July 05, 2013

So now Mario Draghi and Mark Carney want the huge tax on savings to be kept for a longer period

Sir, Michael Steen and Chris Giles, referring to declarations by Mario Draghi and Mark Carney, report that “Central Banks send clear signal on low interest rates” July 5.

So now these two gentlemen have publicly announced they think on behalf of the European Central Bank and the Bank of England respectively that the huge de-facto tax which low interest rates impose on savings signify, should be extended.

If only this tax could help, but, having with capital requirements based on perceived risk corked up the channels for bank credit to “The Risky”, like to small and medium businesses and entrepreneurs, it will not serve any useful purpose.

And did not Mario Draghi recently say “it is important to acknowledge that there are limits to what monetary policy can achieve”?

And now all us who worry that, as a consequence, the officially perceived safe-havens, “The Infallible”, will as a result become dangerously overpopulated, must take refuge in assets of almost any kind.

If the cost of a shirt goes up that is inflation and that is bad, while, if the price of assets, like a house or the P/E ratio of a stock, goes up, that is not inflation and that is held to be good. Sounds strange, eh?