Sep 18

Bank Of England Economist Calls For Cash Ban, Urges Negative Rates:

Just three short years ago, Bank of England chief economist Andy Haldane appeared a lone voice of sanity in a world fanatically-religious Keynesian-esque worshippers. Admissions in 2013 (on blowing bubbles) and 2014 (on Too Big To Fail “problems from hell”) also gave us pause that maybe someone in charge of central planning might actually do something to return the world to some semblance of rational ‘free’ markets. We were wrong! Haldane appears to have fully transitioned to the dark side, as The Telegraph reports, he made the case for the “radical” option of supporting the economy with negative interest rates, and even suggested that cash could have to be abolished.

Speaking at the Portadown Chamber of Commerce in Northern Ireland, as The Telegraph reports, Mr Haldane’s support for a possible cut in rates came as the Bank as a whole has signalled that the next move in rates would be up.

Andy Haldane, one of the Bank’s nine interest rate setters, made the case for the “radical” option of supporting the economy with negative interest rates, and even suggested that cash could have to be abolished.

He said that the “the balance of risks to UK growth, and to UK inflation at the two-year horizon, is skewed squarely and significantly to the downside”.

As a result, “there could be a need to loosen rather than tighten the monetary reins as a next step to support UK growth and return inflation to target”.

But recent volatility in financial markets, prompted by China, and a decision by the US Federal Reserve to delay rate hikes, have pushed back expectations of the Bank’s first rate rise to November 2016.

Traditionally policymakers have resisted cutting rates below zero because when the returns on savings fall into negative territory, it encourages people to take their savings out of the bank and hoard them in cash.

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This could slow, rather than boost, the economy. It would be possible to get around the problem of hoarding by abolishing cash, Mr Haldane said

Interestingly, one idea, Haldane told an audience of business owners in Northern Ireland, could be to scrap cash and adopt a state-issued digital currency like Bitcoin. Although widely reviled as the currency for drug dealers and criminals, Haldane said Bitcoin’s distributed payment technology had ‘real potential’. Which may explain the Fed’s sudden fascination in the virtual currency.

NIRP – it would appear – is about to global.

So Haldane has gone from worrying that “financial markets were detaching themselves too materially from fundamentals” and fearing the “biggest risk to global financial stability right now it would be a disorderly reversion in the yields of government bonds globally,” the BoE’s chief economist has not only called for policies which will enable an even bigger bond bubble but will also remove freedom from the people to do what ‘they’ think is best with their capital. Indoctrination is complete (or more ominously, is there something Haldane sees that has driven him to this extremist perspective?)

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2 Responses to “Bank Of England Economist Calls For Cash Ban, Urges Negative Rates”

  1. squodgy Says:

    Looks like a desperate load of hogwash to me.

    With rampant ‘on the High Street” inflation running at 10% (noting the packaging reductions especially), real unemployment over 10%, manufacturing at rock bottom, the BDI stuck in the silt, an unserviceable National Debt of over £1.5T, immigrants and shirkers milking the system for what it’s worth, austerity cut backs hitting those who have dutifully paid in to the system for decades, hidden threats of bail-ins, damn right he’s seen a ghost!

    Makes loads of sense doesn’t it, since 2008 we’ve had two tranches of QE printing billions of notes…..now the fools want to ban cash. No thought at all.

    It’s only a small country but 60million headless chickens being told they must embrace bitcoin is going to be hilarious.

  2. Marilyn Gjerdrum Says:

    I think the British are too smart for that one. They were clever enough to decline turning their currency over to greedy gut bankers with the Euro game.
    I don’t think they will allow it……The reason the British will survive the economic fallout from the debt laden Euro Zone is the fact they kept their own currency…

    The British have fought bigger battles and won. Remember the Hitler days, they stood alone against the Germans, and they were instrumental to winning WW2. Americans came to help them, and Russia played a big part.

    Nobody wants to admit Russia’s role…..they fought the Germans on the Eastern Front, and won. Without them, we might all be speaking German now…..

    The Brits have too much spirit. This is one idiot economist with an agenda…..

    It is the refusal to buckle down that wins.

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