A Negative (Interest Rate) World: When The World Plunged Into Its Mirror Image…

(Un)customary Warning: This is a parody of a rather boring real-life event. Negative interest rates; a topic high on Repulsive Quotient. Mumbo-jumbo is kept down to a minimum, however, and one hopes the brief waddle through an arcane world turns out to be an enjoyable ride.


Johnny Simple was flummoxed and a trifle grumpy. The reason behind his grumpiness was his government. Simple didn’t really harbour views on the quality, or the sanity, of his government (‘I couldn’t care less’), but in the sleepy surroundings of his home, his mind was astir. An investment that he had made – out of his own free will – was giving him ample cause for bemoaning.

He had chosen the safety of his trustworthy government’s Bonds, had made an investment for a return, waited…but on maturity, something seemed amiss. Simple had naively thought his government would return his principal and then something extra, on his investment. But his government seemed to have charged him for the privilege of investing with it. He learnt the true meaning of ‘return’. To air his misgivings, he sought out a friend, Complexius, and learnt a bit about himself and human behaviour. Complexius quickly got down to dealing with complexities.

For centuries, people thought a country’s government was the safest of safe places to park one’s capital. It was simple. You invested in a country’s government bond, the government provided interim happiness (interest on the bond), and one got one’s investment back at the end of it all. This was when countries around the world were paragons of strength.

Like a body that wilts under the tentacles of cancer, countries were now consumed by Debt. A pale shadow of their strong former selves, countries were scampering to resuscitate one another. The world had changed.

Bank deposit rates had gone Negative.

Ailing countries proclaimed that considering their financial ill-health, their citizens would now have to pay them for the privilege of safe-guarding their savings. A few paused and thought, deteriorating financial health ought to lead to ever higher interest rates as compensation. What in the heavens was happening here? This minority, however, was superseded by a vast majority that deemed it rational to turn over their savings to near-default governments, that were now mavens of shakiness and scrambling in the race for life-support.

Risk-free return was now replaced by returns-free risk.

But humans, bless their rational souls, continued ‘investing’ blissfully in their rationality.

Some thought of taking this a step further.

Earlier, everyone desired more money and growing paper wealth. The rules had changed. Holding Paper Currency was now anathema. There would now be a mad desire to lose money. People would be paid to whisk money off their hands, instead of whisking it off others’ hands, as used to happen earlier.

Soon perpetrators realised that heading to an Ivy League was a great way of launching their lose-money careers. The degrees cost a bomb, and it was seen that Ivy League experience in blowing money served as a tremendous adornment in one’s CV.

This led to a happy situation, where smart fellows (with Ivy League backings) now spent their waking hours conjuring up ways to lose money. Investors brandished their capacity for generating the highest rates of return earlier, in order to garner investors. Now, everyone proudly brandished their capacity to lose other people’s money. It was observed that the ones with a long and established track record of losing money, often in scintillatingly novel ways, seemed to enjoy great demand.

Banks, which earlier were vilified by the larger public, suddenly assumed a God-like persona. Many thought no one would know how to lose money better than those with a centuries-old history of practising the fine art. Banks did not disappoint. Complex derivative transactions, which earlier were onstensibly aimed at reducing risk of loss, were now in vogue; with the sole purpose of finding complex ways of increasing risk of loss.

Governments across the world, well, were already in the game before most others.

This culture spilled over to the social sphere, threatening the very fabric of society by questioning age-old customs. The historical roles of the pilferer and the ‘pilfered’ swapped. Thieves, existing and aspirants, took umbrage to this unwanted development. They remonstrated that their identities were being snatched away forcibly and blamed lose-money Capitalism for this conspiracy.

The culture of education underwent a change too. Oodles of moolah was now spent in providing young humans with an that had little value. The institutions soon had a problem, they were generating massive amounts of money without enough outlets for losing it. So they turned to paying parents to send their kids to school. This circle of bliss, paradoxically, left everyone unhappy. Employment went through the roof, as everyone scrambled to lose money. Governments found that they had little to do, leaving them grumpy. There was no money in being a politician.

Eating also witnessed some queer developments. Farmers now fell over one another to pay consumers to buy food. Gradually, most resorted to not producing any food at all. Food was a source of headache for these producers, so they weeded out the cause. Humankind did not take to this kindly.

Riots began, queerly due to the negative prices for essential food commodities, and then thanks to food scarcity. Food scarcity, however, led to a death spiral of ever lower prices now. Things were not turning out well.

Riots soon morphed into skirmishes, which then morphed into regional squibbles, which then morphed into nationwide agitation, which then morphed into international conflict. Ending in obliteration.

Complexius’ exposition left Simple with a heavy head.

He had never thought losing money would lead to such unhappiness and collective disaster.


15 thoughts on “A Negative (Interest Rate) World: When The World Plunged Into Its Mirror Image…

  1. Haha! Was thinking same as Ankur in above statement. My favorite line: “but humans… continued to invest blissfully in their rationality.”


  2. The term financial industry is a non sequitur of glaring absurdity.

    Real money is not created for the purpose of making profit. The essential purpose of profit is to ensure the dominance of those who take it over those from whom it is taken.

    Money, in its purest form, has absolutely no intrinsic value and this is as it should be. Money is a simple contract and its only validity is the agreement of society to accept it as a medium of exchange with a permanently set and immutable value accepted by all.

    Money is not a commodity, nor does money represent any commodity. The use of any commodity, either directly or through representative tokens, is barter!

    β€œBoth Aristotle and Plato noted the paramount monetary principle, that the nature of money is a fiat of the law, an invention or creation of mankind and society, rather than a commodity.”
    The Lost Science of Money

    The entire concept of interest as a means of extracting unearned income from falsely commodified currency is utterly immoral, fraudulent and was recognised as usury millennia ago. Through historical revisionism, the parasitic money masters have changed the accepted definition of usury, enabling them to insinuate themselves into the workings of monetary systems thereby ultimately gaining private control of economies and consequently governments the world over.


    I will soon be publishing a rather lengthy missive relevant to this very subject. Rather than compose a thousand word comment here, I will invite all to read it at their leisure.

    1. Money, indeed, is quite a worthless commodity, for purely economic – as opposed to spiritual – reasons.

      It is in the nature of a Paper Currency system. One unit of money loses value with the passage of time (apart from rare instances). Inflation creates an illusion of prosperity and the only way we feel prosperous is by accumulating increasing volumes of paper. As the value of one unit of paper falls, thanks to inflation, it is only rising volume that sustains ‘wealth creation’.

      (You might be interested in reading an old post on Paper Currency: https://haphazardlinkages.wordpress.com/2011/01/15/in-maya-i-trust/ where I talked about how fiat currency has no intrinsic value and it is faith that keeps the system going).

      A long run look at the history of world’s economic growth would show something interesting happening post 1970. Economic growth rallied, across the globe. This coincided with the breakdown of the Bretton Woods system, which ushered in the Paper Currency era.

      It is hard not to be sanguine about paper money. To an alien watching us, the Earth might seem like a reality show of Monopoly!

      I look forward to your post.

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