Steen Jakobsen, Chief Economist at Saxo Bank, says tightening monetary policy has created a 60% chance of a US recession in 2016. Contrary to popular understanding, he says monetary policy has been tightening since 2014. A counter-intuitive example of this comes from negative interest rates. “I live in one of the few countries where we have negative interest rates. I pay more for money today than I did when the interest rate was positive. The market-based rate may go to zero or negative, but to protect their regulatory capital, the lender put on an extra 1-1.5% in fees. That is really a tax on capital.” Regulators see higher financial risk in lending out money at zero rates and charge the banks a premium for the ability to do this, which is then passed on to borrowers. In this video, he explains how the Fed is ‘taxing’ the US banks.