The Coke Snorting Chancellor.

Normally if you lend me money I pay you interest, right? Anything other would be insanity. Currently interest rates are less than 1% and the usual recourse of lowering them to bolster the economy has nowhere to go. I mean how can it go negative and you pay me for using your cash? It seems strange for a commodity to so change its dynamics as it passes through zero. I’m finding it hard to imagine what might provoke breaking this economic taboo or its consequences, but as I’m not coke-snorting Osborne I’ll give it a go. So you have loads of money and I have less fortunate circumstances. But you have had a right kicking from falling markets, (as we currently have) and even government bonds etc are giving negative returns. World growth is flat, (as we currently have) and there’s no home for your cash that won’t decrease its value. What to do? Pundits tell you 95% of the population simply can’t afford to fund (by buying products and services) future growth because the top 5% have amassed so much wealth they can’t/won’t spend it because they have all the toilet rolls they need and definitely not going to give it away. As the situation worsens you realise you’re losing say 3% and there seems no future in just keeping it in the bank. (which is close to collapse anyway) What to do? Something must be done to re-capitalise the world economy. You hit on an amazing idea. If enough people lend money at –1% all the hard-up people will go on a spending spree and cause a great surge in demand. Your guaranteed loss of 1% will quite quickly increase economic activity which will swing your invested residue into a positive return. Invest say 20% of your wealth in this loss making scheme will lose you £0.2 whereas 5% on the remaining 80% will net you £4. Even 2% would give you £1.6, a net gain of £1.40. Maybe a proviso that the recipient must repay the loan in five years, so ending the -1% interest payable. Essentially this is an investment in people’s purchasing power whereas coke-snorting Osborne’s austerity would have us all believe impoverishing the already poor makes economic sense. It just goes to show that following ridiculous ideas is worth considering, and why Chancellors shouldn’t use Class A drugs.