Category Archives: Economics

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.”

“Zero?”

“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?”

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Remember When You Had Never Heard of Austerity Measures?

Last Sunday night, or Monday morning if you use the metric system, it was announced that François Hollande had defeated Nicolas Sarkozy in the runoff election for President of France.  The voters, by a crushing 51.62 majority, rejected the austerity measures being pushed by Mr. Sarkozy, and embraced the 15-minute work week being promised by Mr. Hollande.

I used to hear the word “austere” used only in connection with the 17th Century Puritans, who observed strict fiscal discipline by tightening the buckles on their shoes and hats.  But after “austerity” was anointed the Merriam-Webster Word of the Year for 2010, I started paying attention to this newer usage, and what it meant for my Pez habit.

The term “austerity” when used in connection with economics means, in a very general, non-nation-specific, Wikipedia kind of way, “a policy of deficit-cutting, lower spending, and a reduction in the amount of benefits and public services provided.”  The more I’ve heard this word on the radio as I search for the latest Katy Perry hit, I’ve started to introduce some austerity measures into my own life as a way of reducing my debt obligations to foreign markets.

The first area in which I tried to impose some fiscal conservatism was in garbage collection.  In my home, we typically throw garbage out.  But this requires paying for someone to come and pick our garbage every week.  So to save on this bloated budget item, instead of throwing out our trash, I started taking it to work and using it as weight to keep books open flat on my desk.  On occasion the weight still contains some food, yielding double austerity points for saving me from having to buy lunch that day.

Another area that was really adding to our households expenses was eating out at restaurants.  So to save money I decided to start cooking.  But first I had to learn how.

“Honey,” I asked my wife, “where do we keep all the ingredients and recipes?”

After an hour of searching through the kitchen, and getting bogged down in the drawer that holds all the pens, tape measures, and keys that don’t go to any locks, I was ready to make chateaubriand, a dish that has fallen out of favor in America but which I’ve always liked pronouncing.

Searing the meat was easy enough; in my youth I was a Boy Scout for several weeks and so was familiar with fire.  But I really got hung up on the shallot.  Like, what was a shallot?  I searched on the Internet, and found that a shallot is “a botanical variety of the species Allium cepa.”  Still puzzled, I looked at a picture of shallots.  “Ah, they look like onions!” I said, and located an onion that had been rolling around in the vegetable drawer of our refrigerator, a drawer I hadn’t opened since the Prussians sealed off the city and attempted to starve us.  After serving the chateaubriand, however, I think my wife would have preferred starving.

My last austerity measure was designed to save money on gasoline.  I started hitchhiking to work once a week.  The thumbing-signal I mastered pretty quickly, but I could never get the red polka dot cloth tied properly to the end of the stick.  There was a seminar being offered at the local community college on “Introduction to Running Away From Home,” but, thanks to the austerity measures, my education budget had been slashed, and I had to hold my polka dot cloth with my lunch and work in my hand.

No one wants to pick up a hitchhiker who can’t master the polka dot cloth on the end of a stick.  I learned this the hard way.  But maybe that’s what austerity measures are all about—learning how to learn for free.

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