By Kevin Murcko
Is it possible to link, in a sane thought process, the push toward
negative interest rates to the uber-AML’ find and destroy’ tactics that led to
the leak of the notorious ‘Panama Papers’ in 750 words or less? It won’t be
easy, and it may be a fool’s errand, but this is an opinion piece…so here we
go.
Think 2008, think ‘housing bubble’, think resulting G7 economic policy, and
fast forward, through a few ‘blah, blah, blahs’ to near present day with most
of the world’s first tier economies with near, at, or below zero interest
rates.
Now, image the next ‘oh sh*t’ moment, when the next bubble bursts, or oil
prices cripple the energy sector, or Chinese led alien invaders, posing as
political heavyweights, purposely implode our respective economies, that is of
course, if this hasn’t already happened. The point is, with the ‘textbook’ tool
to combat economic implosion essentially gone, what happens next?
I would never make the mistake of saying the words ‘creative’ and ‘economist’
in the same sentence, (unless they are in parenthesis, that’s okay) as let’s
face it, these guys don’t really score any points in the ‘I could manage my way
out of a paper bag on my own’ category. So of course when faced with a still
failing economy and zero interest rates, they just opted to go lower…
So, once just a hypothetical idea in some boring macroeconomic thesis, negative
interest rates, at the central bank level, are now, and it seems will be for
the foreseeable future, a reality.
Hmm, so if zero interest rates don’t push consumption Mr. Bank president, why
on earth would a few extra points lower make any difference?
Negative rates at the central bank level is one thing, but at the retail level,
now that is a true game changer. All those long conversations you were forced
to have with your dear old grandpa, as he spat all over your face trying to get
his oh so poignant words to actually be absorbed by your young and totally
uninterested brain about the virtue of saving and spending like you were living
in a constant 1920 post war depression…. are what, now meaningless??
It’s simple really…central banks have officially declared war on cash. While
they may have disliked their own creation for years, they are now on a clear
path to completely changing the definition of a modern economy.
We start at a consumption based economy, we then move forward to an all
electronic monetary system, one that will allow governments to track, trace,
recover, and create money at their will. It seems that all these regulators
that touted Bitcoin and other e-currencies as evil and risky and tools of the
devil, are now being shown by big brother that while those statements may be
true in part, well…who cares, if a system is solid enough to keep back
hackers but open source enough to allow them to play around at will, that’s a
government win that us blind sheep, may, at least initially, jump right on
board with.
Okay, take a breath…. the Panama Papers. So… we know government doesn’t like
tax ‘avoidance’ (yes I am trying to be nice here), and we know that other
governments that offer structures that assist in ‘avoiding’ (still being nice)
taxes are being pressured to share tax information, and that nearly all of them
have complied at some level, but sharing of other non-banked assets and ‘safe
deposit box’ surprises are still just a tax man wet dream. Now the granddaddy
of death by taxes, the old US of A, which is in itself ironic considering the
Boston tea party and what not, knows that getting the money they think they are
owed can be difficult. Now what if all that money was simply in some electronic
wallet in some blockchain style ledger somewhere, that every government had the
master key to. Problem solved.
See the reverse psychology here? Just this past year we heard that,
‘e-Currencies are tools for laundering ill-gotten gains’, and ‘e-Currencies are
not money’ and now, the powers that be are quickly pushing us toward the same
thing they essentially pushed libertarians to over the past few years with their
anti-bitcoin rhetoric. You got to give it them… nice bluff.
So… centrals banks essentially gave the poor houses they couldn’t afford, in
an effort to undermine the world economy through the creation of a series of
complex credit swap, which led to them giving us near free money for the last 8
years, to now, pushing to make this money useless, so they can come back and
implement a system they recently called a AML nightmare, with a final ploy to
have access to each and every transaction we make regardless of where or how we
make it.
Did I say they weren’t creative? Hmm…everyone’s wrong once I guess.