The Keynesian euthanasia of the rentier policies of abolishing interest rates has been intensifying.
Today, the Swiss National Bank joins the ECB (June 2014) and Sweden (2009) to implement negative deposit rates supposedly intended to discourage capital flows.
The Swiss National Bank (SNBN) imposed the country’s first negative deposit rate since the 1970s as the Russian financial crisis and the threat of further euro-zone stimulus heaped pressure on the franc.A charge of 0.25 percent on sight deposits, the cash-like holdings of commercial banks at the central bank, will apply as of Jan. 22, the Zurich-based central bank said in a statement today. That’s the same day as the European Central Bank’s first decision of 2015.The SNB move follows Russia’s surprise interest-rate increase this week and hints at the investment pressures that resulted after that decision failed to stem a run on the ruble. Swiss officials acted as the turmoil, along with the imminent threat of quantitative easing from the ECB, kept the franc too close to its 1.20 per euro ceiling for comfort.
As one would notice, the SNB’s has supposedly been responding to unintended consequences from previous interventions
And since every interventions create unintended economic and financial dislocations, these has prompted policymakers to apply even more interventions which furthers the imbalances. Thus one intervention begets another. The ramification of which is a massive accumulation of distortions, or malinvestments pillared on the destruction of savings or capital consumption that eventually results to a crisis
As great Austrian economist Ludwig von Mises warned in his magnum opus the Human Action (bold mine)
The age-old disapprobation of interest has been fully revived by modern interventionism. It clings to the dogma that it is one of the foremost duties of good government to lower the rate of interest as far as possible or to abolish it altogether. All present-day governments are fanatically committed to an easy money policy. As has been mentioned already, the British Government has asserted that credit expansion has performed "the miracle...of turning a stone into bread." A Chairman of the Federal Reserve Bank of New York has declared that "final freedom from the domestic money market exists for every sovereign national state where there exists an institution which functions in the manner of a modern central bank, and whose currency is not convertible into gold or into some other commodity." Many governments, universities, and institutes of economic research lavishly subsidize publications whose main purpose is to praise the blessings of unbridled credit expansion and to slander all opponents as illintentioned advocates of the selfish interests of usurers.The wavelike movement affecting the economic system, the recurrence of periods of boom which are followed by periods of depression, is the unavoidable outcome of the attempts, repeated again and again, to lower the gross market rate of interest by means of credit expansion. There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.
And why does it seem that we are in a crisis for central banks to resort to unprecedented emergency measures?
Naturally Wall Street love such invisible transfers—policies which confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some—as they are one of the key beneficiaries.
And so today’s continuing party.