Remember When Interest Rates Were Positive?

“There’s got to be something we can do to get this economy rolling.”

“There isn’t, sir.  We’ve taken interest rates as low as they can go.”

“Don’t use ‘they’ to refer to interest rates.  ‘They’ should be used only in reference to people.  Use ‘these’ or ‘those’ or something.  Rework the sentence.”

“Yes, sir.  We’ve taken interest rates as low as these…um, those…the interest rates can go.”

“That can’t be true.  How low are the rates now?”

“Zero percent.”

“Zero!  So isn’t that igniting economic growth?”

“It is reported that more and more people are choosing to move in with their parents rather than start Fortune 500 companies.”

“But it’s cheap to get a loan!  Zero percent!  Why aren’t people going into more debt?”

“I don’t know, sir.  A lack of parking near the bank may be a problem.”

“Well, if zero percent won’t do, we’ll have to go below zero.”

“Below zero, sir?  You don’t mean—”

“Oh yes, I most certainly do.  Negative interest rates.”

“Negative interest rates?  But that would mean that people would have to pay for the right to deposit their money.  And people who borrowed money would be paid for the right to borrow it.”

“Exactly.  Now let’s see them try to not go into debt and spend.”

The newspapers dubbed it “Monetary Fallacy,” but after a few months it was hard to argue with the results.  Saving was at all time low, and spending at an all time high——and that was saying a lot.  Sales of flat-screen televisions over 60 inches quadrupled.  The number of new employees that were needed to carry those televisions from the register to the customers’ cars reduced the national unemployment rate by three whole percentage points.

And technology was not the only sector that was booming.  People took out loans to make additions on their houses.  Even people who already had very nice houses were finding deficiencies that they had not noticed before.  Suddenly everyone had to have a charging room, filled with outlets so that people could charge their phones and laptops and eyebrow trimmers.

“Oh, you don’t have a charging room?” went a popular conversation.  “Well then, looks like we’re hosting Thanksgiving this year.”

Because borrowers were paid to borrow money, some people quit their jobs so that they could borrow full time.  And thus even more positions were freed up.  Young people who had taken out thousands in educational loans to earn post-graduate degrees in esoteric areas like Tupperware Organizing could finally pursue their chosen field.

“Sir, you won’t believe it!  The unemployment is the lowest it has ever been!”

“Excellent.  And they told me I couldn’t do long division.  Tell me, what is it now?”

“Zero percent.”


“Why yes.  Why are you making that face, sir?  Isn’t zero percent what you wanted?”

“Of course not!  If unemployment is zero percent, then what do they need policy wonks like us for?  How will I pay for my new charging room?”

“But sir, we can’t let the unemployment rate go up in an election year.”

“Well then, if we can’t let the unemployment rate go up, we’ll have to take it even lower.”

“Sir, you don’t mean—”

“Oh yes, I most certainly do.  Negative unemployment.”

“Negative unemployment?  But sir, how does that work?”

“Haven’t I taught you anything?”



Filed under Economics

6 responses to “Remember When Interest Rates Were Positive?

  1. Great read! Needed a chuckle. 🙂

  2. I’m thinking you should run for president!

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