Tag: negative interest rates

DERANGED CENTRAL BANKERS BLOWING UP THE WORLD

It is now self-evident to any sentient being (excludes CNBC shills, Wall Street shyster economists, and Keynesian loving politicians) the mountainous level of unpayable global debt is about to crash down like an avalanche upon hundreds of millions of willfully ignorant citizens who trusted their politician leaders and the central bankers who created the debt out of thin air. McKinsey produced a report last year showing the world had added $57 trillion of debt between 2008 and the 2nd quarter of 2014, with global debt to GDP reaching 286%.

The global economy has only deteriorated since mid-2014, with politicians and central bankers accelerating the issuance of debt. These deranged psychopaths have added in excess of $70 trillion of debt in the last eight years, a 50% increase. With $142 trillion of global debt enough to collapse the global economy in 2008, only a lunatic would implement a “solution” that increased global debt to $212 trillion over the next seven years thinking that would solve a problem created by too much debt.

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The Fed Being Brow-Beaten into Negative Rates?

Guest Post by

FederalReserve-1

The Federal Reserve is in a real crisis. Interest rates are falling negative around the world which by no means has succeeded in stimulating anything. Governments are dead broke and they keep raising taxes yet hope the central bank can compensate by lowering interest rates to negative. Between rising Taxes and declining interest rates, this toxic-mix is destroying pension funds and wiping out the elderly. There is nobody in government who has any common sense to see this is going to wipe out the economy – not stimulate anything.

The Federal Reserve has been talking to U.S. banks behind the curtain and asking them to consider that the Fed might have to do the same to stop the capital inflows. In its annual stress test, the Fed will assess the ability of big banks to survive a drop to negative rates on the three-month U.S. Treasury bill, which simply becomes prolonged.

The central bank announced the stress test for 2016 last week, commenting, “The severely adverse scenario is characterized by a severe global recession, accompanied by a period of heightened corporate financial stress and negative yields for short-term U.S. Treasury securities.”

The Fed pays 0.25% on excess reserves and that drives much of the capital inflow. Foreign banks have used their U.S. branches to get in on the game. They are shipping in cash from Europe and Asia, and they do not lend and park it at the Fed. Taking rates negative will only create a real financial crisis for as long as the Fed continues to pay 0.25% on excess reserves. A bank will be able to charge you to keep money there, so park it at the Fed and make a 100% riskless trade. This is the ultimate wet dream for Goldman Sachs especially.

Negative Interest Rates will flip investment and drive capital into the stock market just for yield. If pension funds do not dump government debt, they will go bankrupt. This is totally insane and even Social Security will collapse.


They’re coming for your cash

Guest Post by Mark Nestmann

It might sound like a conspiracy theory spun by right-wing crazies. But judging by the increasing desperation of governments to reboot the world economy, it just might happen.

“It” is the recall or confiscation of cash, i.e., dollars, euros, pounds, etc., in physical form. And a key justification that those calling for this radical measure cite is that it reinforces the ability of central banks to impose negative interest rates.

Negative rates mean that lenders literally pay businesses and consumers to borrow money. They also penalize savers for hoarding it. The Danish and Swiss national banks have gone the farthest into negative territory, with interest rates of -0.75%. That means €100,000 in a euro-denominated account in Switzerland would be worth only €99,250 after one year. While these rates apply only to “excess reserves” banks maintain at the central bank, nothing stops banks from requiring depositors to share the pain.

But that’s not enough, according to some economists. Citicorp’s chief economist, a technocrat named Willem Buiter, thinks the US needs much lower interest rates to push the economy out of the doldrums. He thinks negative interest rates around -6% would do the job. But there’s one condition: For his plan to work, he says, the government must abolish cash.

It’s easy to understand why Buiter might not have warm and fuzzy thoughts about cash. After all, if your bank is taking 6% from your savings, $100 in your account would be worth only $94 at the end of one year, $88.36 after two years, and $83.06 after three years. On the other hand, a $100 bill with Ben Franklin’s picture on it would still be worth… well, $100. Buiter understands that as long as cash exists, no one will voluntarily keep their savings in accounts with negative interest rates.

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Yellen Tells Congress Negative Interest Rates Are Possible

Guest Post by

yellen-Janet

Reuters has reported that Yellen told a House of Representatives committee when testifying before Congress: “Potentially anything – including negative interest rates – would be on the table. But we would have to study carefully how they would work here in the U.S. context.”

Yellen may have been placating Congress for negative rates would wipe out the elderly entirely. They have failed to work in Europe in the slightest.

Swiss 1000-CHF

Negative interest rates are not working in Europe. Even in Switzerland, hoarding of cash is becoming a national pass-time. This entire idea demonstrates that those who would be king, do not understand even how the economy functions.

Paine-Common Sense

We are back to Thomas Paine’s Common Sense that inspired the American Revolution. He explained that government was evil because it operates from a NEGATIVE perspective to always PUNISH the people. This is the only way those in government ever perceive their power – it is always to demand and punish, never to work with society to comprehend what the problem might be.

Budget Crisis 2917

Taxes are too high and the standard of living has declined. Those in power will ONLY raise taxes because they are incapable of reform. The year 2017 will cross the Rubicon. The inflation they are desperately trying to create will arrive, but not in the form they desire.