A fundamental assault on freedom
Of all basic freedoms, one of the most fundamental of all is the freedom of the individual to organise his or her relationship with time. The way we order our affairs with respect to the all too brief time allocated to us on this earth is a profound right that we all should be allowed to exercise unhindered. In short, everyone should be free to choose whether to be an ant or a grasshopper.
When it comes to economic matters, the tool we use to organise our time rationally is the interest rate. If interest rates are high, if I am young, or if I have my children’s future to provide for, I may decide to save more and to consume less. Conversely, if interest rates are low, if I have no children, or if I have limited life expectancy, I may choose instead to be a grasshopper.
But if interest rates are at zero or negative, then I am forcibly deprived of this freedom of choice. I am compelled to become a grasshopper, whether I want to be one or not. Zero or negative interest rates collapse the future into the present, and by doing so annihilate this fundamental freedom.
In the first incarnation of socialism, socialist governments considered it quite “normal” to restrict the freedom of their citizens in the geographical sphere. So-called socialist countries, whether of the National Socialist branch or of the Marxist church, always and everywhere prevented their own citizens from leaving the countries of their birth. To do so they built walls, not to keep foreigners out, but to keep their own people in—which is not the same thing at all. Slaves their people were born, and slaves they had to stay. Nothing could be further from the ideals expressed by John Locke more than 300 years ago or by the founding fathers of the United States almost a century later.
Having failed miserably two decades ago, the socialists, arming themselves with another form of scientific socialism called “Keynesianism”, have now decided that you and I are utterly incapable of organising our own relationships with the time that is granted to us.
By saying that the economic system suffers from an excess of savings—one of the greatest idiocies ever advanced by economists, on a par with the iron law of salaries or everdecreasing profit margins—governments are granting themselves the right to intervene in our time preferences.
Needless to say, the technocrats responsible for what will surely turn out to be one of the greatest economic disasters of our times have absolutely no idea, nor have they done any studies to demonstrate, whether this high-handed intervention will ever lead to favorable results. They are simply convinced that you and I are incompetent, and that they know better.
In reality, anyone with a solid working knowledge of realworld economics could have shown years ago that their attempts would fail. I can say this with confidence because five years ago I published a research report called “The High Cost Of Free Money”, in which I argued that abnormally low interest rates would lead to a collapse in capital spending, a collapse in productivity, a decline in the structural growth rate of the economy, and a massive increase in the Gini coefficient of income inequality. The all too probable result of this intervention would be an economic disaster, and the emergence of populist politics and demagogues everywhere.
Technically, these policies have indeed proved a disaster, but there is a more profound question that nobody addresses. The ability to organise my time as I choose is the very essence of freedom. This freedom has now been taken away from me by a coterie of technocrats, who are not only unelected, unaccountable and incompetent (the three usually go together), but to whom this power has never been granted by any citizen.
What we are witnessing is nothing less than the end of our right to organise our lives as we see fit in relation to time, and this must mean the end of democracy.
Of course, I can still take a plane; no walls have been built to prevent me from leaving my own country. But freedom has two components: the freedom to move geographically, and the freedom to do as I please with my time. A silent coup d’etat has deprived me important—of the two.
Perhaps somebody should ask the Supreme Court in the US whether negative real interest rates are compatible with the US Constitution. I would venture that philosophically they are not.