LETTER

The Bank of Mattress

 

For 25 years, I have had an account at the Hanley Economic BS, a bank in the UK. On Friday, I received a 90-day notice from them that my account is being closed and my funds returned to me. This follows the same action by the Bradford & Bingley a few months ago, for this is not an isolated event, but an accelerating pattern that results from this "new norm" of near-zero interest rates.

In the old days, banks would raise money from depositors and loan it out to clients, but no more.  With near-zero interest rates for years and governments worldwide offering loads of cheap dough, it is far easier and cheaper for the banking system to receive fat blobs of taxpayer cash from governments borrowed to the hilt rather than actually working for a living to attract investors’ deposits.

In the other direction, too, the consequences of low interests rates are crippling the poor.  At near-zero interest rates, it is pointless for banks to take a risk loaning to low income people, so the poor are forced to deal with emergencies by accessing payday loan sharks like Cashmoney who, by utilising "arrangement fees" are able to charge the equivalent of 10 percent PER WEEK.

Whilst the middle class feel the pinch with house prices soaring through the stratosphere as a result of the crazy low interest rates, the poor worldwide find themselves dealing with crippling rents and a banking system that is now little more than having to put money under the mattress.

Robert L Thompsett
Aylmer