Friday, December 30, 2011

Foreign Policy Kills The Bank of Dad

One of my earliest posts explained the function of The Bank of Dad.  By setting artificially high interest rates, this dad thought he could encourage better savings habits.

This grand experiment has failed.  Not for the reasons you might think.  The kids understand it.  Most of the time it works.

However, foreign policy has recently killed the Bank of Dad.  Imagine the EU with an extremely generous, altruistic Germany.  Oh, and a bankrupt Greece.  Now, substitute "Grandchildren" for "Greece" and "Grandparents" for Germany.  And, of course, Dad is some combination of the IMF and European Central Bank.  You see where this is going?

Encouraging austerity measures fails...miserably...especially for an almost-nine-year-old boy with wonderful, generous grandparents, and Chanukah conveniently falling two weeks before a New Year's Eve birthday! 

So, who benefits?  The Man, that's who!

On second thought, maybe the Bank of Dad needs more government-like unsustainable policy?  I could crank rates up so high that the kids still saved beyond December 31st.  Unfortunately, unlike a government that steals from the young to give to the old, that plan would steal from the old to give to the young.  I suppose the bank could always default on depositors!