The Damocles Impact of Sub-Zero Interest Rates

by Jörgen Eriksson on May 28, 2015

Damocles swordDamocles was a courtier at the court of Dionysius II of Syracuse, a fourth century BC Greek city-state tyrant. As legend tells, Damocles exclaimed that as a great man of power and authority, Dionysius was truly fortunate. Dionysius offered to switch places with him for a day, so he could taste first hand that fortune.

In the evening a banquet was held where Damocles very much enjoyed being waited upon like a king. Only at the end of the meal did he look up and notice a sharpened sword hanging directly above his head by a single horse-hair. Immediately, he lost all taste for the amenities and asked leave of the tyrant, saying he no longer wanted to be so fortunate. Dionysius had successfully conveyed a sense of the constant fear that comes with living at the edge of risk.

Today we live in such a time of risk, as interest rates in the advanced economies are set to be lower and lower, and many Economists are concerned this may ignite extremely dangerous deflation. We have written about this in two articles recently, In Denmark You are now Paid to take out a Mortgage and How low can the interest rates go?

Screenshot 2015-05-30 14.09.15

Now deposit interest rates at the ECB and some other European central banks are below zero. In a video from earlier this week, the Financial Times Christopher Thompson and Ferdinando Giugliano discuss why central banks took such a dramatic step and if negative rates are having the desired effect.

Sub-zero Rates

About Jörgen Eriksson :

Jörgen Eriksson is the founder of Bearing and is the Chairman of the firm since it was created. He has successfully expanded Bearing into covering projects on four continents. He is also Adjunct Professor of Innovation Management at the International University of Monaco and at Universitat Politècnica de Catalunya in Barcelona and he is an active member of the Founders Alliance organisation.

Working with consulting engagements across Bearings practices, he has over the past fifteen years participated in and supervised a large number of client projects, from innovation system development and place development and branding, to merger and acquisition assignments and leading edge research and business development activities for key clients.

His new book, Branding for Hooligans, will be published in 2015. It is about how innovation and branding are key survival factors in our modern times of hyper competitive markets.

Prior to Bearing, he was Director of Europe, Middle East, and Africa for Trema Treasury Management, a technology and consulting services provider, supplying financial software solutions for the global financial industry, Clients included The European Central Bank, Citibank, SEB, South African reserve Bank, Deutsche Bank, Abu Dhabi Investment Authority (ADIA), as well as many other large financial institutions and Fortune 500 companies.

Early in his career Eriksson was educated at the Stockholm School of Economics, where he studied economics, financial economics and philosophy. He then worked in Scandinavian investment banks and also for the Swedish Institute of National Defense Research.

You can contact Jörgen on e-mail, connect on LinkedIn onörgen-eriksson/0/38/8a0/ and follow him on twitter on joreri508.

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