IMF Wants to Ban People From Saving
WASHINGTON, DC – February 7, 2019
The IMF is preparing for a new crisis and proposing to introduce a “dual-circuit monetary system” in order to stimulate demand and reduce population savings. This is reported by Bloombeg with reference to the IMF economists Ruchir Agarwal and Signe Krogstrup. In particular, it is noted that ten years after the 2008 financial crisis, refinancing rates in many countries remain at a record low level, somewhere below zero, so the question is how well will monetary policy be able to withstand the future recession?
One of the options for such a policy is electronic money issued in tandem with regular cash, economists at the International Monetary Fund wrote on the group’s blog. Cash allows you to bypass negative rates, but electronic money issued by the Central Bank cannot be easily withdrawn from circulation and hidden.
IMF economists Ruchir Agarwal and Signe Krogstrup say splitting the monetary base into two separate currencies – cash and e-money – could lower rates even below zero. E-money would pay whatever the policy rate is and cash would have an exchange rate against the e-cash, they wrote.
The key factor is the conversion rate, since that would let cash depreciate at the same pace as the negative interest rate on e-money. Stores will also indicate prices in electronic money and cash.
“Cash would thereby be losing value both in terms of goods and in terms of e-money, and there would be no benefit to holding cash relative to bank deposits,” Agarwal and Krogstrup said. “This dual local currency system would allow the central bank to implement as negative an interest rate as necessary for countering a recession, without triggering any large-scale substitutions into cash.”
Negative rates are now a reality in, for example, Denmark, Switzerland, Sweden and the euro area. It’s been possible to lower rates below zero since taking out cash in large quantities is inconvenient and costly.
Sweden was also a good test case, as the country quickly became increasingly cash-free. Its central bank, whose current benchmark is -0.25%, is also exploring the possibility of issuing a so-called electronic crown.
According to Ruchir Agarwal and Signe Krogstrup, the dual-circuit system "will have the advantage of fully freeing monetary policy from the zero lower bound, and will also confirm the Central Bank’s commitment to targeting inflation.”
But there are problems also, for example, all of this will require “tremendous communication efforts,” but there are other options for increasing the monetary policy space, such as higher inflation targets, experts said.
As we have already written, in 2018 it became known that the central bank of Sweden intends to launch a pilot project on the development of digital currency next year, while the country seeks to ensure the operation of payment systems in the future without cash.
The goal is to “develop a proven and ready” digital currency ekrona, which can be entered if Riksbank decides to do so.
What does this mean? Why it is being voiced now? Let's see.
If you look pragmatically at the IMF’s proposal, which Bloomberg writes about, then you can only be surprised at the level of arrogance and directness of the goals. As we wrote recently, the problem of a sharp drop in the standard of living and the transformation of the middle class into the class of the new poor is not new. Everyone sees it. It is actively discussed at the highest levels.
For example, in Davos, much was said about how to fight poverty. And this is not by chance. World elites consider this issue as a social danger. They're afraid that the poor will rebel (the reasons for this phenomenon we have analyzed here). They are urgently trying to find a way out, but at the same time they cannot talk about the reasons for the problems (this is barred by economic theory) so they are looking for different proposals to combat the consequences.
Now, for example, IMF experts suddenly found that people spend little. This is bad for the economy. Instead of spending, going into debt, and spending again, part of the population and businesses are engaged in savings. And savings are evil. We must punish people who save and encourage them to spend money and thus start the economy.
In Europe they introduced negative deposit rates so that it was pointless and unprofitable to save money and to stimulate people to spend their money. In response, the people and business began to withdraw money to cash and hide it under their mattresses, and this limits the level of negative rates that can be entered because if they are lowered too low, there will be no money left in the bank. This means that the geniuses from the IMF will come up with a solution and they did find it: You need to devalue the cash, that is, enter a certain "conventional unit of electronic money" and allow all transactions only in it, while gradually "dropping" the exchange rate of cash to electronic.
The final goal is, quoting from the IMF blog: "Cash would whereby be losing value both in terms of goods and in terms of e-money, and there would be no benefit to holding cash relative to bank deposits."
The victims of such IMF measures will have to choose between buying goods right now, or a deposit with a negative percentage (ie, losing money) or losing value paper money.And government bonds also have negative interest, so that no one can avoid losses.
That is, the message is: "We will not allow you, plebs, to save money. You will spend all your money and even go into debt. Saving and increasing capital is not a motor of capitalism and the goal of every citizen, as you were told in the 20th century, but a privilege only for the elite. "
It remains to be seen when they will decide to ban gold (as has already happened) because it cannot be devalued in favor of the IMF.