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There are some interesting ideas in here, in the €-zone’s stimulative innovations. But this innovation like most central bank innovation is changing the rules to give advantages to banks who play along with stimulators’ objectives. In this case, some private 1/ (ht @csissoko)
depositors will pay for the privilege of lending funds that banks will lend on without themselves paying for the privilege, creating a carry. Under some circumstances the public sector will pay for the privilege of lending, so the carry will be a direct fiscal xfer. You can 2/
make a technocrat’s case for why this is a good idea (tho it would hardly be watertight). But a nontechnocrat may observe it is pretty unjust, turning negative rates into a tax payable to banks or tax money paid to banks. It’s obscure now, but it won’t be for long, and people 3/
(including me) may simply be outraged. We’ve done this before, support the banks to save the economy. In stratified societies where those central to finance are perceived (correctly) as having profited unjustly from rents connected to their centrality, it is more fuel for the 4/
fire lit a decade ago that threatens still to burn us all down. This is clever, technocratically attractive, but in a broader social sense, a very, very risky play. /fin
