by Martin Armstrong, Armstrong Economics:
Kenneth Rogoff is a Professor of Public Policy and Economics at Harvard University. Rogoff calls critics of negative interest rates “ignorant” despite the fact that negative interest rates have been used since 2008 without any success. He had the audacity to say that people should not look at their short-term personal losses, but rather look at the long-term vision of the central banks. He is such an elitist. I cannot find words appropriate to describe how this academic, who has zero experience in the real world, is incapable of comprehending that his Marxist style intervention is creating the next crisis.
Yes, negative interest rates lower deficits. But who will buy the negative debt besides central banks? Why borrow money at all and compete against the private sector? Interest rates are negative to punish savers for saving. He wants them to spend their money. Fine – stop government borrowing altogether and just print what is needed for the expense of government. Stop this elitist Marxist concept that people like Rogoff can play the role of emperor and manipulate society to do whatever they believe is appropriate.
Just before his death in 1946, John Maynard Keynes (1883-1946) told Henry Clay, a professor of Social Economics and adviser to the Bank of England, that he hoped that Adam Smith’s invisible hand would help Britain out of its economic hole. “I find myself more and more relying for a solution of our problems on the invisible hand which I tried to eject from economic thinking twenty years ago.”
Economists such as Rogoff are still basking in the ideas of Karl Marx that government CAN and SHOULD manipulate society to achieve the public policy dreams of those in power. Rogoff is not willing to even think about what he has done to the pension system and how we are looking at states like Illinois becoming broke.
In California, less than four years have passed since it fought to achieve a balanced budget by raising taxes to the highest level in the nation. Politicians cannot manage the economy and negative interest rates are destroying pensions. There is no long-term gain, for Rogoff cannot imagine the next step. The central banks are trapped and can NEVER resell what they have bought under Quantitative Easing. We are rapidly approaching the point of no return or NO BID. That is when government tries to sell its debt to pay off the last chunk and there is NO BID. Oops! Checkmate!
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