In response to an FT 'Big Read' by Robin Wigglesworth and Leo Lewis on 17th February 2016, entitled 'Central banks: Negative thinking'
Here's a proposition from your friendly Central Banker and his chums at Eye, Screw, Ewe and Larf, PR Consultants to the elite:
CB: Mr Smith, you can have a definite £100 to spend now, or a possible £95 in a year's time - which is it to be?
Mr S: What do you mean a possible £95 in a year's time?
CB: Well, while the money is in the bank it isn't actually yours, it's a loan to the bank upon which you have a claim; it appears on both sides of their balance sheet as an asset and a liability, dreadfully clever stuff
Mr S: Well surely that means I can have it whenever I like?
CB: Normally yes, but if the bank goes bust, it'll be their money at that point, it's technical but essentially you'll get bailed in. The derivatives people will get their money first, but the bank will get round to you eventually, so yes you'll get something...probably
Mr S: So let me see if I've got this right - I'm paying you guys £5 for the privilege of possibly losing up to and including the other £95
CB: Well I wouldn't put it that way
Mr S: Well I would put it that way, give me my money I'm taking it home
CB: Excellent, you want to spend it now, jolly good for aggregate demand and all that
Mr S: No - I want to take it home, keep it until I want to buy something; then spend it
CB: You can't do that I'm afraid; we have a cashless society now - Larry Summers wants to protect you from terrorists and drug dealers.
Mr S: Well you can tell Larry Summers to go...(fill in the blanks to your own liking dear readers)
John Stepek, the editor of MoneyWeek coined a splendid phrase for negative interest rates in an article last week: "The weaponisation of compound interest".
Here's a more traditional one - theft.
There is no way on God's earth that a free market would ever result in negative interest rates. If anyone had asked you ten years ago if you'd stand for this - you'd have said 'no'. The fact that this seems almost normal to many people is an indication of just how insidious these moronic policies are. We are like frogs in a pot being boiled alive 1 degree at a time. Time to get out of the pot before we're all too drowsy to notice.