The Eurozone “Soviet”?

Negative interest rates have a pernicious effect on human beings. They corrode the structures of society, culture and people’s mindsets, triggering widespread resignation and even nihilism.

Imagine an inverted universe – where the arrow of time is in reverse. As a result, the present is richer than the future. The defining property of this universe is negative interest rates.

In such a universe, time and value flow backwards and downwards, meaning from more to less.

Capital is no longer allocated to the highest return projects or the projects that create the most value. In such an environment, the financial system’s basic operating principle becomes relative value destruction.

As we are entering the netherworld, we need to recognize that this trap is not a flight of fancy. We don’t need to unduly stretch our minds. Such a universe has existed before. We have two recent historical examples that point to the endgame awaiting us.

Historically, the first of them is the case of the Soviet Union, which we will consider in this article. There also is the case of Japan, with will we will deal in a subsequent article.

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