Friday, July 31, 2020

Deeply Negative Interest Rates

Updated February 2021

With the Federal Reserve pretty much emptying its inventory of monetary policy tools when it did this:

...and with the economy needing continuous intervention to prevent an even deeper and longer economic contraction(s), it looks like the Fed will have to use hitherto untested and experimental monetary medicine to get the economy back on its feet once the COVID-19 panic is over and as part of a move to force us into a cashless society.

Thanks to the International Monetary Fund, the braintrust at the Federal Reserve has a roadmap for its future stimulation policies.  Back in April 2019, authors Ruchir Agarwal and Miles Kimball released a working paper entitled "Enabling Deep Negative Rates to Fight Recessions: A Guide" as shown here: 

In this paper, the authors open by noting that a lower bound (i.e. zero percent interest aka the zero lower bound or ZLB) can be a significant obstacle to fighting recessions.  This is particularly the case in our current ultra low interest rate environment which has left the Federal Reserve with almost no room to manoeuvre.  The authors note that the zero lower bound is "...not a nature of law; it is a policy choice..." and that deeply negative interest rates are one tool that can be used by central banks to end recessions in a short period of time. In the authors' opinion, this is preferable to using mildly negative interest rates for a short period of time which may result in a longer period of economic recovery.

In the past, the Federal Reserve and other influential central banks including the Bank of Japan, the Bank of England and the European Central Bank have been able to cut interest rates significantly during economic contractions as shown on this graphic:

On average, central banks have been able to cut interest rates by between 5 percentage points and 6 percentage points during recessions as you can see on this graph showing the Federal Funds Rate going back to 1955:

Clearly, this is no longer possible with the world's key central banks having interest rates that are nearly zero (or less) at this point in time.

As it stands now, the public obtains cash from a commercial bank using an ATM or by cashing cheques.   Commercial banks get their cash from the central bank through an account that they hold on reserve with the central bank by using the central bank's "cash window".  This cash window allows the banks to exchange electronic currency for paper currency which is shipped from the central bank's cash offices.  In the current system, the central bank treats a 100-dollar note as an equivalent to 100-electronic dollars and does not charge any substantial fees for the issuance or acceptance of paper currency (i.e. a zero percent interest rate on currency).  The authors note that this does not have to be the case; central banks could choose to charge a non-zero paper currency interest rate.

How can central banks impose a deeply negative interest rate policy, noting that electronic money refers to credit balances in an account held in the books of the central bank or commercial bank?  There are two methods:

1.) "The Clean Approach" - an electronic money system that takes paper currency off par with electronic money.  For example, using this mechanism, if the central bank wished to implement a negative interest rate policy, it could do so as follows:

"...the central bank could gradually phase out $100 bills by every year deducting $1 from what it would give in exchange for a $100 bill: after one year, $99, after two years, $98 and so on. If that is how the central bank treated a paper $100 bill at the cash window, that is what it would be worth..."(i.e. the central bank would be lowering the value of a paper bill when compared to an electronic dollar, essentially resulting in a negative interest rate).

In this scenario, retailers who accept both cash and credit cards could apply a paper currency surcharge to any transactions where customers use cash.  The advantage to this system is that no extra regulations are required since the impact on the economy works entirely thought the price system by imposing a negative rate of return on paper currency anywhere since it cash is only accepted at a discount.

2.) "The Rental Fee Approach" - an approach which keeps paper currency at par with electronic money within the financial system and the large corporate sector.  The central bank could generate a non-zero paper currency interest rate through the imposition of an "x" percent per annual rental fee for commercial banks withdrawing paper currency from the cash window.  For example, if a commercial bank withdrew a $100 bank note from the central bank, in addition to being debited the $100 from its reserve account by the central bank, it would also pay "x" dollars as a yearly rental fee to the central bank, thus creating a negative interest rate on cash.  To avoid inconveniencing households, the central bank could set an exemption amount which would allow banks to withdraw amounts up to the net withdrawal of paper currency on behalf of its customers up to a per-customer and per-month limit, thus preventing large scale withdrawals.  Both the Swiss National Bank and the Bank of Japan have adopted somewhat altered versions of this approach.

Here is a table showing the side effects of the rental fee approach:

In both cases, the authors recommend that the transmission of negative paper currency interest rates should fall to the commercial banks since they have far more experience dealing firsthand with customer relations problems than central banks. 

Obviously, there will be a reduction in the circulation of paper currency as a result of these two approaches.  Let's look at a quote from the paper:

"If households can’t readily sell it at a premium, they will have incentives to hoard paper currency, instead of using it as a medium of exchange. This in turn will lead to reduced circulation of paper currency in the system. This could be burdensome and costly for some households and small businesses, especially for those that rely heavily on cash transactions. On the other hand, a silver lining of reduced circulation of paper currency would be that it encourages electronic transactions and the adoption of technology that facilitates electronic transactions. By raising the fraction of electronic transactions—and encouraging irreversible investments in digital payment systems—the Gresham’s Law effect would make it easier for the central bank to use the clean approach based on an electronic unit of account at a later date.

Another silver lining of the Gresham’s Law effect would be making law enforcement easier. While many individuals use paper currency for perfectly legal purposes (and some may even have an ‘irrational’ preference for cash), an important part of the demand for paper currency is driven by the desire to keep secrets from the government. As Ken Rogoff (2016) puts it, in addition to the legal tax- paying domestic economy, the sources of demand for cash include the (a) not-so-law-abiding domestic underground economy—including both tax evasion and criminal activities, and (b) the global economy, including both legal and illegal demand.  Imposing a rental fee on cash withdrawals does.  Imposing a rental fee on cash withdrawals does not eliminate the freedom to use cash, but makes large-scale murky cash withdrawals stand out more, thereby facilitating law enforcement." (my bold)

Let's close with these thoughts from the authors:

"Our view is that, when needed, deep negative rates are likely to be worth the political cost. After all, when facing a deep recession with little room to cut rates in the positive region, the choice is not between political calm for a central bank or a political storm for the central bank, but the political cost of negative rates on one hand weighed on the other hand against the opprobrium a central bank justifiably comes under when it fails to fulfil its mandate and return the economy to normal in a timely way. Nevertheless, reducing political costs where that is consistent with sweeping away any lower bound on interest rates is not only directly helpful, but also makes the financial markets more likely to believe that the central bank will be bold enough to pursue a vigorous negative interest rate policy."

Given that the Federal Reserve has dropped its key rate to near zero and further bloated its already morbidly obese balance sheet as shown here:

...we can pretty much assure ourselves that, at the very least, a negative interest rate environment is not far off, particularly as part of the ultimate cashless society scheme currently being explored by central banks around the globe.  As yet, there has not been any experience with interest rates below -1 percent, however, given the current moribund state of the global economy, that is not likely to hold true for very long.

Wednesday, July 29, 2020

YouTube - Censoring the COVID-19 Narrative

With the Big Tech Congressional antitrust hearing taking place in the hallowed halls of Washington, a fine example of how the technology monopoly is controlling a key part of the global narrative is timely.  In this posting, we will take a look at how Google/YouTube is handling its responsibility to its stakeholders during the COVID-19 pandemic.


As we all know, Google's YouTube has increasingly become a heavily censored platform in which dissenting views are not permitted.  By controlling the COVID-19 narrative, Google has essentially white-washed any views that go against those promoted by governments, the mainstream media and the World Health Organization (aka The Bill and Melinda Gates Health Organization).


Here is a list of what is "verboten" under the guise of protecting the unwashed masses from ourselves:


"YouTube doesn't allow content about COVID-19 that poses a serious risk of egregious harm. 


YouTube doesn't allow content that spreads medical misinformation that contradicts the World Health Organization (WHO) or local health authorities’ medical information about COVID-19. This is limited to content that contradicts WHO or local health authorities’ guidance on:







Here is what Google terms as "misinformation":


"1.) "Treatment Misinformation: Discourages someone from seeking medical treatment by encouraging the use of cures or remedies to treat COVID-19.


a.) Claims that COVID-19 doesn’t exist or that people do not die from it 


b.) Content that encourages the use of home remedies in place of medical treatment such as  consulting a doctor or going to the hospital


c.) Content that encourages the use of prayer or rituals in place of medical treatment


d.) Content that claims that a vaccine for coronavirus is available or that there’s a guaranteed cure


e.) Content that claims that any currently-available medicine prevents you from getting the coronavirus


f.) Other content that discourages people from consulting a medical professional or seeking medical advice


2.) Prevention Misinformation: Content that promotes prevention methods that contradict WHO or local health authorities.


3.) Diagnostic Misinformation: Content that promotes diagnostic methods that contradict WHO or local health authorities.


4.) Transmission Misinformation: Content that promotes transmission information that contradicts WHO or local health authorities.


a.) Content that claims that COVID-19 is not caused by a viral infection


b.) Content that claims COVID-19 is not contagious


c.) Content that claims that COVID-19 cannot spread in certain climates or geographies


d.) Content that claims that any group or individual has guaranteed immunity to the virus or cannot transmit the virus


e.) Content that disputes the efficacy of WHO or local health authorities’ guidance on physical distancing or self-isolation measures to reduce transmission of COVID-19"


Let's look at some more specific examples of what is not allowed on YouTube when it comes to furthering the discussion about the COVID-19 pandemic:


"1.) Denial that COVID-19 exists


2.) Claims that people have not died from COVID-19


3.) Claims that there’s a guaranteed vaccine for COVID-19


4.) Claims that a specific treatment or medicine is a guaranteed cure for COVID-19


5.) Claims that certain people have immunity to COVID-19 due to their race or nationality


6.) Encouraging taking home remedies instead of getting medical treatment when sick


7.)Discouraging people from consulting a medical professional if they’re sick


8.) Content that claims that holding your breath can be used as a diagnostic test for COVID-19


9.) Videos alleging that if you avoid Asian food, you won’t get the coronavirus


10.) Videos alleging that setting off fireworks can clean the air of the virus


11.) Claims that COVID-19 is caused by radiation from 5G networks


12.) Videos alleging that the COVID-19 test is the cause of the virus


13.)Claims that countries with hot climates will not experience the spread of the virus


14.) Videos alleging that social distancing and self-isolation are not effective in reducing the spread of the virus"


But, apparently it's okay with Google if the World Health Organization and government health officials clearly change their minds on how the SARS-CoV-2 virus spreads, the effectiveness and use of masks and other issues that have morphed during the COVID-19 pandemic.  Of course, Google provides itself with an "out" by stating that YouTube's policies on COVID-19 are subject to change in response to changes to global or local health authorities' guidance on the virus.  Sadly, if you've already been banned by YouTube, it's just too bad for you even though your original thesis may turn out to be correct.


This begs the question; how many virologists, epidemiologists and vaccinologists does YouTube have on staff and what individuals (Bill Gates?) and organizations (WHO?) are sponsoring them?


Should YouTube's COVID-19 Medical Misinformation Policy happen to disappear, here is a screen capture showing the policy in its entirety:


Censorship - it's alive and well and living in Mountain View, California.  The truth is AWOL.

Challenge Trials - The Ethics of Human Trials for a COVID-19 Vaccine

While it received almost no coverage in the mainstream media, a publication by the World Health Organization dated May 2020 is particularly frightening given the unprecedented rush to create a vaccine for the SARS-CoV-2 virus.

Here are quotes from an article that appeared on the Financial Times website on May 9, 2020:

"Francis Collins, director of National Institutes of Health, has asked the NIH vaccines working group to “write a perspective on the scientific and practical considerations for a Covid-19 human challenge model”.

The group, which includes senior vaccine developers from universities and industry, will meet on May 11 to discuss the issue.

Challenge trials have a long history in medicine because deliberately infecting volunteers gives results more quickly than waiting for them to be infected in the community, but they are inevitably risky. 

A growing number of scientists say the world needs a Covid-19 vaccine so urgently that regulators and research funders should make preparations now, enabling human infection studies to begin after potential vaccines have completed their initial safety testing.

Around 100 Covid-19 vaccines are currently in development worldwide, with several in the early stages of clinical trials." (my bold)

While you may think that actually using the virus to deliberately infect volunteers is an unrealistic idea, here is a recent letter from several members of the United States Congress to  the Secretary of Health and Human Services and the Commissioner of the Food and Drug Administration dated April 20, 2020 with the pertinent sections regarding human trials of deliberately infected people highlighted:

Now, let's look at what the World Health Organization has to say about human trials using deliberately infected human test subjects.  The paper, entitled "Key criteria for the ethical acceptability of COVID-19 human challenge studies" (i.e. the deliberate infection of test subjects) dated May 6, 2020, again, with the pertinent sections highlighted:

The World Health Organization states that there are four benefits to challenge studies:

1.) acceleration of vaccine development.

2.) increased likelihood of selecting the most effective vaccine.

3.) validation of immunity testing.

4.) improved knowledge of SARS-CoV-2 infection and transmission.

It is also important to note that WHO recommends using healthy young adults between the ages of 18 to 30 since they are less likely to die from COVID-19.  This is actually of relatively little use since the vast majority of the people dying from COVID-19 are the elderly, particularly those in their late seventies and early eighties.

The World Health Organization also notes that challenge studies have been used in the past to accelerate the development of vaccines against typhoid and cholera, however, they neglect to note that the case-fatality rate for typhoid fever ranged from 10 percent and 30 percent and the case-fatality rate for cholera ranged from 54 percent to 68 percent, far in excess of the case-fatality rate for COVID-19.

Given this graphic which shows that the daily number of new cases of coronavirus ranges from 250,000 to nearly 300,000: has to wonder exactly why members of the United States Congress and the World Health Organization feel that it is necessary to deliberately infect human subjects with the SARS-CoV-2 virus.  Surely, the number of infected humans around the world should be sufficient for a reliable field trial of an experimental coronavirus vaccine.

While the very thought of medical experimentation on humans should send shudders down the spines of all of us, in the name of a government-ordered rush to create an unprecedented vaccine for a coronavirus, all caution is being tossed to the wind.  The rush to create a "medical COVID-19 miracle" has created an atmosphere where ethics no longer apply and human lives really don't matter.

Tuesday, July 28, 2020

NATO 2030 - What Lies Ahead for the Alliance

While the world grapples with the war against the SARS-CoV-2 virus, the drums of another war continue to beat loudly.


On June 8, 2020, NATO Secretary General Jens Stoltenberg launched NATO 2030, a "conversation" about strengthening the Alliance in "an increasingly competitive world" (i.e. in a world that is no longer unipolar, thanks to Russia and China).


According to NATO's 2030 website, NATO 2030 is:


"...about making sure our Alliance remains ready today to face tomorrow's challenges.  And how NATO will keep us safe in the next decade and beyond."


Here are Stoltenberg's reflections:


Here is his tweet regarding NATO 2030:



Note that NATO 2030 is being launched in cooperation with the Atlantic Council (a "nonpartisan organization that galvanizes U.S. global leadership...") and the German Marshall Fund of the United States (which "strengthens transatlantic cooperation on regional, national and global challenges...").


Here is a key quote from Stoltenberg's musings:


"COVID-19 has changed our lives in ways we could barely imagine.  And it has magnified existing trends and tensions when it comes to our security.  Russia continues its military activities unabated.  ISIL and other terrorist groups are emboldened.  Both state and non-state actors promote disinformation and propaganda.  And the rise of China is fundamentally shifting the global balance of power.  Heating up the race for economic and technological supremacy.  Multiplying the threats to open societies and individual freedoms.  And increasing the competition over our values and our way of life.  NATO 2030 is about how we adapt to this new normal.  And to do this we must:


Stay strong militarily.

Be more united politically.

And take a broader approach globally."

Note that he invokes the threats from China and Russia in the same sentence as he refers to ISIL and other terrorist groups.


How will NATO's global approach evolve?  Here is another key quote:


"As we look to 2030, we need to work even more closely with like-minded countries.  Like Australia, Japan, New Zealand, South Korea.  To defend the global rules and institutions that have kept us safe for decades.  To set norms and standards."


Not only is NATO content with being a European - North America alliance but, with the growing influence of China, NATO is looking to expand into the Pacific region.


Why does the world need NATO 2030?  Back in December 2019, NATO leaders released the London Declaration at their North Atlantic Council meeting held in London.  Here is a key excerpt:


"We, as an Alliance, are facing distinct threats and challenges emanating from all strategic directions.  Russia’s aggressive actions constitute a threat to Euro-Atlantic security; terrorism in all its forms and manifestations remains a persistent threat to us all.  State and non-state actors challenge the rules-based international order. Instability beyond our borders is also contributing to irregular migration. We face cyber and hybrid threats. 


NATO is a defensive Alliance and poses no threat to any country.  We are adapting our military capabilities, strategy, and plans across the Alliance in line with our 360-degree approach to security. We have taken decisions to improve the readiness of our forces to respond to any threat, at any time, from any direction.  We stand firm in our commitment to the fight against terrorism and are taking stronger action together to defeat it.  We are addressing and will continue to address in a measured and responsible way Russia’s deployment of new intermediate-range missiles, which brought about the demise of the Intermediate-Range Nuclear Forces Treaty and which pose significant risks to Euro-Atlantic security.  We are increasing action to protect our freedoms at sea and in the air. We are further strengthening our ability to deter and defend with an appropriate mix of nuclear, conventional, and missile defence capabilities, which we continue to adapt.  As long as nuclear weapons exist, NATO will remain a nuclear alliance.  We are fully committed to the preservation and strengthening of effective arms control, disarmament, and non-proliferation, taking into account the prevailing security environment.   Allies are strongly committed to full implementation of the Treaty on the Non-Proliferation of Nuclear Weapons in all its aspects, including nuclear disarmament, non-proliferation, and the peaceful uses of nuclear energy.  We remain open for dialogue, and to a constructive relationship with Russia when Russia’s actions make that possible." (my bolds)


This declaration gives us a sense of where NATO is headed, despite their proclamation that they are a "defensive Alliance" that "poses no threat to any country".  


At this meeting, NATO's leadership invited Stoltenberg to "lead a forward-looking reflection process to strengthen NATO's political dimension".  To support him, Stoltenberg has appointed a group of ten experts as follows:



Stoltenberg first met with the group of ten experts on April 8, 2020 as shown here:



Since the United States is the main driver behind NATO, it is obvious that Washington is feeling threatened by the growing global influence of both Russia and China as the world becomes decreasingly Americentric and increasingly multipolar and is using NATO as its puppet to ensure that the post-World War II American-led rules-based international order remains intact.


Monday, July 27, 2020

Sex During the Time of COVID-19

Let's start this posting with a warning; despite the fact that all of the material is directly extracted from government sources, some people may find the subject matter NSFW.

Back in 1967 when Canada's then Prime Minister Pierre Trudeau was campaigning for changes to the Criminal Code which would have seen the decriminalization of "homosexual acts", he made the following comment:



Let's repeat that:


"There's no room for the state in the bedrooms of the nation...."


While that sentiment may have carried water in 1967, it certainly has proven not to be the case during the "Era of COVID-19" as you will see in this posting.  The same governments that are telling you where to stand, where to line up, who you can associate with and how far away from them you must remain,  when and how many of you can visit family members with life-limiting conditions, how many people you can have at a family funeral, what you can buy and where you must be masked/muzzled has taken a much-ignored foray into the "bedrooms of the nation".


Let's start with Canada's own British Columbia.  Here is a screen capture from the British Columbia Centre for Disease Control or BCCDC webpage on "COVID-19 and Sex":



The BCCDC starts out by noting that sex can be very important for mental, social and physical well-being and is a part of everyday life.  That said, it claims the following:


"The virus has been found in semen and feces (poop). It is not yet known if the virus is found in blood or internal genitalia/vaginal fluids. It is not yet clear if the virus can be transmitted through sex. You are your safest sex partner; your next-safest sex partner(s) is/are the person(s) you live with, or the person(s) who has close contact with only you and no one else."


Given that, what sexual activities does the BCCDC recommend?  Here they are:


"1.) Masturbating: You are your safest sex partner. Masturbating by yourself (solo sex) will not spread COVID-19. If you masturbate with a partner(s), physical distancing will lower your chance of getting COVID-19.


2.) Virtual Sex: Video dates, phone chats, sexting, online chat rooms and group cam rooms are ways to engage in sexual activity with no chance of spreading COVID-19.  Be aware of the risks of sharing information or photos online, and web camming. Some people do not share personal information or show their face or other identifiable body parts, for more privacy.


3.) Sex with partner(s): Having 1, or a few, regular sex partner(s) can help lower the chances of being exposed to COVID-19. Talk with your sex partner(s) about:


a.) The types of sexual activities you want to have with them, and


b.) The precautions that you can each take to make sex safer for you and your sex partner(s), like wearing a mask and social distancing, and


c.) Whether you or your sex partner(s), or anyone you are in contact with, have a higher chance of getting a more serious COVID-19 illness (such as someone with an underlying medical condition like diabetes, lung disease, cancer or a weakened immune system)."


So much for the parental/pastoral/priestly admonishment that masturbation led directly to blindness or worse.   Of course, if you absolutely insist on having sex, the braintrust at the BCCDC has the following recommendations for steps that you can take to protect yourself during sex, some of which sound rather kinky:


"Before and after sex:


1.) Wash your body with soap and water.


2.) Wash your hands with soap and water for at least 20 seconds.


3.) Wash sex toys thoroughly per the manufacturer’s instructions. Most, but not all, can be cleaned with mild unscented soap and water. Do not share them with multiple partners.


4.) Wear a face covering or mask. Heavy breathing during sex can create more droplets that may transmit COVID-19.


5.) Avoid or limit kissing and saliva exchange.


6.) Choose sexual positions that limit face-to-face contact.


7.) Use barriers, like walls (e.g., glory holes), that allow for sexual contact but prevent close face-to-face contact.


8.) Using condoms, lubricant, and dental dams may help to further reduce the chances by minimizing contact with saliva, semen, feces, blood and/or internal genitalia/vaginal fluids during sex.


I realize that some of you may not be familiar with the recommendation made under the use of barriers, particularly "glory holes".  Thanks to Wikipedia, here is a definition of "glory hole":

"A glory hole (also spelled gloryhole and glory-hole) is a hole in a thin partition, such as a wall, often between public lavatory cubicles or adult video arcade booths and lounges, for people to engage in sexual activity or observe the person in the next cubicle while one or both parties masturbate.


Glory holes are especially associated with gay male culture, and anal or oral sex. The partition maintains anonymity. Some gay websites offer directories of glory holes."


Here is a photo of a glory hole for your further illumination:

Now, should you happen to think that getting involved with people's sex lives during the COVID-19 pandemic is just a West Coast, Canada thing, the State of New York has also released this document on "Safer Sex and COVID-19":



You will note that I highlighted the pertinent portions that are similar to the recommendations of the BCCDC, particularly the use of "physical barriers, like walls" (i.e. the aforementioned glory holes).  It's increasingly looking like this could be the sex toy of the future and, fortunately for all of us, they just happen to be on sale:



We really are living in an alternate reality.  While Pierre Trudeau's 1960's mantra of the state staying out of the bedrooms of their citizens worked very well in the past, apparently, in the "new normal", the state feels perfectly justified in prescribing what type of sex we should be having and how and with whom we should be having it.