A major central bank now requires you to pay for the privilege of having your money on deposit.

For the first time in the post-WW II period, a European central bank has cut its deposit rates to negative or minus 0.25%. This marks an historic shift in central bank monetary policy, at least for Western banks, and submits to the battle of ongoing deflation in bank credit since 2008.

The Swedish Riksbank, or central bank, cut its deposit rate from 0% to -0.25% yesterday. Central banks have historically avoided negative money rates because it acts as an effective tax on commercial banks and could extend balance sheet stress. That's what occurred in Japan in the 1990s.

In the 1930s, the Fed also cut rates to zero percent as the demand for dollars amid the Great Depression led to minus or negative real inflation-adjusted interest rates. Despite negative real rates throughout the yield curve in the 1930s, the economy continued to struggle and, by late 1937, entered the last leg of a double-dip or W-shaped economic contraction that started in 1932.

I think we're headed to a similar liquidity trap over the next 18-36 months as the current round of massive government fiscal spending is exhausted. If the Swedes are cutting rates to negative territory now – while fiscal stimulus is still pumping the economy – then imagine what lies ahead when government measures to boost growth run out of gas.

Central banks have rarely cut rates to zero percent in the post-WW era.

The Japanese were the first to cut rates to zero percent as a result of the big bust in Japanese assets starting in the early 1990s. But now several major economy central banks – including the Swiss, Danes, Swedes, British, Canadians and the Americans – have all cut rates to rock-bottom levels in their vein to stimulate bank lending.

What the Riksbank's policy response clearly shows is that credit growth is almost non-existent in Sweden. Bank credit is still clogged as CEOs continue to hoard cash and refrain from making new loans in an environment of still shaky balance sheet assets, rising non-performing loans and rising unemployment. Does this sound like a sustainable recovery? The credit crisis is not over.

Have a good weekend. See you on Monday.