to issue a half - cent coin at that time. in other words, the purchasing power of new zealand's money had declined by over 90 per cent over a period of just 30 years - despite inflation being quite low for the last 10 years of that period. and in case you feel that new zealand's performance was substantially worse than australia's over that period, it is worth noting that the domestic purchasing power of the australian dollar also fell heavily over the 30 years from 1967, by over 85 per cent. there is nothing fair, just, or even honest in a monetary system which steals people's savings, or rewards those lucky enough to go heavily into debt at the right time. there can be little doubt that some of those who today are wealthy in both our countries became wealthy as much through having the real value of their borrowings evaporate before their eyes as through their own efforts and initiative. and this sends absolutely the wrong message to everyone making saving, spending, and investment decisions. i know that when i returned to new zealand in 1971 after living overseas for nine years, four of them in australia, i bought a house for $ 43, 000 by paying a small deposit and borrowing the balance. fifteen years later, the house had a market value of nearly 10 times the price i paid for it, so that instead of owning just 10 per cent of it, as i did in 1971, with the bank effectively owning the balance, by 1986 i owned almost all of it. that increase in my equity was substantially larger than anything i had been able to save out of my post - tax income during those 15 years. on the other side of the ledger so to speak, my elderly uncle sold the apple orchard on which he had worked all his life, by chance also in 1971. to keep the sale proceeds safe - the orchard had represented virtually his entire life's savings - he invested them in 18 year government bonds, then yielding 5. 4 per cent. perhaps fortunately, he died before the bonds matured in 1989, because by that time the $ 30, 000 for which he had sold his orchard would have bought him one small, four - cylinder, car - not much of a retirement nest egg. in 1971, $ 30, 000 would have bought him 11 of the same fourcylinder cars, a much more substantial retirement nest egg. i, and people like me, benefited enormously at the expense of my uncle and people like him, and all

benoit coeure : savers aren ’ t losing out opinion piece by mr benoit coeure, member of the executive board of the european central bank, published in handelsblatt on 11 november 2013. * * * complaints about the european central bank ( ecb ) favouring borrowers over savers with its low - interest - rate policy are getting ever louder. in countries such as germany there is even talk of a “ cold expropriation ” of those who save money for their old age. i don ’ t think this assumption is appropriate. the current low returns for savers are mainly an ongoing result of the recent deep recession and of the fragmentation of the financial market in the euro area. against this background, low interest rates are a tool to maintain price stability. and price stability is a pre - requisite to bring the economy back onto a sustainable growth path. higher key interest rates would have exacerbated the recession, delayed the recovery and contributed to deflationary risks. higher interest rates would therefore hurt savers. they are not the losers under the ecb ’ s monetary policy, as many are claiming. it ’ s true that the ecb ’ s interest rates have never been as low as they are today. the main refinancing rate – the rate at which banks can borrow money over the short term from the central bank and which is perceived by the public as the “ key rate ” – now stands at 0. 25 %. what matters more to german savers, however, is that interest rates for long - term investments that are considered safe have fallen to their lowest level since the establishment of the monetary union. investors in ten - year german bonds currently get an interest rate of around 1. 76 %. the main reason for this is that because of the european sovereign debt crisis investors prefer investments which they consider to be particularly safe. in the end, it can be said that the ecb with its monetary policy has, above all, kept the interest rate low for very short - term loans. but the returns on longer - term investments considered safe have fallen so much primarily as a result of the increased demand. there remains the question of whether the key rates in the euro area are unreasonably low. what would be the level if interest rates could freely form on the market, without monetary policy intervention? this so - called “ natural ” interest rate would fall in a shrinking economy over a prolonged period and rise again during a recovery.