We might soon have to pay our banks for holding our money for us. This is a veritable penalty for being in the black, as distinct from egregious rates we are charged when overdrawn. Such a negative interest scheme has just been instituted by the European Central Bank as a supposed growth stimulant.

Since we are bound by ties of imports and exports to Europe, it’s not too far-fetched to assume that something of the sort is bound to eventually reach the bank branches nearest us.

It appears that savings are the latter-day enemy of economic well-being. What was conventionally held as the long-term common-sense goal for industrious and productive households has now become a mind-set to be actively discouraged.

Hence we might find periodical deductions from our accounts unless we rush to splurge. Why? Because money is like any other commodity. The more of it available on the marketplace, the less it costs and vice versa. Inflation means too much cheap money. Deflation is too little money, which impels some central bankers to punish us for stashing it – that is, saving.

We have already grown inured to our savings earning next to nothing in the bank. The next stage to push us to spend is to charge us what amounts to rent for keeping money in the bank. This is negative interest and the rationale is that by not withholding money from circulation, we grease the economy’s wheels.

Israel generally boasts slightly higher interest rates than elsewhere, a fact that artificially overvalues the shekel by making Israel a desirable location for speculators.

Since this is detrimental for exports, it’s doubtful that the Bank of Israel can long afford large interest differentials with Europe, a fact that may well usher in negative rates here and spell disaster for mom-and-pop savers and conservative investors.

Can negative interest actually transfuse stagnating economies? It’s more like an ill-thought facile act of desperation.

Creating synthetic inflation won’t do the trick, especially if it comes in place of needed labor reforms and small business boosts. Joblessness and sluggish financial systems aren’t only the products of monetary policies.

As long as risks remain high, banks are not likely to exhibit greater credit generosity.

In theory low interest is the great equalizer. It hypothetically enables the have-nots to borrow cheaply, pay off debts, consume by resorting to inexpensive credit and acquire property at tempting mortgages. But in real life the beneficiaries of low and negative interest rates are the lenders, the banks, the stock market players along with building contractors and developers. Spiraling real estate prices are the one surefire outcome.

The American experience of recent years shows that those who most need credit are least likely to get it from risk-wary banks, while the cheap money being piped into the economy inflates financial markets and real estate bubbles that only further broaden and deepen the initial inequality. Those with wherewithal can buy more, but those with limited means won’t win any perks.

What will happen is that traditional savers and unadventurous small-time investors will be forced into riskier behavior. That’s why more speculative investment avenues appear to be booming and why the stock markets keep setting new records. Bubbles are already feared in Israeli corporate bonds fueled by low interest rates.

There’s nowhere to safely grow savings.

Another money magnet is the housing market, where bubbles are being inflated despite Finance Minister Yair Lapid’s notion of exempting given first-home buyers from VAT. This exemption is wholly irrelevant to investors, many of whom may be pushed despite themselves into real estate purchases. They will be buying at high prices and will thereby raise housing costs even further for young families.

None of this is remotely likely to resuscitate a slowing or dormant economy, but it can induce fever in localized economic niches and set the course for the next great crisis.

Monetary and housing bubbles aren’t synonymous with economic growth, and the cure they’re expected to herald can, if anything, be far worse than the disease for which they were prescribed.

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