The Negative Interest Rate?! Certainly feel not positive!

Some central banks in this world have set their interest rate with the negative value. Frankly speaking, as we save our money, we receive the minus interest paid so it means we are penalised for our saving. Then, we pay the minus interest rate for our borrowing so we gain bonus from borrowing money. Then, why not should we keep diligently save up our income and start spending a load of money? But, wait before taking out a loan for your dreaming extravagant life! This is certainly negative so that you should not feel positive about it!

First of all, banks will not rend you a lot of money. We must not forget that the interest rate fluctuates from time to time so that the rate may suddenly goes back to the positive rate. Therefore, unless this borrowing person or institute seems to be able to pay all the borrowed money back at the time when the rate becomes positive again, banks will not rend you money. In the real world, when majority of people are confident for the future enough to spend their load of money at once, central banks will not launch their negative interest rate.


Banks will not rend money for the simplest things that people will spend unlimited amount of money because this kind of things is often addictive behaviours easily related to violence and vice which will cause a severe catastrophe of civilisation. Therefore, the aggregate of cost of rending money substantially will exceed the aggregate gain from rending under the negative interest rate.

We cannot enjoy eating delicious foods, sleeping off, and having sex several times at once enough to avoid doing these things for other days or even years. We need to have adequate amount of foods, sleep, and sex day by day. This is why we save money which is an intermediary of exchange. We use money to earn and keep in exchange of our efforts and/or fortune in our life. Money is able to be saved for our daily needs and wants, and enables ourselves to prepare for eating, sleep, and sex whenever we need or want.


The central interest rate is set in order to offset the price inflation rate which is the relative devaluation of money. In order to maintain the money as the intermediary of exchange, the money saved should not be either appreciated and depreciated across times. So, the central interest rate is adjusted to the inflation rate, and the expected inflation rate is frequently referred.

The price inflation is high when the productivity level becomes higher relatively to the money value over the time. The high inflation can be either good or bad. Any way, the higher inflation implies that the market circulation is fast so it is active. So, the interest rate is set high in order to maintain the money as the intermediary of currency for people to secure their daily life and their pleasure.

By contrast, there is a negative price inflation which is the phenomenon that the productivity level is lowered so that the productivity rate becomes relatively lower than the appreciation rate of money. This implies that the market circulation is stagnated and the entire size of the market is shrinking. This usually happens in the developed countries where their productivity rate used to be high but declines recently.

The considerably low, zero, or even negative interest rate can be launched in order to offset the further decline of the productivity level. They may try to prop up investing money to the market to re-circulate again to increase the productivity. Nevertheless, when the confidence of improving the productivity level is low and it literally seams to be just a waste of money for doing so, these economic agents tend to be reluctant to invest.


In terms of the investment motive, the performance of the financial market must be negative. People usually participate in the financial market in order to increase their money in order to secure their life in the future and maximise their utility (maximising their pleasures meanwhile minimising pains). They usually split their saved income and even borrow money to invest in the financial market when the expected investment return seems to be high. By contrast, the expected return must be negative recently so they must think that they should simply save their money by investing less or none in spite of the considerably low or even negative interest rate of their money saving account.

This situation also is also reflected in the national bond market. The surprising aspect is that the interest rate of some national bonds is also negative although this is still less negative than the central interest rate for the money market. The interest rate of national bonds is always adjusted to the interest rate of money. This is because when the interest rate of a national bond is lower than or indifferent from the interest rate for money, rational individuals do not hold national bonds because they can just save their money in their basic saving account. When the interest rate of a national bond is significantly higher, then more rational people simply switch their money from their basic saving account to their national bond investment account so that the less money is injected to circulate the market.


The developing and the newly emerging countries often offer a high interest rate for purchasing their national bonds in order to attract investors for these national bonds. The high rate tends to be set in order to offset the risk of the significantly fluctuating unstable economic situation of these countries. As same as the situation that private banks and insurance companies set a high interest rate for risky borrowers and insured customers, the high interest rate of these national bonds tends to be required as an incentive for these investors.

Almost the opposite case scenario is occurring in some of the current developed countries. Their economic situation is stagnated but still stable and there does not seem to be any further dramatic decline. Therefore, these countries still do not substantially decrease these investors whom these countries owe even with a low, zero, or even negative interest rate. Although this does not mean that these countries keep gaining a financial gain, these investors are still happy to hold these national bonds because their interest rate is still less negative than the basic money saving account and safer and relatively more profitable than holding other shares.


In the financial market, there are two different gains from investing in shares: The income gains and the capital gains. The income gains are the interest rate payment and dividend as rewards for shareholders. The capital gain is the net profit from trading these shares e.g. buying with a cheaper price in advance and selling with a high price later. By means of money, the fiat money we use in our daily life, the central interest rate of borrowing and saving money is the income gain meanwhile the capital gain is the value of the currency.

The negative interest rate i.e. the negative income gain may indicate that the capital gain i.e. the value of saving money is still way high in the current market situation. The relative value of money to the other assets such as good&service in the real market and share-investment in the capital market must be high in this situation. So, people are quite rational to save their income even under the negative interest rate because the relative appreciation rate of the value of their money saved is faster than the negative interest.

Case against State-Capitalism

We have believed that the road to serfdom was evaded since the end of the cold war with a victory of capitalism over the socialist-empire, the excess form of socialism which was considered as the serfdom. Nevertheless, we are still in danger of being unintentionally guided to a serfdom. The modern industrial world has increased the material productivity and the political stability under the common interest in pursuing a material prosperity. At the same time, this has also produced the cost for individuals to live in an intensively cohesive structure.


Capitalism mentioned in this short essay refers to the State-Capitalism whose economic and political system is based on a stratified corporate structures backed up by a nation-state government. This capitalism requires the law enforcement (The judicatory body of nation-state) and the centralised economic planning by central-banking and governmental fiscal policy (The legislative body of nation-state). Individuals and their private corporations are free to compete as long as they follow the unified rigid rules imposed by a single autocratic body called nation-state.

These individuals and their corporations are actually not free to act and compete because some of them are privileged more than the others. The nation state's government and judicature set their roles suitable for their peer groups which are loyal to the authority or their nation-state. So, their freedom of action is still restricted by the roles and their competition is based on the authoritarian interests of a nation-state's autocracy and its fellow peer corporate elites.

This state-capitalist political structure is a resemblance to the static monarchist political structure explained in Fragment on Government. Even though a monarchy is merely a constitutional, the status-quo having been maintained so long time has already established the unbreakable hierarchy of power and wealth. These peers of monarchy have already monopolised their power and wealth as much as they are able to prevent their potential competitors away from gaining more power than the already existing status-quo even under a free market competition.

They are protected by the old-fashioned law and legislation which indirectly enable monarchy and its peers to keep holding their power and control over the entire nation and its citizens. Bentham then claimed for replacing the law and the legislation unfairly privileging these peers with the new alternatives in order to liberate individuals from this control-ship.


Many socialists refer to capitalism as an antithesis of socialism. The word capitalism was invented by socialists in order to refer to the policy based on the free market mechanism and private property ownership which socialists oppose to. Capitalism has started to be mentioned as one political ideology since many anti-socialist individuals supporting a freer market system started using this terminology capitalism as their believing antithesis of socialism. But, this seems to be doubtful because there are many characteristics in common between these two political ideologies. Both are the modernist political ideologies requiring a systematic autocratic nation-state and the zealous moral universalism putting an excess emphasis on altruism and cohesion.

Both capitalism and socialism frequently put emphasis on excess-conformity and staunchly regulate individuals and their freedom of action, life, and thought by condemning egoism as vice. Socialism forcibly integrates individuals into its autocratic cohesion meanwhile capitalism simply spontaneously excludes individuals, who are disloyal and/or useless for their interests, from the means of acquiring material well-being and status honour. Both are the homogenous political ideologies discriminating and ostracising who are too unique and eccentric.

Whenever individuals are employed by a corporation to spend their time and efforts for it, they must have realised that many of corporations do not base their business management on the rational market mechanism. The management of these corporations is influenced by the irrational preferences of both the high class members, the minority but powerful executive committees, and the peer-groups of the majority employees. The executives often tend to put priority on their personal favour and their biased view on unique individuals over individuals' competence and merit. The majority workers form their peer group to purge the other individuals hardly integrated into their peer group due to their jealousy and discrimination.

Because of this employment scheme biased by these irrational causes, the market equilibrium of demand and supply of the human-capital is hardly accomplish-able, and the mobility of human capital is far more rigid than the market structure explained by the free market principle, the classical economic theory of capitalism. There is then the political influence on the corporate structure. The modern corporate structure is unnecessarily big and complexly stratified as same as the bureaucracy of a nation state, and this does not look like how the private sector structural model is supposed to be by the free market principle.

The existence and the prosperity of these corporations are secured by the law enforcement and regulations designed and imposed by the single nation-state's authority, and these corporations aid the nation state authority by doing its favour. Unlike a pure form of socialism, how both various private corporations are incorporated into one unified nation-state bureaucracy. But, this capitalist structure is identical to the state-socialist counterpart seen in the USSR. Lenin had actually embraced the growth of state capitalism in The State and Revolution as the modern capitalism becomes more bureaucratic and incorporate into the nation-state's bureaucracy.


The solution to overcome from the rigidly structured capitalism is certainly not a political revolution because a political revolution simply replaces one stratified politics with another stratified counterpart such as socialism. Moreover, remaining the status-quo just perpetuates the authoritarianism of politics repressing individuals' liberty. As long as individuals rely on any form of stratified political structure, these individuals are manipulated to live like cattle or cogwheels propping up the oppressors of individuals' liberty.

The rebellious mind of individuals is the key of the solution. No violence is required for this rebellion: Individuals just need to keep their strong self-esteem and being honest about their pure ego and natural desires. For the time being, the current excessively stratified modern world politics is hardly relinquished at once. So, the gradual step of liberating individuals is the feasible pathway. We, individuals, should use them instead of being used as they can still bargain with government and corporations for our own interest. Individuals will simply need to be enlightened to maintain their self-esteem by preventing themselves from being used by either government or corporations.

ABL Political Compass (Legislative and Judicial axes) to the Unknown-Ideal

When people talk about anarchism (Zero control) and the low control level, many of them tend to be confused with a chaotic or primitive state. A chaotic and/or primitive state often implies the low or no control. But, anarchism does not always imply either chaotic or primitive. There are several forms of control-ship as well as there are several forms of no/low control-ship.

However, there is a significant difference of an economic political structure between controlled and less/non-controlled. The characteristics of the economic political control is created within a relatively short time period meanwhile the characteristic of non/less controlled economic political structure is created through various influences of cultural and technological new inspirations unless it is a collapse of civilisation going back to chaos/primitive. The control is artificial meanwhile the counterpart is spontaneous. The spontaneity cannot be artificially created all the sudden: Individuals and their living civilisation need to experience various cultural and technological influences enough to obtain the wisdom to live without an artificial economic political control.

The controlled structure can be sustained as long as a few powerful individuals in charge of the control are wise enough. By contrast, the structure with no/less control requires majority of individuals to be enlightened and already wise enough to be self-autonomous. The root motivation of individuals enabling to establish no/less controlled state can be religion and other forms of strong ideologies. However, this project also adds another form of no/less controlled state which is free from not only the physical (economic) control but also the moral (political) control, and this is the unknown ideal which I, the author of this blog Art&Blue-Liberalism (ABL), is aspiring to discover.



The following charts explains how the new political compass based on the political map of various already-existing forms of civilisation and the unknown ideal together:



There are two axes, the legislative side of politics mainly in charge of regulating economic policies and the judicial side of politics mainly in charge of regulating moral policies.

There is only one the most economically and morally controlled state. It assumes that the objectives of all rational individuals in this world is to achieve in material as well as spiritual prosperity. So, regardless of ideology basing the control-ship, the main-objective is prosperity and the degree of control is adjusted to achieving it.

The spectrum of the old political compass is based on the straight forward high-low control. By contrast, both the ends of this new compass are low control and the centrist indicates the highest control.

* Legislative: Economics side *

This project regards that the pure command economy, such as Marx-Leninism, is equivalent to the primitive economy, and the high economic control implies the positive planning of economic policy such Keynesian economy. So, it does not measure by means of the size of public sector: it measures by means of the active role of government and big corporations directly intervening into the business cycle and the overall economic climate.

Furthermore, it indicates the clear difference between two low control levels: The one where majority of individuals are less aware of market mechanism and the other is majority of individuals are aware of market mechanism without an instruction provided by rational authorities.


* Judicial: Moral side *


An intense autocratic government always requires its citizens' worship to it as though it were only one God. Even an authoritarian government with theological ideology, they often use religion and morality as their political instrument. The pure religious community represses the excess control of government, and individuals follow moral disciplines without any paternalistic intervention by a political autocracy.

The third characteristic of this spectrum is the freedom from both government or any moral entrepreneurs' moral intervention. Many Continental European states are close to this category. The extreme side of it is the anarchism existing in political theories.




The teaching of Islam contains a full knowledge about the market mechanism, and citizens of various Islamic nations achieve in a reasonable level of economy. Their government often intervene into economy to stabilise their business cycles, and the big corporations and the Islamic banks are highly encouraged to voluntarily help the economic adjustment.

Jewish community is not restricted by a nation state, and their holy nation Israel was established relatively new compared to Jewish people's own long history of existence. They are only controlled by the moral entrepreneurship which is free from any artificially created autocratic form of politics. Majority of Jewish are aware of market mechanism, and self-autonomous enough to cope with any havoc challenging them.

Asian nations tend to prefer a high control for both economy and morality. Their culture to follow rational authorities enables them to stimulate rapid economic growth and political stability. The weak point is their low self-autonomic level which hardly promotes a self-autonomous state.

The moral entrepreneurship in Latin America is intense even nowadays. The degree of economic intervention varies across different Latin-American nations. They are less secular than majority Asians but less religious than Isramic citizens.


In the Western nations (except Latin-Americans), there is a big divide between the Continental Legal Positivist states and the Anglo-American Common-Law states. The former is a rational secularist nation which promotes morally neutral policy with an effective economic intervention. The latter remains a strong moral entrepreneurship but a laissez-faire economic policy. The latter puts emphasis on the self-responsibility of all individuals for both fortune and misfortune, and the flexibility promoted by this emphasis has strengthened their strong financial management. The former put emphasis on the safety net helping individuals accidentally trapped into misfortune, but demands on individuals' tax contribution and strict legal codes which disrupt the flexible flow of the financial market.

Scotland is one of the former states even though she is a part of the United Kingdom of Great Britain and Northern Ireland. Jeremy Bentham aspired to establish a perfect legal-positivist state and ardently challenged against the traditional commonlaw of his own mother nation. Bentham 's ideal state is to promote the maximum secular freedom of individuals protected by the reasonable level of positive government intervention and the fair judicature based on the logically and explicitly coded legal codes. Murdock empire is not a nation but its media influence is often superior to any national propaganda. The media empire of Murdock is highly secular meanwhile it still remains its business ethics based on the common law states requiring all individuals to be responsible for both their fortune and misfortune.

The unknown ideal is something combining the secular-rationalism of the legal positivist states and the self-autonomy and the strong financial management of the Anglo-Saxon and Jewish culture. In order to accomplish the unknown ideal such as Max Stirner and Ayn Rand had aspired for, the combination of the flexible flow of the financial market promoted by both Anglo-American Common law and Jewish culture and the morally neutral rationalism promoted by both the Continental Legal Positivist Europe and Asian nations seems to be demanded. The practical method to achieve is not created yet, but there is already an idea leading to keep looking for the solution.

Difference between Communism and Socialism explained by Ayn Rand