16.7 Negative interest rates as condition of democracy
Negative interest rates, fully digitalized economy have deeper than economic meaning.
These tools are indeed a guarantee that democracy will be preserved even after long time of capital accumulation and that social system will not mutate into plutocracy – rule of rich
Imagine a start of newly democratically elected government, which has certain agenda based on which they gained majority of votes and wants to put it into reality. ( say, reduction of working time as a tool to lower the unemployment)
This program would help millions of workers but its realization is not welcomed by the rich part of the society who, for ideological reasons, scorn with workers and is not willing to support such government.
And so they decline to buy government bonds to cover annual state deficit which is from macro economical point of view absolutely necessary to maintain healthy economy ( see previous chapters). Banks too, owned by the same people, will refuse to buy government bonds as well.
The consequences are devastating: the cost of financing the state debt skyrockets and government is unable to finance it. They have to implement cost saving measures which will send economy to a major recession and create millions of unemployed.
The government falls and new government is formed which is following the lead of the rich.
And they now begin to buy government bonds even for NEGATIVE interest, only to prove that „this is the way to do it“ and this is the only way possible.
That of course means that the citizens have no chance to change anything in their state. It is pointless to start political parties, to be active in devising ideal policies which can improve the lives of all people. If your policy will be against the will of local / international oligarchy, your government will inevitably collapse as without annual deficit EVERY economy will collapse.
And that already means that democracy ceased to exist.
Which is quite a significant problem about which the people should know.
Has anybody told you that you no longer live in democracy but in Plutocracy ( rule of the rich only) ?
It wasn´t in TV for sure. Not in your favorite papers.But it did happen, the democracy has died.
To revive it again we need to implement fully digital currency, which will enable negative retail interest rates which will enable to recycle unmoving capital.
Then legally elected governments will not have to beg on their knees so that somebody would buy their annual state debt. If the rich will buy government bonds, OK. If not, the government will have the tools to tax them a capital so gained will be put back to the economy through various government programs ( even without need to increase total debt).
Only then every government will be able to realize its policies.
And this is true democracy.
And to achieve it we have to have fully digital currency.