Who Warned “Be Careful What You Wish For… If Interest Rates Go Negative”
Now that the Bank of Japan has joined other central banks such as Denmark, Sweden, the ECB, and Switzerland into pushing its rates into what until just two years ago was considered the monetary twilight zone below the zero bound, and in the process sending a record $5.5 trillion in government bond yields negative…
… which quickly puts into in context all the recent warnings about physical cash being eliminated (because as a reminder negative rates and cash simply can not coexist as the latter provides a ready immunity from the former), such as the following:
- Norway’s Biggest Bank Demands Cash Ban
- Bank Of England Economist Calls For Cash Ban, Urges Negative Rates
- Citigroup’s Gold “Expert” Demands A Cash Ban
- Leading German Keynesian Economist Calls For Cash Ban
- The War On Cash Is Advancing On All Fronts
Perhaps the only open question is which comes first i) Japan hinting at a cash ban, or ii) the Fed going NIRP as well.
So in light of all this monetary lunacy, we have dug up the following blast from the not so distant past, which contains several rather dire warnings about the dystopian future of a NIRP world:
- if rates go negative, the U.S. Treasury Department’s Bureau of Engraving and Printing will likely be called upon to print a lot more currency as individuals and small businesses substitute cash for at least some of their bank balances.
- I might even go to my bank and withdraw funds in the form of a certified check made payable to myself, and then put that check in a drawer.
- If bank liabilities shifted from deposits to certified checks to a significant degree, banks might be less willing to extend loans, because certified checks are likely to be less stable than deposits as a source of funding.
…click on the above link to read the rest of the article…
