Paying to give them money

This is a fascinating example of the potential consequences of American bank depositors failing to understand what their bank deposits are:

Leading US banks have warned that they could start charging companies and consumers for deposits if the US Federal Reserve cuts the interest it pays on bank reserves. Depositors already have to cope with near-zero interest rates, but paying just to leave money in the bank would be highly unusual and unwelcome for companies and households.

This is akin to the credit card company paying you for the privilege of borrowing their money. It should also eliminate any last vestige of belief in the idea that the Federal Reserve, the Congress, or the banks have any capacity for putting either the economy or the American people before their own short-term pecuniary interests.

Just to make it clear, your bank deposit is a loan you make to the bank. It is an unsecured loan that the bank can utilize in any way it pleases, and since it is unsecured, if the bank happens to lose the money by making bad investments or spending it on cocaine and expensive hookers, you have no legal recourse. This is why John Corzine is not only not in jail, but hasn’t even been charged with a crime; he didn’t commit one.

It’s not stealing if you’re dumb enough to give them the money in return for an unsecured promise to pay it back so long as you ask for it before they don’t have it on hand.

And note that this is bank industry opposition to a rate cut, not the much-feared rate increase.