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Tyler Cowen

In Defense of the German Saver

Negative interest rates have their uses, but the European Central Bank should be more mindful of the downsides.

A sign of comfort for the German saver.

A sign of comfort for the German saver.


If there is one thing the world should have learned over the last decade, it is that politics is usually more symbolic than pragmatic. A good policy attached to the wrong symbols can fail, while impractical or even irresponsible leaders can succeed by promoting popular symbols.

And yet this is a lesson we are still learning. Take, for example, the policy of the European Central Bank to charge negative interest rates, currently at -0.4%. Practically speaking, this does not bring big macroeconomic gains, and as symbolic politics it is proving disastrous — most of all in Germany, where it is turning people against the Eurozone.