investors.
· Perhaps central bank’s interest rate shouldn’t be lower than 1%.
· Local banks should offer the lowest mortgage rate of 3% for 5-year term at lowest point.
Having higher mortgage rates, but lower housing prices would be a better scenario for home buyers. Even though the monthly payment may be similar, but home owners could save money to pay off lower mortgage debts quicker due to lower house price/debt.
*September 7, 2018: By the way, it should be the responsibility or judgement of local banks to buy fixed term corporate bonds, preferred shares, or stocks during QE period to ensure that central bank would get money back after a fixed period of time, e.g. 3 years or 5 years.
2020-09-23
There are some facts about central banks around the world
including US Fed that we misunderstood. Those central banks are not really
government arms.
------------------ Texts from Internet about US Fed
-------------
1. What families own the Federal Reserve Bank?
The Federal Reserve Cartel: Who owns the Federal Reserve?
They are the Goldman Sachs, Rockefellers, Lehmans and Kuhn Loebs of New York;
the Rothschilds of Paris and London; the Warburgs of Hamburg; the Lazards of
Paris; and the Israel Moses Seifs of Rome. Mar 27, 2020
2. Who owns the Federal Reserve 2020?
The Federal Reserve System is controlled not by the New York
Fed, but by the Board of Governors (the Board) and the Federal Open Market
Committee (FOMC). The Board is a seven member panel appointed by the President
and approved by the Senate.
3. Is the Federal Reserve a public or private institution?
REALITY: The Federal Reserve is not a private corporation.
It is part private and part public, with its Board of Governors an agency of
the United States government. The regional Federal Reserve Banks are private
corporations acting as agents of the government that are owned by their member
banks.
4. Do the Rothschilds own the Federal Reserve Bank?
The US Federal Reserve is a privately owned company
(controlled by the Rothschilds, Rockefellers and Morgans) and prints the money
for the US Government. The true power of the Rothschilds goes far beyond the
banking empire: they are also behind all wars since Napoleon.
5. What companies are owned by Rothschilds?
- Edmond de Rothschild group includes these companies.
- Banque privée Edmond de Rothschild – Swiss private banking
firm.
- Compagnie Financière Edmond de Rothschild – French private
bank.
- La Compagnie Benjamin de Rothschild.
- Cogifrance – Real estate.
- Compagnie Vinicole Baron Edmond de Rothschild – wine
making firm.
6. Who profits from the Federal Reserve?
The federal government sets the salaries of the board's
seven governors, and it receives all the system's annual profits, after
dividends on member banks' capital investments are paid, and an account surplus
is maintained.
7. Who founded the Federal Reserve?
President Woodrow Wilson
--------------- Bank of Canada, BoC from Internet -------------
1. Is the Bank of Canada owned by the Rothschilds?
The bank operates as a closed partnership, all its shares
held by the Rothschild family. ... The bank's basement is packed with historic
archives and at least one stack of evidence that the Rothschilds have been studying
Canada for a long time: copies of The Financial Post dating back to 1910.
2. Are banks private or public sector in Canada?
Chartered banks, sometimes known as commercial banks, are
public corporations that are licensed by the federal government to operate a
banking business within Canada. Dec 13, 2017
3. Where does the Bank of Canada get its money?
Both private commercial banks and the Bank of Canada create
money by extending loans to the Government of Canada and, in the case of
private commercial banks, lending to the general public. The Bank of Canada's
money creation for the Government of Canada is an internal government process.
3. How much money does Canada have in reserve?
The Department of Finance Canada announced today that
Canada's official international reserves increased by an amount equivalent to
US$1,918 million during December to US$83,926 million. This was driven by
reserves management funding operations (US$1,003 million), and a gain in net
investments (US$915 million). Jan 4, 2019
4. How much is Canadian debt?
According to data from Statistics Canada, net debt (gross
debt minus assets) as of March 2019 was approximately CAD$768 billion. With a
total GDP of approximately CAD$2.2 trillion, Canada's overall net-debt/GDP
ratio is about 34%.
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