
No longer a future dystopia - it's here and now
Remember those old ads showing a senior couple lounging on a warm beach, captioned "Let your money work for you"? Or
the scene in Mary Poppins where young Michael is being advised to put his tuppence in the bank, so that it can compound into "all manner of private enterprise," including "bonds, chattels, dividends, shares, shipyards, amalgamations . . . "?
That may still work if you're a Wall Street banker, but
if you're an ordinary saver with your money in the bank, you may soon be paying the bank to hold your funds rather than the reverse.
Four European central banks - the European Central Bank, the Swiss National Bank, Sweden's Riksbank, and Denmark's Nationalbank -
have now imposed negative interest rates on the reserves they hold for commercial banks; and discussion has turned to whether it's time to pass those costs on to consumers. The Bank of Japan and the Federal Reserve are still at ZIRP (Zero Interest Rate Policy), but
several Fed officials have also begun calling for NIRP (negative rates).
The stated justification for this move is to stimulate "demand" by forcing consumers to withdraw their money and go shopping with it. When an economy is struggling,
it is standard practice for a central bank to cut interest rates, making saving less attractive. This is supposed to boost spending and kick-start an economic recovery.
That is the theory, but central banks have already pushed the prime rate to zero, and still their economies are languishing. To the uninitiated observer, that means the theory is wrong and needs to be scrapped. But not to our intrepid central bankers, who are now experimenting with pushing rates
below zero.
Locking the Door to Bank Runs: the Cashless Society
The problem with imposing negative interest on savers, as
explained in the UK Telegraph, is that "there's a limit, what economists called the 'zero lower bound'. Cut rates too deeply, and savers would end up facing negative returns. In that case, this could encourage people to take their savings out of the bank and hoard them in cash. This could slow, rather than boost, the economy."
Comment: Slowly but surely, step by step, the powers that be continue to increase their surveillance of everyone and everything, and to systematically put ever more restrictive controls on the free movement of people. Sounds like the same strategy used by the Nazis.