You know that central banks and the bankers who populate them are out of ideas when they promote negative interest rates. the daily news is full of interviews with bankers about how to stimulate the economy into spending and growth once more but the bankers are clueless. They don’t yet acknowledge that demographics is driving the economy and retirees don’t spend as much as when they were bringing up families. Japan is the classic example yet experiments continue.

The latest weapon brandished by central banks is supposed to boost economic growth and ward off deflation by punishing cash hoarders. In practice, this radical policy damages credit creation, fuels bubbles, threatens civic freedoms and spooks the living hell out of markets.

Source: Chancellor: Negative rates, negative implications | Columns | Breakingviews