A normal, benchmark interest rate for a national economy
is between 3 – 5%. Indeed, if we go back a little further
in history , a normal rate was significantly higher than that range. This
fact is mentioned because after eight years of monetary madness in the West,
many (most?) people have completely forgotten what “normal” is with respect
to interest rates.
The title of this article is something of a misnomer.
There are, in fact, numerous big lies being disseminated concerning the
Western world’s utterly insane, totally criminal, near-zero interest rates
(and now “negative” rates). However, all these Big Lies are then piled on top
of each other, in order to create an even Bigger Lie.
When Japan introduced the world to the “0% interest rate”,
it was universally castigated for this monetary voodoo. But when the Western
world copied
Japan (after Japan’s policy had already failed for more than 20
years), suddenly near-zero interest rates became normal and acceptable. This
brings us to the 21 st Century Principle of Monetary Policy. If
one nation institutes a really crazy monetary policy, by itself, it is
labeled as “insanity”. But if everyone engages in that same, really crazy
monetary policy ( after it has been proven to be a failure) then it
becomes “normal” and acceptable.
To deceive our Zombie populations into believing that
these Criminalized Interest Rates are “normal”, the mainstream media has
turned up its propaganda machine to maximum decibels, broadcasting an endless
series of lies and half-truths, as our governments pretend that they
are not perpetrating the complete
destruction of our economies. A particularly obvious-and-nauseating
example of such lying comes from (where else?) Bloomberg
News .
People have come up with a lot of reasons to worry
about zero interest rates. At first they worried about inflation, and later
about financial instability and bubbles caused by a reach for yield. But the
years passed, and there was no inflation, no bubble or instability in
financial markets . [emphasis mine]
Clearly the remarks above represent such audacious lies
that no sane writer could possibly believe them to be true. “No inflation”?
Food costs have more than doubled over the past eight years. Housing costs
(in many markets) have also more than doubled.
“No bubble”? U.S. equity markets are at all-time
bubble-highs. The U.S. bond markets is also at an all-time bubble-high – and
it isn’t even supposed to be theoretically possible to have a stock
bubble and a bond bubble, simultaneously. There are obvious real
estate bubbles throughout all Western regimes.
“No instability”? We see daily headlines from
Europe, across various jurisdictions of Big Banks in grave, financial
peril . Indeed, more “bank
bail-outs” have already begun. However, for the moment, let’s pretend
that all of the pathetically obvious lies above were actually true – for the
moment – and simply examine the reasoning behind the lies.
But the years passed, and there was no inflation, no
bubble or instability in financial markets.
More generally, this reasoning translates as follows: our
economies haven’t been destroyed yet, so this means there is no
problem with near-zero interest rates. The ‘logic’ behind this assertion is
so infantile that we have a joke/cliché which exposes such stupidity.
A man jumps off the roof of a 100-storey building. As
he sails past an open window on the 50 th floor, someone inside
the building hears him remark, “So far, so good.”
Here we have a liar/apologist hired by Bloomberg to
pretend that near-zero interest rates are not destroying our economies, and
this is the best fiction the writer could produce. Near-zero interest rates
haven’t destroyed our economies yet, so they are OK. And (as already
noted) every facet of the “evidence” used by the writer was a bald-faced lie.
We do have raging inflation. We do have extreme asset bubbles.
We do have massive, financial instability.
Using the allegory above, what we see is that the man who
“jumps off the roof” is about to hit bottom, and be splattered all over the
pavement. However, we have the propagandists still pretending that he
is merely sailing past the 50 th floor, without a care in the
world.
Meanwhile, as these criminal central banks push their criminal
interest rates lower and lower, we now have several corrupt regimes in
the West with negative interest rates – and the rest of these Traitor
Governments will obviously soon follow. “Negative” interest rates represent
open criminality: borrowers literally stealing from lenders/savers. Yet even
here we have the liars of the Corporate media attempting to deceive us into
believing that such criminality is not merely acceptable, but actually “normal”.
The example used is Denmark, and the propaganda comes from (once again) Bloomberg.
The Land Below Zero: Where Negative Interest Rates Are
Normal
Once again, we are tortured with the same, infantile
pseudo-logic: negative interest rates haven’t destroyed Denmark’s economy yet,
so this means they are OK.
Although some dovish economists have advocated
negative interest rates as a salve for deflation and anemic growth, if Econ
101 is to be believed they should have stomach-churning consequences: asset
bubbles, capital flight, and the frenetic manufacture of very heavy vaults to
hold money pulled from banks.
Central bankers looking to Denmark for evidence of
such trauma aren’t likely to see much. If anything, they might find the
Danes’ approach tempting.
Really? Look at the economic policies which Denmark’s
government has been forced to enact, just to keep its economy from completely
disintegrating in the four years since its interest rate first began to creep
into negative territory:
- While interest rates are officially
negative, the banks aren’t allowed to steal “interest payments” from the
bank accounts of ordinary depositors. In other words, a large portion of
Denmark’s financial system has had to be exempted from this monetary
criminality .
- Corporations, which are not
exempt from such stealing, began to pre-pay their taxes as a means of
reducing their cash-on-hand, so it couldn’t be stolen by the banks. Thus
the government had to enact a law limiting corporations from pre-paying
their taxes.
- Even the Bloomberg propagandists
acknowledge there is a real estate bubble in Denmark. To try to prevent
this bubble from spiraling out-of-control, Denmark’s government has
imposed the following rules:
i) Virtually no foreign ownership of real estate is
permitted.
ii) Buyers can only purchase homes that they intend to
live in (i.e. no “speculation”).
iii) Minimum down payments of 5% and rigorous
“stress tests” for all buyers, showing that they could afford ownership even
if interest rates suddenly rise.
Understand that these draconian policies don’t make
negative interest rates sustainable, they are just economic band-aids to reduce
the bleeding. Over the long term, it’s impossible to exempt a large portion
of the economy from that nation’s official interest rate. Over the long term,
it’s impossible for corporations to sustain having their operating capital
steadily bled away, stolen via “interest payments” (and remember that these
negative interest rates are supposed to stimulate our economies).
Then we have the real estate bubbles. No foreign
ownership? No real estate speculators? Only responsible buyers are allowed to
purchase property? Try translating those policies into North America’s
property-bubble, where our real estate market is primarily composed of
foreign buyers, speculators, and “sub-prime mortgages”.
The Bloomberg article attempts to construct the lie that
negative (i.e. criminalized) interest rates have virtually no harmful
repercussions, and thus we in North America should find this criminality
“tempting.” What Bloomberg has actually demonstrated is that it is impossible
to sustain such monetary criminality over the longer term, and it would never
be possible to use “the Danish approach” in North America – where our real
estate bubbles would instantly and violently implode, should our governments
attempt to “regulate” the market in such an ultra-extreme manner.
The reason why it could never be sustainable or even sane
for a central bank to push interest rates to extreme lows over an extended
period of time can be summarized in two words: easy money. As a matter of the
most elementary logic (and arithmetic), if you reduce the cost of capital
to zero (or less) you will see real estate bubbles, market
bubbles, and other forms of speculative malinvestment – in epic proportions.
Compounding this arithmetic, we have “fractional-reserve
banking”: the monetary multiplier of insanity. Looking at just the U.S.
system, every one of the $4 trillion which B.S. Bernanke helicopter-dropped
onto the U.S. economy as the U.S. began monetizing its debt has been
multiplied by the ratio-of-criminality of our “fractional-reserve system”:
35-to-1. Suddenly, that $4 trillion mushrooms to over $100 trillion, an
amount equal to roughly double global GDP, and this is even without
factoring in any interbank lending.
As was explained and demonstrated in previous
commentaries , thanks to the combination of a 0% interest rate and
fractional-reserve banking, U.S. Big Banks have been able to counterfeit
literally infinite quantities of U.S. dollar funny-money . “Easy money”
is a serious danger to any economy. Infinite easy money is a guarantee
of complete economic Armageddon.
To summarize: everything that the puppet politicians,
criminal bankers, and media drones have told us about near-zero, 0%, and
below-zero interest rates is a lie. All of the “evidence” they have
manufactured to supposedly show that these ultra-extreme interest rates are
not destroying our economies is a lie. This leaves one, last point for
discussion. Why?
Why have our Traitor Governments permitted the Big Bank crime
syndicate (and their central bank lackeys) to impose these ultra-extreme
interest rates on our economies – permanently – when it has always been
completely obvious and absolutely inevitable that such a monetary policy
would lead to the total destruction of our economies?
Here the answer to the question is the same as with most
questions we ask about our corrupted economic policies. It is to
facilitate the theft of all of our wealth by the
Banking Oligarchs . The primary mechanism by which the central banks
enable the theft of all our wealth is the financial crime they call
“inflation.” This is not an assertion. Rather, it is an elementary fact,
backed up the famous confession of the worst of these monetary thieves.
In the absence of the gold
standard, there is no way to prevent confiscation of savings
through inflation.
- Alan
Greenspan , 1966
There is no way to protect ourselves from the
financial crime that the central bankers call “inflation”, as they steal from
us on behalf of their Masters. The lower the interest rate, the higher the
inflation rate – i.e. the faster the Banking Oligarchs can steal all our
wealth. First it was near-zero rates, then 0% interest, now “negative” rates.
Faster and faster the Thieves steal our wealth. Bigger
and bigger are the lies which our puppet politicians and central bank
criminals engage in, in order to conceal the systematic looting of all the
wealth from all of our economies. It is the single, largest economic crime-against-humanity
in the history of our species.
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Jeff Nielson is co-founder and managing partner of Bullion Bulls
Canada; a website which provides precious metals commentary, economic
analysis, and mining information to readers and investors. Jeff originally
came to the precious metals sector as an investor around the middle of last
decade, but with a background in economics and law, he soon decided this
was where he wanted to make the focus of his career. His website is www.bullionbullscanada.com.
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The views and opinions expressed in this material are those of the author
as of the publication date, are subject to change and may not necessarily reflect
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