12,000 billion euros were spent in 2020 by public authorities around the world to support the private sector. Faced with these losses of wealth, negative interest rates would be the solution to avoid further widening the deficits and cushion this unprecedented crisis.
Our world is in the midst of deconstruction. Its wealth is being decimated at a frightening rate. Politicians, central bankers and, more generally, all those who have the safeguarding of our way of life and social peace at heart will have to find how to make creditors pay, the only way to safeguard the essential.
Herculean efforts are being made by the authorities to openly and directly support the private sector. Globally, 12 trillion dollars have been spent so far - in 2020 alone - to avoid global liquefaction. This figure represents 12% of the universal GDP knowing that our leaders are well aware of the absolute and extreme urgency of the situation. In fact, in comparison, the stimulus put in place in 2010 by the G20 following the financial crisis, after endless hesitation, and which was 2% of world GDP, seems very stunted ...
Negative interest rates as a solution
This is only the beginning, however, because it is crucial to limit the loss of wealth, which will be all the less recoverable when the public sector is in considerable debt. There is, however, a solution able to avoid widening our deficits and which would make it possible to curb - or at the very least - dampen this unprecedented crisis made of a nauseating mixture of recession, collapse of worthy GDP periods of war, massive unemployment, partial or even total confinements, curfews ...
This buoy is only a banal instrument of monetary policy in the hands of central banks and consists in making the rent of money negative. To this end, let me tell you about a time that those under 20 cannot know: a time - not so long ago - when interest rate cuts (when they were still at 4 or 5% for example) gave new life to economic activity. The mechanism is in all respects the same when it comes to breaking the floor of the 0 rate which, if it is skilfully carried out, is likely to save the State - and therefore us - a lot of money.
A European rate of -3% is the ultimate weapon for relaunching growth, resuscitating aggregate demand and combating unemployment. A negative key interest rate would also avoid “hitting” creditors and limiting debt restructuring. Fiscal policy and other fiscal measures are certainly essential in the current context. However, only monetary policy - the responsibility of central banks - interacts with credit, which is the very essence of our modern economies. Only negative interest rates - even largely negative - are today likely to save what can still be saved.