Sweden betrays its standing as most civilized country in the world

It is with a heavy heart that I convey what I have just learned from Mike Shedlock’s blog and that totally shatters the image I held of Sweden and its people.

You can read Mike Shedlock’s blog entry of today. Whilst you are at it, you should read all three entries because they are all relevant to the aims of this blog. Here is the link to the post regarding Sweden

You can find Shedlock’s other entries for today in the left hand column on his blog.

I had this by now unjustified respect for Sweden, as a country I perceived as the most civil in the Western world. I had this perception of a people dedicated to hard work tempered by the utmost respect for others, their ideas and their way of being. I had this vision of a society dedicated to the well being of its members to the point of being considered socialist in terms of the way the government collects and distributes tax revenue but that has little to do with the notoriously self destructive socialism perpetrated by Russia or Cuba. I admire the fact that politicians in Sweden freely walk amongst the people thus living and experiencing the same things that members of their society live and experience everyday; these are the things that make for politicians that are in touch with reality. A reality (for Swedes) brought about by a country that though rich in some natural resources has not been blessed with the wealth of Mediterranean countries whom, I might add, seem hell bent on squandering it by comparison. No; the Swedes know what they have and have always endeavored to make the most of it. Swedes are by and large a happy, friendly, outgoing, hard working people capable of taking themselves lightly and more free from social traditions and prejudices than any other people on earth. And though I hear official statistics rank Sweden as the country with some of the highest suicide rates, I cannot say I see it in those Swedes that, fleetingly as they may do, come into my life.

Today, the Swedish central bank, in one tremendously shocking move, announces they are cutting the deposit rate to negative 0.25%.

What the above means is that Swedish people from this point forward are going to be charged interest on their savings account.

That means that anyone that may have any savings will be punished for not spending that money.

That means that all those members of society that have led a frugal life, salting away a little something for a rainy day, making preparations for their old age perhaps, so as not to be fully dependent on the state and drawing needlessly on state resources; all the people that have conducted themselves with honor, prudence and honesty and have decided to provide though only partially for themselves;  all those people that did not give in to the consumerists’ siren song and whom in turn made the greatest contribution to the fight against climate change…. all these people, from today, will be punished and will be asked to pay a fine. A fine, I might add, that comes on top of the income tax I am sure Sweden levies on interest on deposits.

If you follow my blog, you know that something like this was in the pipeline. I knew it. I knew it many years ago. I also know this is only the beginning of what is going to be a new dark age for the Western world… a dark age that is taking us inexorably into a world war. Inexorably not because it is inevitable; inexorably because the political process is such that our “leaders” are bound by political ideals and strategies that in a democratic environment can only lead to the bankruptcy of the state. The problem here is not so much the bankruptcy of the state. The problem is that the West, the self proclaimed holder of the moral high ground and defender of the modern economics faith; the West owners of the greatest and most advanced armies; the West leader in scientific and technological innovation;  could not, without enduring significant quantities of egg on their face, admit bankruptcy.

If any Western government could come clean and declare the true economic state of their country, we’d already be half way out of this depression. It would be messy and hard but we’d be half way out of it by now.

The truth, of course, is that no “leader” anywhere on God’s green earth can ever admit to something like that.

The following is a graphic representation of the trend of interest rates in the USA

FRED Graph

You will notice that the graph goes from the top left to the bottom right at an angle of approximately 45 degrees.

In thirty years of declining interest rates, we’ve only ever been able to foster GDP expansion of roughly 5% year on year; this after exploding debt burdens and a good measure of hedonic adjustment I might add.

In view of the above graph and given a recession that is variously described as the worse since WWII, or the worse since the Depression or the worse since records in a particular sector began, has it not occurred to anyone in government that more of the same at this point may just be counterproductive? We have had 30 years of steadily declining interest rates that have brought about negative rates of savings and record rates of debt.  Why would dropping rates to below zero make things better? By what intellectual feat can anybody rationalize that the way out of depression is to spend all the money you have and double down using money you don’t have? What happens when we are all deep in debt and the recession is not over?

For what it’s worth, I think Sweden has been backed into a corner and has been told to float a trial balloon. Essentially, the governments of the USA, UK and EU want to see what the people might do in the event they should decide to go with this asinine idea. I say this because some politicians and some folks that call themselves economists have discussed this very option in semi public fora in the recent past. However, I would have thought that passing a similar law in the USA or England or Europe would just about ignite the social tinder box. Of course, this is only speculation on my part. I don’t really know what the truth is. I just find it so incredibly incongruous for Sweden to do something like that that I have to believe they have been forced to do it by the rest of the Western world.

Got bullion?

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3 Responses to “Sweden betrays its standing as most civilized country in the world”

  1. I told you so… (negative interest rates) « Guido's temple of the absurd Says:

    […] If this goes through, I may have been right in speculating some two years ago that Sweden was floating a trial balloon. […]

  2. Preecerdb Says:

    hello, i am eking, love you!

  3. And for the most recent “WTF!” moment… « Guido's temple of the absurd Says:

    […] civilized country in the world”. This is due to a post I put online some two years ago chiding Sweden for betraying its status as most civilized country in the world when it decided to offer negative interest rates on saving […]

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