The Hidden Tax in Central Banks’ Low-Interest Policy

Under the regime of the two-per-cent inflation standard, governments are levying a vast new tax. This shows up nowhere in public sector or private sector accounts and has so far created little if any resentment among those subject to its burden. Many live in the illusion that there is a continuing escape possible. This is a dream tax from the viewpoint of the collectors and their political masters.

As such the monetary repression tax (MRT) triumphs over the older and better-known inflation tax in terms of political efficiency. As regards economic efficiency, by contrast, both taxes are potentially devastating.