To understand negative rates, you need some grasp of economics. To understand the political fallout, you’d be better off with linguistics.The German term “Strafzins”, or “punishment rate” is widely used in the country’s media to refer to interest rates below zero. And a day after the ECB cut rates for the first time since the spring of 2016, it is back in the news. This is despite the fact there is an alternative German word for negative rates: negativzins (as Michael Steen, formerly of the FT and ECB global media chief, pointed out on Twitter). Admittedly negativ also has . . . negative connotations. But the use of “straf”, or “punitive”, reflects a widespread perception across Germany that the ECB is penalising savers through its monetary policy. Tyler Cowen outlined the case for this in
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To understand negative rates, you need some grasp of economics. To understand the political...