In the topsy turvy world we live in, almost everything that has been considered good is now evil, and everything that was formerly considered sin, is now virtue. We see this in the ongoing sexual revolution, but don’t mislead yourself–it doesn’t stop there.

Our political and monetary system* now embraces monetary nonsense as a matter of course. The press routinely talks about the fact that we have less than 2% CPI inflation as somehow harmful (parroting the Fed), which I assert is bad economics. We can have deflation be bad (almost never historically) or good (except the Great Depression) but inflation is always bad; or at least it makes no sense to talk about a good inflation. I talk about good deflations all the time in class–there is no counter category of a good inflation.

But perhaps the biggest nonsense is that constant framing that the economy just does things and can go off track, but that the enlightened leaders can hopefully steer it. We almost have this vision of a bullrider (Mr. Powell) on top of a wild bull (the market). So it is with the discussion of negative interest rates. Yesterday Mr. Greenspan, the long-revered but now somewhat discredited former chair of the Board of Governors, suggested there is nothing to stop interest rates from going negative.

There is some $15 trillion in government debt that now yields less than zero, and former Federal Reserve Chairman Alan Greenspan believes there’s no reason why U.S. government bond yields couldn’t join much of the developed world in the subzero world. Greenspan, during a phone interview with Bloomberg News on Tuesday, said “zero” has no real meaning for the U.S. bond market and that a slide below that psychological level, already traversed by many others countries, wouldn’t be inconceivable for U.S. paper.

We are unmistakably being led to believe that the market just might take us to negative rates–we might even slide below the nothing-magical 0% interest level. Let me say as strongly as possible: Our interest rates will not just slide below zero. They may go there, but that will be a deliberate act of our monetary authority to do so. Our current craziness of negative interest rates in Europe is a result of the extreme policies of the ECB, both monetary and regulatory. We may join them, but it will be because the Fed takes us there.

The monetary authority has the ability to do so, and it many respects its not much different than financial repressions of the past. I’ve always known that it would go this way, because it always has. Earlier financial repressions would work like this: the monetary authority would create an inflation while capping interest rates. India, if my memory serves me well, had something like a 20% inflation rate in the 1970s while capping interest rates at 5%. This would be an inflation tax of 15% on all savers–they would have 15% less purchasing power at the end of one year of saving for the future. Negative interest rates work identically, they are just a sneakier way of doing it. So in the decade after the financial crisis, the Fed systematically took about 2% per year inflation tax (depositors received virtually nothing in interest while inflation was about 2%). When we go to negative interest rates, that will simply expand the financial repression and increase the inflation tax.

Who is the primary beneficiary of these negative interest rates? That would be the biggest borrower–yes, you guessed it, the U.S. Treasury. Our debt cannot be paid off, but it can be inflated away. I would not be surprised to see us go there too. But make no mistake, it won’t just happen–it will be directed by our political process for many reasons, and a very important one will be to manage our massive debt. “The wicked borrows but does not pay back,” is changed by our political process to be “the government borrows but pays back with funny money.” Always has, always will.

* Make no mistake, our monetary system is deeply embedded in our political system–beginning with every member of the board of governors being nominated by the president and confirmed by the senate