Opus 2016-69: New Terms: Negative Interest Rates

I thought this was the bank paying you to borrow.  That didn’t make sense at first.  Then I realized it was coming from the government, not the bank.  It didn’t need to make sense.  It didn’t need to be logical.  It didn’t need to be profitable.

What is it really?  It is a tax on savings.  The government dips into your savings and withdraws a percentage.  It is not a fee.  It does not go to the bank although I assume they will get a fee for the “service”.  It is another penalty dumped on those who have been trying to be responsible.  If you are paying attention to history this is another case of the Obama Administration following the playbook of FDR.  I had been wondering how they would do it.

During the depression FDR noticed that businesses with any money were not investing it.  They could make no plans because they didn’t know what crazy idea that the New Deal Democrats would come up with next.  So they put their money into cash and held it.  Since they wouldn’t spend and thus pay taxes the progressives simply passed a law taxing the money they were trying to keep for the future.  We have seen companies like Apple do the same thing today.  They have cash but since the government makes it so risky with all their regulations and taxes, they are just sitting on it.  So, like the socialist Franklin Delano Roosevelt, Barak Obama decides to steal from the piggy bank and rainy day fund.

In the Middle Ages I am told that banks charged a fee to hold people’s money.  That was to keep it safe.  It was the bank with a large secure area offering to share that security for a fee.  It was not a tax by the government.  It was like what we now consider a safe-deposit box, not a savings account.

So how does this play out?  People will pull their money out of banks and either hide it or send it out of the country.  That will make even less available for borrowing and cause even more problems than we have now.  The economy gets worse.  People panic and ask the government for protection from the evil banks and greedy rich people.  More liberty will be surrendered.

The cycle continues.  Have you also been hearing about doing away with $100 bills to fight crime?  It will also make it harder for you and me to hide any assets we have from the government.  If we go to a cashless economy then the government can even keep us from hiding our money under the mattress. 

The Progressives just keep pushing the socialism.

homo unius libri