Bank Of England Economist Calls For Cash Ban, Urges Negative Rates

Just three short years ago, Bank of England chief economist Andy Haldane appeared a lone voice of sanity in a world of fanatically-religious Keynesian-esque worshippers. Admissions in 2013 (on blowing bubbles) and 2014 (on Too Big To Fail "problems from hell") also gave us pause that maybe someone in charge of central planning might actually do something to return the world to some semblance of rational 'free' markets. We were wrong! Haldane appears to have fully transitioned to the dark side, as The Telegraph reports, he made the case for the "radical" option of supporting the economy with negative interest rates, and even suggested that cash could have to be abolished.

Speaking at the Portadown Chamber of Commerce in Northern Ireland, as The Telegraph reports, Mr Haldane's support for a possible cut in rates came as the Bank as a whole has signaled that the next move in rates would be up.

Andy Haldane, one of the Bank’s nine interest rate setters, made the case for the "radical" option of supporting the economy with negative interest rates, and even suggested that cash could have to be abolished.

He said that the "the balance of risks to UK growth, and to UK inflation at the two-year horizon, is skewed squarely and significantly to the downside."

As a result, "there could be a need to loosen rather than tighten the monetary reins as a next step to support UK growth and return inflation to target."

But recent volatility in financial markets, prompted by China, and a decision by the US Federal Reserve to delay rate hikes, have pushed back expectations of the Bank's first rate rise to November 2016.

Traditionally policymakers have resisted cutting rates below zero because when the returns on savings fall into negative territory, it encourages people to take their savings out of the bank and hoard them in cash.

This could slow, rather than boost, the economy. It would be possible to get around the problem of hoarding by abolishing cash, Mr Haldane said

1 2
View single page >> |

Copyright ©2009-2015 ZeroHedge.com/ABC Media, LTD; All Rights Reserved. Zero Hedge is intended for Mature Audiences. Familiarize yourself with our legal and use policies every time you engage ...

more
How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.
Ian Mathers 6 years ago Member's comment

I suppose that when your attempts at inflating away all savings value have failed, you have to resort to outright theft.

Gary Anderson 6 years ago Contributor's comment

I warned a long time ago that Bitcoin was likely to be the NWO currency. Looks like that could be.

Gary Anderson 6 years ago Contributor's comment

Larry Summers' totalitarian plan is being swallowed by the banksters. He is weaving a web of total fascism, where the banks will rule the world.