[tormeh]

>It is quite customary in Europe

Except northern Europe (although not Belgium). But yeah, it's pretty common.

>fact of the matter is that it's being done to prevent people from avoiding the extra tax the ECB wants to create : negative interest rates [2].

You can avoid that tax by keeping your money in anything but money - which is what the ECB wants. Just buy an index fund. That's what you should do anyway.

[candiodari]

> You can avoid that tax by keeping your money in anything but money - which is what the ECB wants. Just buy an index fund. That's what you should do anyway.

Whichever way you do that, it involves extra risk. Central banks/governments forcing people to take more risk ... well let's put it this way ... we all know what comes next.

2 reasons. Firstly there's a reason they're doing this, so there's already a problem. By definition that would be a problem that puts asset prices at risk. So it means that risks on most assets are higher than generally believed (because the government is pushing the measure of that risk - interest rates - forcibly down, you are bound to underestimate risk as a result). What if the reason behind some of those risks surfaces ?

One of the things the government is doing here is forcing the banks/funds/... to take comparatively massive risks with your pension. The results are already surfacing, but they're getting worse - fast. And the government will have to bail these out, as not doing that will kill the livelihood of tens of millions of people, which will not come without huge consequences.

Second reason is, that even if there's not already a disastrous problem, this takes the capital preservation + profit motive away from markets and (partially) replaces it with pleasing the government/central banks. Central control has always failed, and this next attempt will be no different. The nail factory in Soviet Russia story seems apt here, and is obviously a massive oversimplification, but the basic problem is there.

[pjc50]

Not all risk is equal, and there can be no implied right to risk-free preservation of capital.

What the banks would like people to do is invest in productive capacity and consumer goods; this feeds the "virtuous circle" of employment and economic growth. Investing in businesses would have a normal, uncorrelated risk profile.

What I think people are struggling with is the prospect of big, correlated, exogenous risks like global warming and the collapse of global trade into protectionism. If that kind of thing happens the total amount of value in the economy goes down - so who bears that risk? Do we try to distribute it equally, or put it all on governments which may not be able to bear that kind of systemic collapse? Or do we let the capital-holding class protect themselves while real wages collapse and the risk falls on those least able to bear it?