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A new serfdom

On money and negative interest rates.(you can read about this on WSJ at a fee, or Bloomberg,  or Zero Hedge (which I admittedly take with a pinch of salt) for free.)

Hmm. Harvard. As one of my friends (a world-class leader in his field, and not trained at Harvard) said dryly ‘You can tell a Harvard man – you just can’t tell them much.’ It has produced a large number of billionaires. This may have bearing on the rest of this. It also has an economics professor called Ken Rogoff. I’m sure it may well have valued academics whose work does not make me imagine an outcome of mobs, smoky torches and pitchforks…

Professor Rogoff believes that negative interest rates could be a good thing. He also believes that cash (as in physical money) per se is a bad thing. The former forces spending, so vital for the engine for economies, and the latter facilitates crime, money laundering, tax evasion, and even illegal emigrants.

I suspect he’s completely right… from the point of the billionaires, or at least the very wealthy and powerful. Probably from the point of view of government (who hate competition in the crime racket. That is after all the origin of several ruling houses, and I suspect most government, despite smoke and mirrors to contrary).

But what about as a general thing: for those unlikely to go to Harvard or be billionaires or even millionaires?

I would argue that for those outside that select group – this can be translated into one word: serfdom.

Let’s think about the negative interest rates, for example. Why, it would mobilize cash, make for immediate consumption. Isn’t that good? There is no point in saving as that money will be worth less, next year. And mysteriously, inflation will not go away… so it’ll be worth less, twice. Now I’ve argued before that inflation effectively robs savers for profligate borrowers, and that historical norm cycle of inflation followed by deflation worked both to encourage and build savings and then to encourage investment –as that could bring a better return than just holding onto that money. There was an almost seasonal quality to it, a sort of drawdown-refill-drawdown-refill-drawdown process – which worked in the longer term – even if it wasn’t much fun at times in short term (depending if you were a debtor or a saver). The world slowly got to be a better place to live in.

Negative rates – available to banks from the state, and paid to savers by the banks (not, naturally to borrowers, would indeed free a rush of savings – and make a rush of borrowings. Wonderful for stimulating the economy! Wonderful for banks – after all if the bank can borrow at -1% and lend at 5%, it’s no different to borrowing at 3% and lending at 9%. They profit on the margin, not the figure. Their figure is always positive.

But where is the refill? And what happens next year?

“But we haven’t had deflation for decades! Where was that refill? We’ve got fiat money and reserve banks and printing presses now.”

Indeed. Outside habit and obstinacy saving has not been encouraged for a long time. Fiat money printing (and the inflation this causes) have ruled instead. Yes, there have been investments that could leave you making a return after inflation. But generally speaking, the banks and the wealthy tried to limit that. But it was possible and wise to at least lose slowly while adding your savings, having security, and possibly the goods or services that you wanted at less cost than if you borrowed, and then spent years paying it off. As an indebted borrower, you are, de facto, a serf, in thrall to your lender, chained to that job (or another that pays well enough to match). You dare not lose it, or you could lose everything. It’s not a long step to the serf of the middle ages, who worked the land he did not own, lived in a miserable hut at his master’s will, who could not leave or even change jobs without his master’s permission – a master who took most of the proceeds of his labor and lived very well off it – a life of insecurity, working principally for someone, who, often as not merely inherited the position and invested precious little of that profit in making things better for the serf.

“Ah, but if you have a good credit record, you have security! You can borrow as much as you might need.”

Indeed. And you can give part of your income to the lender, and you will need to keep working. And the threat of bankruptcy, forfeiture and a poor credit record will keep you on the master’s estate. That part of your income that you will give to lender = cost of good or service + cost of the loan allowing for depreciating value of money + handsome profit for the lender. If you’d simply stuck dollars in the bank and got interest largely cancelled by inflation you’d have lost some to inflation, but the handsome profit for the lender would have been yours to spend – which as Joe Average makes money circulate more than Fred Banker 1%, and spends locally would have been better for the economy – if not Harvard graduate billionaires. And if you’re hurt or sick or unhappy at your job… well you don’t have to worry about paying it back, and remain trapped there.

At best negative interest rates cause a brief burst of consumption and investment, and thereafter mean that any consumption and infrastructure investment must carry parasitical rent seekers who add value but mean the consumer and infrastructure investment must carry their weight as well. And they have no practical choice but to (unless of course you enter this equation with a lot of money. In which case you produce a product, which you sell, and the consumer pays both you and the bank if that product is something they can’t afford in the very short term of accumulating money.

With negative interest rates, you’re better off putting dollars under your mattress. Enter part 2 of Rogoff’s equation – get rid of physical money. Neat, isn’t it?

“But you can’t be robbed!”

Really? Well, yes, people are robbed. You can work out the probability, and you can take measures to reduce the chances. Does that beat the utter certainty that some of cash will ‘vanish’ every day you keep it in the bank? It’s an equation a lot of people might like to reach their own decisions about – but if there is no cash, you won’t.

And have you worked out: if there is no cash, who will keep track of the numbers? Who will provide that little card hooked up to the computer system? Ah yes. Mister negative interest rates bank. Or failing that, perhaps the alternative scenario. Mr Negative interest rates and tax you government. While neither would protect you from robbery – not by themselves or others, neither have a record that says “This would be a good idea” – either for the economy or the individuals. The one thing I think we can guarantee is that it would not stop crime, or curb tax evasion. Oh yes, the government would extract more rent from Joe Average. But the rich and powerful don’t pay taxes now, and would, I assure you, not pay taxes then. But the serfs would. Much better for collecting from them. You can just take as much as you like from their accounts (the banks ALWAYS play ball with the bigger crooks, including governments).

One has to ask: what without the possibility that people would keep their cash under the mattress is there to keep either the banks – who usually work hand in hand with governments, or the governments – who usually work hand in hand with the banks, honest? Seriously, the very existence of cash is protective – just as an armed society is protective against despots.

As for the illegal immigrants… well. That depends on the serfdom conditions in their own countries – or even outright starvation. I don’t think a lack of cash to send home will stop ‘em. And, anyway, the people Professor Rogoff’s economics work for don’t care where the serfs that scrub their floors and manicure their lawns come from. They can be legal or illegal serfs.



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Dave Freer’s Mailing list

Given that I am to marketing what Godzilla is to wristwatch repair, I’m doing something incredibly foolish here. The one promise I can make is I am unlikely to bother you very often – but if you enjoy my books and stories, and would like to know when the next one is out, and bits of news about them – well please sigh… sign, yes I mean sign up. I will give away stories and books every now and again, announce specials and probably not waffle too much about how my piggies are growing.

If you would like to sign up, click here



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A new e-book is up!

The picture is a link –

Tom is a cat in trouble. The worst possible kind of trouble: he’s been turned into a human. Transformed by an irascible old magician in need of a famulus — a servant and an assistant, Tom is as good at being a servant as a cat ever is. The assistant part is more to Tom’s taste: he rather fancies impressing the girl cats and terrorizing the other toms by transforming himself into tiger. But the world of magic, a vanished and cursed princess, and haunted skull, and a demon in the chamber-pot, to say nothing of conspiring wizards and the wickedest witch in the west, all seem to be out to kill Tom. He is a cat coming to terms with being a boy, dealing with all this. He has a raven and a cheese as… sort of allies.
And of course there is the princess.
If you were looking for ‘War and Peace’ this is the wrong book for you. It’s a light-hearted and gently satirical fantasy, full of terrible puns and… cats.


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A little Bolg

A little snippet from the WIP, where a Bank – or its minion – has swindled two retired little old ladies out of their life savings. Unfortunately they are retired fertility goddesses, and have called on the services of the redoubtable PI Bolg to get their money back or at least release a large fly agaric maddened berserker with a double headed axe in the Bank…


Instead, armed with a little knowledge – always a dangerous thing, and without my Glock, or even a suitable double bladed axe — they have metal detectors — I went to the bank.

The woman at reception, when I got to the head of the queue, looked down on me. I’m used to that, at my height, even with the high heels and latex mask. None-the less, coming from a bank employee it could possibly have made me little more gruff than usual. “I want see a Mr Philip Dally. About an investment product.”

“Do you have an appointment?”
“Yes.” I have been given quite a lot, and never returned any. Royal ones too, and they’re supposed to last better. I was appointed holder of the royal trousers once, but only once.

She frowned at her screen. “I don’t have a record of it. What is your name please?”

“Dickson.” I’d been told there were a lot of them, and in a way we all are.

She shook her head. “Sorry. You can’t see Mr. Dally without an appointment.” She sounded very pleased about that.

“But my friend Mr. Jasmin” – I had the Vice President (Investments) name from the ever informative internet – “assured me he would see to it that I got an appointment.”

That plainly was a different matter entirely. “I’ll just see if he’s free, Mr Dickson.”

And indeed, he was. How surprising. I was escorted up to his office.

Given the timing – and the night before, he was drinking coffee and trying to look awake and enthusiastic. He failed at both. Poor fellow looked as if he could use a purge, so I helped him along in that direction. They scan you for firearms, but not rapid and violent laxatives. Fintan had needed elephant dung in a hurry at one stage of some of his experiments, and had run a little batch of this stuff up. It had almost destroyed the circus I’d been working at, at the time. I kept some for other people’s emergencies.

A little misdirection, a few minutes small talk about Mr. Jasmin and our acquaintanceship at the Country Club and wonders of hunting golfs together, a pastime that Dally seemed to envy, and the vast amounts of money coming out of my real-estate venture… and an expression of extreme distress suddenly delightfully enlivened his beautifully shaven and rather pallid face. It was a thing of joy that I was sorry not to record for my clients. It wasn’t quite as devastating as a berserker with an axe that Gersemi had wished for, although I had a feeling Dally’s underwear might not agree with me.

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Twisty Christmas Tales is free

for the 8th and 9th so get in quick


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Makers and breakers

You can find a new guest post here on L. Jagi Lamplighter’s Superversive Blog

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Joy Cometh with the Mourning

(yes, the picture is a link, if you buy via it we get extra from Amazon, and it costs you no extra.)

I am known, principally, as a writer of Science Fiction and Fantasy. To a lesser extent perhaps as a satirist, particularly fond of amorality in his aliens (or dragons… or rats) to question human mores and worldviews. A fool who takes on hell with a fire-bucket, a friend of battlers and lost causes, the old, the weak, the underdog, and indeed dogs in general. And marginally, a contrairian and philosophical fellow, who is mildly barking mad, living in the remotest of quiet backwaters, if one surrounded entirely by extremely turbulent ocean waters.

Humans are complex creatures, and some of us have more small moveable parts than others. I suppose the book above is an example of how different I can be from your preconceptions. It’s not what you expect. It has no elements of fantasy or science fiction in its plot. It is what is commonly called a ‘cozy’. A murder-mystery, with no on-scene blood, gore, or sex. Down the lines of Agatha Christie, with a touch of Miss Read. Oddly such a thing is much harder to write than my normal genre, at least for me. It is set in a small coastal village, more or less present day. The lead character is a rather timid lady-priest from an urban background sent out to hold the fort on the sudden death – in the aisle of the church – of her predecessor, under somewhat mysterious circumstances.

No I did not choose to have a female priest for doctrinal reasons, or because of any deeply held belief on my part. I wrote her as the lead character for two simple reasons – that it is a common de facto situation in the Anglican Church in Tasmania, and I wanted the least suitable character for the problems of a remote rural church and its congregation. That’s what authors do to make a good story: they put their characters in the most difficult situations, and let them dig themselves out. You know, Superman would be really boring without kryptonite. Joy finds ways to turn her weaknesses into strength and, well, she has help.

I wrote this book as a fundraiser for the tiny little Parish of Furneux Islands. I have donated it entirely to them, because they’re in strife and do good things in my community.

And because the image isn’t showing in some browsers…

Final 3

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