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NIRP Has Arrived: Europe Officially Enters The "Monetary Twilight Zone"

Tyler Durden's picture




 

Goodbye ZIRP, hello NIRP. Today's decision by the ECB to officially lower the deposit facility rate to negative (as in you pay the bank to hold your deposits) is shocking, but not surprising: we previewed just this outcome precisely two years ago in "Europe's "Monetary Twilight Zone" Neutron Bomb: NIRP"

Here is what we wrote in June 2012 about Europe's unprecedented NIRP monetary experiment.

Just because ZIRP is so 2009 (and will be until the end of central planning as the Fed can not afford to hike rates ever again), the ECB is now contemplating something far more drastic: charging depositors for the privilege of holding money. Enter NIRP, aka Negative Interest Rate Policy.

Bloomberg reports that "European Central Bank President Mario Draghi is contemplating taking interest rates into a twilight zone shunned by the Federal Reserve. while cutting ECB rates may boost confidence, stimulate lending and foster growth, it could also involve reducing the bank’s deposit rate to zero or even lower. Once an obstacle for policy makers because it risks hurting the money markets they’re trying to revive, cutting the deposit rate from 0.25 percent is no longer a taboo, two euro-area central bank officials said on June 15... “The European recession is worsening, the ECB has to do more,” said Julian Callow, chief European economist at Barclays Capital in London, who forecasts rates will be cut at the ECB’s next policy meeting on July 5. “A negative deposit rate is something they need to consider but taking it to zero as a first step is more likely.” Should Draghi elect to cut the deposit rate to zero or lower, he’ll be entering territory few policy makers have dared to venture. Sweden’s Riksbank in July 2009 became the world’s first central bank to charge financial institutions for the money they deposited with it overnight."

There is only one problem when comparing the Riksbank with the ECB: at €747 billion in deposits parked at the ECB as of yesterday, the ECB is currently paying out 0.25% on this balance, a move which may or may not be a reason for the depositor banks, primarily of North European extraction, to keep their money parked in Frankfurt. However, once this money has to pay to stay, it is certain that nearly $1 trillion in deposit cash, currently in electronic format, would flood the market. What happens next is unknown: the ECB hopes that this liquidity flood will be contained. The reality will be vastly different. One thing is certain: inflating the debt is the only way out for the status quo. The only question is what format it will take.

More from Bloomberg:

It won’t help the prospect of a functioning money market because banks won’t be compensated for the risk they’re taking,” said Orlando Green, a fixed-income strategist at Credit Agricole Corporate & Investment Bank in London. It would make more sense to lower the benchmark rate, thus reducing the interest banks pay on ECB loans, and keep the deposit rate where it is, Green said.

 

The ECB has lent banks more than 1 trillion euros in three- year loans, with the interest determined by the average of the benchmark rate over that period. Societe Generale SA estimates that cutting the key rate by 50 basis points would save banks 5 billion euros a year.

 

The deposit rate traditionally moves in tandem with the benchmark, which policy makers kept at a record low of 1 percent on June 6. Draghi said “a few” officials called for a cut, fueling speculation the bank could act next month.

Sadly, because all this is merely operating in the confines of a broken system, just as the LTRO provides a brief respite only to commence crushing banks such as Monte Paschi, so any further intervention by the ECB will only lead to a faster unwind of an unstable system.

Other institutions have opted against such a move. The Fed started paying interest on deposits to help keep the federal funds rate near its target in October 2008 and has reimbursed banks with 0.25 percent on required and excess reserve balances since December that year.

 

Some Fed policy makers last August argued that reducing the rate could be helpful in easing financial conditions. While they discussed doing so in September, many expressed concern that such a move “risked costly disruptions to money markets and to the intermediation of credit,” the Fed said in minutes published on Oct. 12.

 

The Bank of Japan (8301) introduced a Complementary Deposit Facility in October 2008 to provide financial institutions with liquidity and stabilize markets, and has kept the interest it pays for the funds at 0.1 percent since then. Governor Masaaki Shirakawa told reporters on May 23 there would be “large demerits” to reducing the deposit rate because it could lead to a decline in money-market trading.

It gets worse: by trying to help banks, the ECB will actually be impairng them:

If the ECB cut the deposit rate, it would take an important profit opportunity away from banks,” said Tobias Blattner, an economist at Daiwa Capital Markets Europe in London. By doing so, the ECB would also be “encouraging banks to lend to the real economy” even though “there’s hardly any demand for credit,” he said. Blattner predicts the ECB will cut its benchmark and leave the deposit rate at 0.25 percent.

 

ECB Executive Board member Benoit Coeure said on Feb. 19 that market interest rates of zero or lower “can result in a credit contraction.”

 

That’s because banks, trying to preserve their deposit bases by paying customers a reasonable interest rate, may reduce lending to companies and households because the return is too low and invest in higher-yielding assets instead.

Finally kiss money markets - which together with Repos are one of the core components of shadow banking - goodbye:

“A deposit rate at zero will be of particular support to banks in southern Europe because it could help encourage some flow of credit,” said Callow. “A negative deposit rate can be damaging for money markets.”

 

Negative rates would destroy the business model for money- market funds, which would face the prospect of paying to invest, said Societe Generale economist Klaus Baader.

 

“But the ECB doesn’t set policy to keep alive certain parts of the financial sector,” he said. “Policy makers want to show that they haven’t exhausted their options yet.”

 

 

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Thu, 06/05/2014 - 12:10 | 4827056 TSTM
TSTM's picture

The CBs only weapon against asset deflation is deflation - deflating the value of currency. Quite the paradox.

Thu, 06/05/2014 - 12:15 | 4827074 midtowng
midtowng's picture

It took longer than anyone expected, but V. Lenin was right when he said the way to destroy capitalism is to debase its money (paraphrased).

Thu, 06/05/2014 - 16:48 | 4828011 Alien 851
Alien 851's picture

If negative 0.1% why not "up (down?, I'm confused now) the interest" to negative 5.0% or even negative 25%, voila, no more revenue problem....or less of one...  

Thu, 06/05/2014 - 08:01 | 4826119 GetZeeGold
GetZeeGold's picture

 

 

 

Here is what we wrote two years ago

 

Dude.....that was like two years ago!

Thu, 06/05/2014 - 08:00 | 4826122 sodbuster
sodbuster's picture

WTF??!!! I thought the crisis was over, everything was fine! I guess, in fact, it is not.

Thu, 06/05/2014 - 08:06 | 4826138 TheFourthStooge-ing
TheFourthStooge-ing's picture

.

WTF??!!! I thought the crisis was over, everything was fine!

Greece fires are notorious for being difficult to extinguish.

Thu, 06/05/2014 - 12:46 | 4827188 DoChenRollingBearing
DoChenRollingBearing's picture

Good one!  Ha ha!

Thu, 06/05/2014 - 08:12 | 4826162 Oldwood
Oldwood's picture

Evidently just a minor "tuning" adjustment.

You do have to appreciate what they have been able to do,

     Charge interest to lend money they do not possess

     Charge a holding fee to put your cash in their bank

     Earn income by taking Fed funds to buy US treasuries

     Too Big To Fail so they never have to say they are sorry

Thu, 06/05/2014 - 10:26 | 4826711 JRobby
JRobby's picture

The can seems to be lodged in some obnoxious weeds growing close to the place where the road ends.

Thu, 06/05/2014 - 08:02 | 4826126 buzzsaw99
buzzsaw99's picture

i was WRONG about ZIRP 4EVAH? Oh, the humiliation.

Thu, 06/05/2014 - 08:03 | 4826130 El Hosel
El Hosel's picture

Ponzi palooza

Thu, 06/05/2014 - 09:10 | 4826396 Anasteus
Anasteus's picture

Nothing wrong. NIRP is just a cosmetic facade in the next act of the farce. The amount deducted from bank deposits will be compensated for by positive yields from bonds or treasuries. The measure seems to me an impetus to encourage private banks to buy the sovereign debts instead of central banks. And a suitable excuse for bailins if the states fail to fulfil their obligations.

Thu, 06/05/2014 - 08:03 | 4826129 headhunt
headhunt's picture

Funny how Putin seems less and less crazy... for a communist

 

Thu, 06/05/2014 - 08:30 | 4826217 Ghordius
Ghordius's picture

Putin is for sure not a communist. though he holds Mussolini's handbook in his hand. and yes, there is a difference between fascist and communist

no, I'm not accusing Putin to be a fascist. only to skirt the boundary to fascism

Thu, 06/05/2014 - 09:26 | 4826460 headhunt
headhunt's picture

Not a communist in the pure Marxist sense but today's version of such.

If you want to see fascism look no further than the USSA

Thu, 06/05/2014 - 09:40 | 4826534 Ghordius
Ghordius's picture

I mean there is a difference between ultra-liberal corporatocracy and fascist corporativism

Thu, 06/05/2014 - 12:07 | 4827046 Jumbotron
Jumbotron's picture

I need better glasses to see that distinction in reality.

Thu, 06/05/2014 - 16:28 | 4827216 headhunt
headhunt's picture

.

Thu, 06/05/2014 - 12:46 | 4827183 JuliaS
JuliaS's picture

Mussolini wasn't a fascist - he was facilitator and a piggyback speculator. He bet on Germany and lost.

Thu, 06/05/2014 - 08:05 | 4826132 Ghordius
Ghordius's picture

"There is only one problem when comparing the Riksbank with the ECB: at €747 billion in deposits parked at the ECB as of yesterday, the ECB is currently paying out 0.25% on this balance, a move which may or may not be a reason for the depositor banks, primarily of North European extraction, to keep their money parked in Frankfurt. However, once this money has to pay to stay, it is certain that nearly $1 trillion in deposit cash, currently in electronic format, would flood the market. What happens next is unknown: the ECB hopes that this liquidity flood will be contained. The reality will be vastly different."

reality looked different in both Sweden and Denmark (yes, Denmark went to NIRP, lately). a lot of bank's cash was kept on the national bank's accounts nevertheless

yet the logic is this: ECB to eurozone banks, stop playing in the markets and lend. or else

Thu, 06/05/2014 - 08:13 | 4826171 sodbuster
sodbuster's picture

yet the logic is this: ECB to eurozone banks, stop playing in the markets and lend. or else...........problem is, you need a willing,credible, borrower.

Thu, 06/05/2014 - 08:25 | 4826206 Ghordius
Ghordius's picture

+1 and my suspicion is that the borrower is not willing. remember all the ZH articles about how new net lending is becoming negative, particularly in Italy?

all those SMEs, but also a lot of private borrowers are paying loans back. which makes perfect sense, imho. I'm doing the same for years, now, and all the SMEs I know of are doing the same, across the whole eurozone

growth? where? in China? in the US? I'd be happy to produce more, but there is no new customer in sight. and no, this can't be "fixed" by monetary policy

so reducing debt is reducing exposure to bad events. it's less disinvesting and more a form of saving

Thu, 06/05/2014 - 08:47 | 4826296 LawsofPhysics
LawsofPhysics's picture

Please Ghordius, the average european is smart enough to know that there is no monetary or political solution to scarcity.  

Thu, 06/05/2014 - 12:31 | 4827136 Herd Redirectio...
Herd Redirection Committee's picture

Well, at the very least one could expect more efficient capital allocation.  If there were free markets, I mean.

Thu, 06/05/2014 - 08:54 | 4826333 sodbuster
sodbuster's picture

but also a lot of private borrowers are paying loans back. which makes perfect sense, imho.......... agreed- I will be debt free by this fall. Banker, actually calls me and BEGS me to buy equipment and borrow more. Had an old-timer tell me once, years ago, if you need advice or a business decision made, go to your banker and lay it all out, give him all the info you have- then when he tells you his opinion, do the exact opposite. Works everytime!!

Thu, 06/05/2014 - 08:57 | 4826344 darkpool2
darkpool2's picture

Completely agree. About the best "investment" a SME can make is use available cash flow to retire any and all loan facilities, then secondly add to first quality saleable inventory ( yes, funny how input costs arent falling for most businesses ! ) ........after basic sustaining Capex, anything left can go to.............. ( well, i will leave you all to figure that one out......;). )

Thu, 06/05/2014 - 08:27 | 4826212 bobby02
bobby02's picture

Far be it from me to throw cold water on a doomer boner, but EUR 787B is what percentage of total EU MFI assets (?EUR 55 trillion?) to say nothing of total EU financial assets or total EU assets.

 

Besides which, why lend? Bunds look nice. Hell, PIIGy paper might even catch a bid. That would certainly make Mario smile and EU MFI balance sheets would look even purtier.

Thu, 06/05/2014 - 08:27 | 4826215 fonzannoon
fonzannoon's picture

Ghordius what if no one wants a loan?

Thu, 06/05/2014 - 08:31 | 4826229 Ghordius
Ghordius's picture

+1 exactly. the old national bank saying was: you can lead the horse to the water, but you can't force it to drink

Thu, 06/05/2014 - 09:18 | 4826423 Greenskeeper_Carl
Greenskeeper_Carl's picture

Remember the discussion we had about this awhile back? Looks like we will find out how Europeans will react first, followed by us 'mericans soon. You will probably be right. I don't know why I gave my fellow man so much credit. They are sheep, therefore they will be fleeced like sheep. "All your monies have belong to us!"

Thu, 06/05/2014 - 08:37 | 4826250 tarsubil
tarsubil's picture

They just need to press the shiny red NIRP button. What could go wrong?

Thu, 06/05/2014 - 08:06 | 4826139 buzzsaw99
buzzsaw99's picture

this is so freaking bullish for usa and german securities bitchez

Thu, 06/05/2014 - 08:48 | 4826302 New_Meat
New_Meat's picture

money goes where it is treated the best (or at least better)

Thu, 06/05/2014 - 12:50 | 4827206 DoChenRollingBearing
DoChenRollingBearing's picture

Peru

:)

Thu, 06/05/2014 - 08:07 | 4826141 JustObserving
JustObserving's picture

You can pay banksters for the privilege of holding your money.  Or you can buy a diminishing asset like gold since every year it gets cheaper to mine gold.

Thu, 06/05/2014 - 08:10 | 4826153 GetZeeGold
GetZeeGold's picture

 

 

Gold gets easier and easier to mine every year....it's like they're not even trying to find it.

Thu, 06/05/2014 - 08:23 | 4826201 TheFourthStooge-ing
TheFourthStooge-ing's picture

.

Gold gets easier and easier to mine every year....it's like they're not even trying to find it.

I know, right?! Lately it's been rising up to the surface everywhere. I have to rake the gold nuggets out of my yard before I mow the lawn because they're just like yellow rocks.

Thu, 06/05/2014 - 08:31 | 4826233 GetZeeGold
GetZeeGold's picture

 

 

Gotta do it....that will really screwup a good lawnmower mulching blade.

Thu, 06/05/2014 - 08:55 | 4826338 TuPhat
TuPhat's picture

Then what can you do with it?  The garbage truck won't haul it off cause it's so heavy.

Thu, 06/05/2014 - 11:36 | 4826929 tonyw
tonyw's picture

i just chuck it in the river, people keep finding it but i don't know what they do with it.

Thu, 06/05/2014 - 11:44 | 4826949 medium giraffe
medium giraffe's picture

WTF? I thought Gold was made from paper? It's rocks?  Are there scissors?

Thu, 06/05/2014 - 12:33 | 4827147 Herd Redirectio...
Herd Redirection Committee's picture

Nitrohydrochloric acid.  You're welcome, bitchez.

Thu, 06/05/2014 - 16:04 | 4827865 Tall Tom
Tall Tom's picture

Then what do you do with that corrosive Aqua Regia?

I do not need lawn burns. They are just so unsightly and the neighbors will complain to the county that I am poisoning the ground water.

Thu, 06/05/2014 - 11:51 | 4826971 ParkAveFlasher
ParkAveFlasher's picture

It's useful for making trinkets, that you can exchange (sell) for cash, which is universally accepted by all the people who sell to you the things that you need to buy.

Thu, 06/05/2014 - 09:21 | 4826432 Calmyourself
Calmyourself's picture

C'mon now it is like $5 / oz to mine..  I forget that trolls name, old timers help?

Thu, 06/05/2014 - 11:55 | 4826527 813kml
813kml's picture

Little known secret:  the yellow corn-like objects in poo are actually gold nuggets.

It's all a bit alchemic, I find that my production peaks when I eat Goldfish crackers and rootbeer floats.

Thu, 06/05/2014 - 08:07 | 4826145 eddiebe
eddiebe's picture

The real question that comes to my mind is who is profiting from this, and how?

Thu, 06/05/2014 - 08:15 | 4826177 ParkAveFlasher
ParkAveFlasher's picture

I know who isn't.

Thu, 06/05/2014 - 08:48 | 4826304 OC Sure
OC Sure's picture

Eddiebe,

Whomever receives the new currency first uses it to exchange it for real things. It is an exchange of nothing for something and therefore is not accretive to anyone but the thief. To everyone else the action is dilutive.

Thu, 06/05/2014 - 08:08 | 4826148 fzrkid
fzrkid's picture

Obviously, this is what consumers have been waiting for. With the flow of debt there is no need to work. Just borrow $$, spend, borrow more to repay, REPEAT..

 

I always knew work was for fools.

Thu, 06/05/2014 - 12:39 | 4827167 Herd Redirectio...
Herd Redirection Committee's picture

So if the bank is charging people to store their deposits, surely they will pay me to borrow money from them?

Thu, 06/05/2014 - 08:11 | 4826163 Billy Sol Estes
Billy Sol Estes's picture

Bank Run! Bank Run! Bank Run! Bank Run!

Thu, 06/05/2014 - 08:13 | 4826168 buzzsaw99
buzzsaw99's picture

neer neer ner ner neer neer ner ner....

Thu, 06/05/2014 - 08:16 | 4826185 ParkAveFlasher
ParkAveFlasher's picture

Cue those pussy Euro cop sirens.

Thu, 06/05/2014 - 08:24 | 4826205 buzzsaw99
buzzsaw99's picture

“There is a fifth dimension beyond that which is known to man ... a dimension as vast as space and as timeless as infinity. It is the middle ground between light and shadow, between science and superstition, and it lies between the pit of man's fears and the summit of his knowledge...

You have just crossed into, the NIRP-light-ZONE.

Thu, 06/05/2014 - 08:38 | 4826253 negative rates
negative rates's picture

Actually it's the space inbetween your ears.

Thu, 06/05/2014 - 08:16 | 4826186 MilwaukeeMark
MilwaukeeMark's picture

Rather than really fixing any problems  ... let's just duct tape over them.

Thu, 06/05/2014 - 08:26 | 4826210 buzzsaw99
buzzsaw99's picture

duct tape is passe. Gorilla tape. GO-rilla!

Thu, 06/05/2014 - 18:19 | 4828260 stormsailor
stormsailor's picture

det cord works best

Thu, 06/05/2014 - 08:18 | 4826191 Dr Benway
Dr Benway's picture

Why not negative interest on loans, so the bank must pay interest every month to its borrowers. And the banks could ensure only cronies got the NIRP loans.

Thu, 06/05/2014 - 08:27 | 4826211 buzzsaw99
buzzsaw99's picture

that only works if you are a big bank. it's called interest on borrowed reserves.

Thu, 06/05/2014 - 08:21 | 4826197 tradewithdave
tradewithdave's picture

Why even bother mining it... Just value the in-situ gold and nationalize it... ala Vector Gold. Rising costs? ... there, fixed it.

Thu, 06/05/2014 - 08:22 | 4826198 asking4it2k
asking4it2k's picture

Are the hard working, innovative Germans going to have to bailout the entire EU??

Thu, 06/05/2014 - 08:24 | 4826203 GetZeeGold
GetZeeGold's picture

 

 

Dude......shhhh!

Thu, 06/05/2014 - 08:30 | 4826223 the not so migh...
the not so mighty maximiza's picture

so they pay you to take a loan now?

Thu, 06/05/2014 - 09:10 | 4826397 madcows
madcows's picture

nope.  they force the banks to pay the FED to hold their money.  in other words... DAMN it boys.  We need more risky loans to get this economy roaring.  LEND LEND LEND.  We don't care who takes the money.  Just get it out there.

 

Like this whole shit fest wasn't caused by loose money policy.  The whole fucking thing is a SNAFU.  The world economy sucks b/c of bad banking, and now they're going to increase the bad banking policies?  This ends badly.

Thu, 06/05/2014 - 08:34 | 4826241 Peter Pan
Peter Pan's picture

The first step is to refuse you interest on your money.
The next step is to refuse you your money.
The final step is to tell you there is no money but that out of the goodness of their heart they will refund you the money using a German style repayment plan of seven years.

Thu, 06/05/2014 - 08:35 | 4826244 OC Sure
OC Sure's picture

 

 

It is the fundamental law of the universe.

Something cannot come from nothing.

Therefore, when the thieves exchange nothing for something then nothing happens.

...Well, what happens is they steal from wealth and make matters worse.

 

Thu, 06/05/2014 - 08:40 | 4826251 Notsobadwlad
Notsobadwlad's picture

If they lend money to consumers at negative interest rates then they will expand the use of money. However, I can guarantee you that paying negative interest rates on deposits and lending to banks at negative interest rates will do nothing except to make banks bid up assets further so as to put assets further out of the reach of consumers and cause people to take as much money as they possibly can out of banks and put it under their mattress.... while the value of the mney is inflated away by the banking criminals.

But, I am sure the ECB already knows this ... and that is why they are proceeding. Banks have no need or interest in depositor money, because the amount is too small for them to bother with... pretty sad, eh?

Thu, 06/05/2014 - 09:09 | 4826393 OC Sure
OC Sure's picture

"If they lend money to consumers at negative interest rates then they will expand the use of money"

At what cost? The new currency will decrease the value of the existing currency.

Everyone will have to run faster so they can fall behind slower.

Thu, 06/05/2014 - 12:50 | 4827201 Herd Redirectio...
Herd Redirection Committee's picture

First people will stuff it in  a mattress.  Then when prices double in the space of two years, they will try to spend it ASAP.  And foreigners holding USD will come to the same conclusion, just slightly earlier.  Result:  Massive price inflation in necessities.  Deflation or stagnant prices in houses, cars, goods which are typically financed, not bought outright.

Thu, 06/05/2014 - 08:40 | 4826260 Magooo
Magooo's picture

Ask the question - why are they doing these seemingly insane things?

 

What do they fear?

 

I will tell you -- 100 oil means the end of growth - that is what they fear

Thu, 06/05/2014 - 08:46 | 4826282 Notsobadwlad
Notsobadwlad's picture

I do not think that is it. Consumers do not control the price of oil, the banks do. So, they would be fearing a situation that they themseves created.

They are still in the process of creating their one world banking ruled government. So, they have to take away the power of everyone who is not them and make them beg to be ruled ... but I do not think that it will go the way they want (JMHO).

Thu, 06/05/2014 - 09:02 | 4826364 sodbuster
sodbuster's picture

Yep- NWO-

Meet the new boss, same as the old boss.........!!!!

Thu, 06/05/2014 - 08:45 | 4826280 LawsofPhysics
LawsofPhysics's picture

There simply is no other way to say this other than it time to prepare for war on a global scale.

Thu, 06/05/2014 - 09:12 | 4826404 g'kar
g'kar's picture

"prepare for war on a global scale."

 

The question is which form Gozer will take upon arrival.

Thu, 06/05/2014 - 09:41 | 4826540 medium giraffe
medium giraffe's picture

Suspect he'll look a lot like John Kerry.

Thu, 06/05/2014 - 11:15 | 4826858 g'kar
g'kar's picture

Kerry's head on that Stay-Puft body. Now that would be hideous.

Thu, 06/05/2014 - 11:36 | 4826928 medium giraffe
medium giraffe's picture

Lol! & John McCain as Slimer.  He's got the grin.  And the slime.

Thu, 06/05/2014 - 13:49 | 4827410 g'kar
g'kar's picture

Calling WB7, we need some nice pictures!

Thu, 06/05/2014 - 09:14 | 4826409 OC Sure
OC Sure's picture

War is already upon those who oppose tyranny via the usurpation and global alliances of the banking systems. The creation of new currency does not produce wealth and instead steals it. For generations, tyranny has already been at war and weakening their opponents.

Thu, 06/05/2014 - 08:48 | 4826300 Mabussur
Mabussur's picture

OT :

Anyone remember when and where Greenwald was supposed to post Snowden's list of people that have been spied on by the NSA ?

/OT

sorry about the hijack

Thu, 06/05/2014 - 12:06 | 4827039 Cathartes Aura
Cathartes Aura's picture

"the sky all covered in spectacular multicolored hues"

 

4th of July?  

Thu, 06/05/2014 - 18:11 | 4828230 Tall Tom
Tall Tom's picture

https://firstlook.org/theintercept/

 

As for when there was no announcement as to time.

 

Back to topic.

Thu, 06/05/2014 - 08:50 | 4826309 Falconsixone
Falconsixone's picture

I gotta go take a ECB.

Thu, 06/05/2014 - 08:52 | 4826323 SheepDog-One
SheepDog-One's picture

NIRP 4eva....and now we've got Flavor-Blaster Doritos! It's a party bitchez!

Thu, 06/05/2014 - 09:01 | 4826363 jay28elle
jay28elle's picture

...hey, don't go knocking Flavor-Blaster Doritos. These are some of only a few good things coming out of the last 5 years (besides my 401k index funds, of course).

Thu, 06/05/2014 - 20:50 | 4828664 Cornfedbloodstool
Cornfedbloodstool's picture

Wow that was funny! +100

Thu, 06/05/2014 - 08:55 | 4826336 AdvancingTime
AdvancingTime's picture

Stupidity on steroids! Modern Monetary Theory often referred to as MMT to its many believers removes much of the risk ahead and guarantees that we will always be able to muddle forward. MMT also known as neochartalism is a economic theory that details the procedures and consequences of using government-issued tokens and our current units of fiat money.  Newly acquired tools like derivatives and currency swaps  allow us to print and  manipulate away problems.

While reading an article about the growth of debt in China's non-financial sector I was forced to reflect on how debt is effected by the interest rates. In Europe the ECB had to step in to halt the economic collapse of Spain, Italy and several other countries that were on the brink. What you pay in interest on debt does matter accept in the manipulated land of MMT. Have we been lulled into complacency by the extraordinary actions taken by central banks and governments over the last six years? This is a key question we must face. More on this subject in the article below.

http://brucewilds.blogspot.com/2014/01/have-we-been-lulled-into-complace...

Thu, 06/05/2014 - 09:34 | 4826501 OC Sure
OC Sure's picture

"Have we been lulled into complacency by the extraordinary actions taken by central banks and governments over the last six years?"

No.

Instead, the tyranny of modern economics began when the term money, the concept of money, was falsely redefined as if it could become detached from the percepts from which it was conceived. Money went from being defined as a unit of measuring one's work to produce a product that meets the demands of others to being named as just a medium of exchange. The tyranny of modern economics thereby changed the course of human events quite simply by redefining a word. Tyranny's obfuscation of the language then is clear. They have been naming money for so long as the medium of exchange that no one asks anymore, "the exchange of what?"

 

http://ocsure.blogspot.com/

The debts to which you refer are a nothing for something exchange instead of what they would be without the tyranny; a something for something exchange.

 

Thu, 06/05/2014 - 08:55 | 4826337 medium giraffe
medium giraffe's picture

nirp derp

Thu, 06/05/2014 - 08:58 | 4826350 AbbeBrel
AbbeBrel's picture

Hey hey hey the german DAX just crossed 10.000 (going up naturally). (that is a USA 10,000). Watch out for the fettnäpfchen!!

Thu, 06/05/2014 - 10:12 | 4826657 August
August's picture

+1 for the fettnäpfchen.

Thu, 06/05/2014 - 08:59 | 4826353 jay28elle
jay28elle's picture

No wonder the people of Ukraine preferred to go to the Russian Federation.

Thu, 06/05/2014 - 09:02 | 4826365 John McCloy
John McCloy's picture

Coming soon to Americccaa-Fuck Yeah..
You think you seen crazy yet? We ain't seen nothing yet...nothing..wait till we see the shite the try to jam us with as this all comes down.

And people actually believe they are really tapering? What do ya think Belgium is for? Schiff was right not only will they not taper they will reverse it increase purchases. And you don't think this Simple Jack in- Chief will authorize anything, even outright purchasing of SPY and other stocks in order to make him look good then you are deceiving yourself.
If they think they think this has a happy ending they have not been paying attention.

Thu, 06/05/2014 - 09:42 | 4826375 cristo
cristo's picture

?

Thu, 06/05/2014 - 09:06 | 4826383 madcows
madcows's picture

There just isn't enough inflation out there, boys.  What we need is more debt.  We've got to force the banks to lend to risky borrowers in order to get this economy growing again!

 

Uh, why not just give savers a decent rate of return and let people pay off their current debts?

 

That's destructive son!  Debt is money.  We can't grow the economy with savings!  That's blasphemy.  Debt is money.  Debt is growth.  quit being such a f-ing moron.  We can make trillions off this bitch of an economy.

Thu, 06/05/2014 - 09:06 | 4826384 GFORCE
GFORCE's picture

Thanks for this piece Tyler. Good summary of the potential outcomes.

Thu, 06/05/2014 - 09:10 | 4826398 ilovemilken
ilovemilken's picture

Seriously, did deflation ever kill anybody?

Thu, 06/05/2014 - 09:11 | 4826400 ilovemilken
ilovemilken's picture

Seriously, did deflation ever kill anybody?

Thu, 06/05/2014 - 10:27 | 4826715 AynRandFan
AynRandFan's picture

Does death by starvation count? If so, yes.

Thu, 06/05/2014 - 18:34 | 4828302 Tall Tom
Tall Tom's picture

I do not know who would downarrow you for  that post. It does not change the truth. The withdrawal of liquidity from an economy hurts the underclass as they are more likely to experience the brunt and famine associated with the cessations of economic activity.

 

It hurts them in Recessions and it is even more pronounced in a Deflationary Depression. Many on this site do not understand that famine has already struck some of the poorest sections of the United States. (Appal;achia and Detroit are examples which are not too widely publicized.)

 

In the 1930s, when most were not alive, there was famine in the USA with the onset of drought in the Midwest. Today not only is the Midwest experiencing drought but so are the inland vallies of California. Food will become scarce as well as liquidity. We are in for some extreme times and...

 

YOU CANNOT PRINT FOOD AND WATER.

 

Of course we were in the middle of the Great Depression which was DEFLATIONARY. Some people actually STARVED TO DEATH. There are MANY PHOTOS from that era showing the emaciated faces of those whom were without.

 

Of course that is easy to ignore so I guess they need to downarrow you to make them feel safe in their DELUSION.

Thu, 06/05/2014 - 10:41 | 4826762 Crawdaddy
Crawdaddy's picture

The quaint, ancient textbook definitions (e.g. deflation harms debtors, benefits creditors) assumed a good person's rule of law. Now the rule of law is controlled by bad people so the old definitions no longer apply.

Thu, 06/05/2014 - 09:17 | 4826418 Save_America1st
Save_America1st's picture

I'm just curious if the majority of the Euro-Sheep will be too pussy-whipped to make a concerted and substantial run on their banks and withdraw from the system.  (and risk being called "financial terrorists").

Same thing for the U.S. herd.  They have all the warning signs they could ever possibly need to know the shits about to hit the fan.  But will they do anything about it to save themselves, or are they just going to continue pathetically dropping to their knees and taking the scraps they get from the politiscum and the banksters?

I'm proud that I've woken up and converted at least 6 people to stackin' phyzz over the last 5 years or so.  Unfortunately, that might only be about a 6% success rate after all the people, friends, family that I've attempted to explain the situation to. 

Oh well...can't save them all.  You can lead them to water, etc. etc. etc.

But a solid bank run in America would be perfect right about now.  We'd really start to see the tyranical backlash from the D.C. scum and their bankster owners.  We'd all be called financial terrorists, domestic terrorists, and the I think that would finally remove the last of the facade they've been hiding behind that has beguiled the sheeple for so many years. 

and if you don't think they would lash out at us for ditching their fucked up system, check this out:

Feds Treated Black Friday Boycott As Terrorist Threat

http://www.infowars.com/feds-treated-black-friday-activism-as-terrorist-threat/

Now if we don't shop and spend their debt-fiat-garbage paper and run up our debt with their high interest credit cards we'll be called terrorists.

Fuck them.  Get outta the fraudulent, criminal bankster system and start power-stacking phyzz silver and gold, food, water, guns, and ammo, other supplies, etc. 

We have to turn our backs on them completely and then they will implode. 

Thu, 06/05/2014 - 09:27 | 4826463 aardwolf
aardwolf's picture

You are aware that your friends probably aren't too happy having bought gold at the top of the market and having lost all their money if they have followed your advice and held gold?

Thu, 06/05/2014 - 09:47 | 4826557 Save_America1st
Save_America1st's picture

none bought gold...silver only.  And none bought at the top of the market.  Yes, some started in the 30's range, but they now understand that dollar amount doesn't matter and that stacking ounces matters.  They understand now that we're being given a gift with this manipulation and so they have continued to buy as the "paper" price has continued to drop.  They get what's up and they're stacking well. 

I ran into my friend's dad at the store the other day.  He said he'd been wanting to call me up to get my LCS contact because he was now ready to start power stacking the Ag.  He bought a huge safe and bolted it "somewhere", and he just picked up an AR-15 as well.  Now he says he's ready to start converting $2000 per month of his fiat into silver. 

I thought that was fucking awesome!!!  So let's add him to my total which brings me up to 7 people converted to stacking now. 

So nobody has had any regrets even as the fake price has gone down.  And I'm glad for that because yes, it would be easy for people to get discouraged and not understand the insane dynamics and Twighlight Zone fundamentals we've had to endure over the last 3 years in the PM's.

As long as people aren't buying phyzz thinking that it's some short-term investment that they're going to get rich quick on then they'll be fine.  Phyzz is for the long-haul.  It's insurance against the collapse of the debased and diminished fiat paper debt-based monetary system.  It's so we can use it many years from now to survive...hopefully.

We don't estimate the value of our stack in terms of dollars or any other fiat currency.  We just go by how many ounces we've stacked.  And the more ounces, the better.  Maybe one day 500 ASE or even 500 Buffaloes will be worth a nice chunk of farm land somewhere, or some nice acreage in the mountains, etc.  It might even cover a nice house on that land as well.  Who knows?   

But what we all know is that we won't have preserved any of our wealth and buying power if we only keep our paper fiat sitting in the banking system.  That's fiscal suicide for us regular folks at this point and everyone should be closing their accounts out or diminishing them to the bare minimum operating levels to only cover some bills and that's it.  Everything else should be withdrawn and held in other assets as well as cash which will still be useful for a while, especially in a deflationary event which is sure to happen eventually too.

 

Thu, 06/05/2014 - 18:31 | 4828291 mkkby
mkkby's picture

What you are talking about is DECADES AWAY in the US.  Those of us awake longer have seen the slow decline in socialist places like Greece and Italy.  They are much further down the tubes than we are, and yet they can still escape with PMs or other physical assets.

You newbies are just too darn shrill.  Your haste is hurting the people you are trying to help.  People who scare to easily bought gold at $1900 and have lost over 1/3 of their savings by now.  Grow a pair and just wait and be patient.

Thu, 06/05/2014 - 09:42 | 4826542 Ghordius
Ghordius's picture

check the statistics. eurozoners hold a lot of cash outside the banking system. we also love our 500 and 200 banknotes

Thu, 06/05/2014 - 18:26 | 4828280 smacker
smacker's picture

The biggest single problem with pulling one's cash out of the banking system (apart from the security risk), is that Euro countries all have laws which prohibit the use of cash in all large transactions. The second problem is that domestic bills for gas/elec/water/credit cards/taxes/insurance premiums etc etc all need to be paid via the banking system often via Direct Debit.

Thu, 06/05/2014 - 09:18 | 4826421 basho
basho's picture

gold is the only answer now. lol

Thu, 06/05/2014 - 09:23 | 4826438 Last of the Mid...
Last of the Middle Class's picture

My gold is backed by lead.

Thu, 06/05/2014 - 09:49 | 4826579 Save_America1st
Save_America1st's picture

Most definitely!!! :-)

Thu, 06/05/2014 - 09:24 | 4826444 FranSix
FranSix's picture

Paying to invest with other people's money?  Such a coprophagic breakfast!

Thu, 06/05/2014 - 09:28 | 4826478 Obamanism
Obamanism's picture

So Negative interest rates for the banks money is that like keeping gold in Vault charges?

May be Goldmann Sachs can get to borrow it for 3 years then give it back

Thu, 06/05/2014 - 10:17 | 4826674 Tortfeasor
Tortfeasor's picture

At least a gold vault protects against risk of theft (Allegedly). Bank deposits increase risk of theft.

Thu, 06/05/2014 - 10:26 | 4826707 AynRandFan
AynRandFan's picture

Excellent point!

Thu, 06/05/2014 - 10:45 | 4826771 CHX
CHX's picture

Most "stored gold" is leased out anyway, so it's a au paper claim, an IOU, just like the fiat parked on your account. It's not really there, and it's not yours, it's theirs, it's lent capital, and you pay for it. I say RUN FOREST, RUN FOR THE BANK... 

Thu, 06/05/2014 - 09:32 | 4826494 jtz5
jtz5's picture

I think this may be the event that leads to some serious issues for banks (and CBs).  If I am going to pay the bank to hold my $, I am going to tell the bank to "fuck off."  I hope this leads to a huge bank run so these MFers get what they deserve.

Thu, 06/05/2014 - 10:44 | 4826770 p00k1e
p00k1e's picture

If a government agent finds your cash stash, they’ll seize it from you.   You’ve been bailed-in. 

Thu, 06/05/2014 - 09:38 | 4826519 Spungo
Spungo's picture

I'm sure this will end well. The people who like stocks (me) are already invested in stocks. The only people left are the people who have no experience buying stocks and don't understand how they work. The negative interest rate will drive these people to buy stocks even though they have never bought stocks before. Expect a lot of pensioners to lose most of their money as they learn how the stock market works.

This is why gun control was introduced. It's a lot harder to shoot bankers and politicians if you don't have a gun.

Thu, 06/05/2014 - 11:07 | 4826830 Imagery
Imagery's picture

The will NOT buy Equities if they have half a brain as you state.  They could buy PMs.......they are on sale still today!

Thu, 06/05/2014 - 09:43 | 4826547 bhakta
bhakta's picture

Insanity seems to have no limits. Already my deposits earn next to nothing. I means I get an whole $6/year on $12,000 sitting in a fixed deposit at Wells Fargo, and Wells Fargo charges me $3/month for the privilege of downloading my acitivity to my Quicken file.

Thu, 06/05/2014 - 10:08 | 4826646 Skin666
Skin666's picture

You've still got money in a bank? Jesus H Christ!

Thu, 06/05/2014 - 10:53 | 4826790 zaphod42
zaphod42's picture

Jesus saves his money at Wells Fargo Bank?

Craig

Thu, 06/05/2014 - 10:52 | 4826787 zaphod42
zaphod42's picture

You do not need to pay WF to download activity.  I use quicken, and I have quicken do it for all my accounts, including two at Wells Fargo.  Quicken goes in and downloads the info and does not charge me for that.   Stop paying the Banksters for something you can get for free!

Craig

Thu, 06/05/2014 - 11:28 | 4826898 madcows
madcows's picture

Is your improbability drive powered by the stockmarket?

Thu, 06/05/2014 - 11:43 | 4826947 zaphod42
zaphod42's picture

It interprets the Brownian Motion of the Stock Markets, conflated with the gyrations of VIX divided by the ratio of bond rates to ginned up inflation stats.  Of course, all of this should be totally random.  It only works when markets are not fixed.

At the moment the HOG is in drydock waiting for the Universe to catch up.

Craig

Thu, 06/05/2014 - 09:47 | 4826563 FranSix
FranSix's picture

Unusually ironic to think that you could sit and wait for years for the inevitable to occur, and that the vast majority are still caught in disbelief, while the gold trade is still very quiet on the  heels of this news, leaving a wide open opportunity served up on a silver platter with a  sprig of parsley on top.

Thu, 06/05/2014 - 09:50 | 4826585 FreeNewEnergy
FreeNewEnergy's picture

I've been trying to smoke and drink myself to death but it's just not happening fast enough, although I've successfully alienated most of my neighbors in the process.

I'm doing this because I don't want to be here when TSHTF, but, then again, maybe I'm wrong. Maybe fecal matter thrown all about the countryside is just what people need to wake the fuck up, so maybe I'll hang around.

OTOH, smoking and drinking excessively does cut down on food costs, which, in case you haven't noticed, are rising quickly. I'm also raising my garden and working out, so I'm like burning the candle at both ends... what could go wrong?

We must be nearing some kind of death-point in bankster-world. I believe the Europeans banksters are scared shitless, while US banksters are just plain shitless. There really is nowhere to hide. Gold, silver? fagedaboutit. I've long maintained that I'd be backing the truck up when silver hits $17 an ounce, which looks to be pretty soon. I've got plenty of cash and credit, so let's get it on, already, OK>?

Thu, 06/05/2014 - 09:55 | 4826604 Which is worse ...
Which is worse - bankers or terrorists's picture

I'm thinking we will actually look back at this day fondly when hyperinflation sends interest rates to 2%,  the repo and derivatives markets collapse and there is no longer food at the grocery store. 

Thu, 06/05/2014 - 10:09 | 4826648 scubapro
scubapro's picture

yep.    some banks might take their excess reserves and quickly lend it out to corporations that deal in 'real' assets (not just PMs).   other banks will take their excess reserves and buy their own sovreign debt.    that is the wheat and the chaff...the future winners and losers.     under no circumstances will they put it into consumers pockets--too risky!  

govt yeilds down, real assets up along with their end products like food, energy, commodities.   stocks wont follow this though b/c they run on emotion not fundamentals..valuations are already way way ahead of even this fundamental valuation metric.  they will be sold to buy bread.

Thu, 06/05/2014 - 09:54 | 4826607 moneybots
moneybots's picture

"inflating the debt is the only way out for the status quo."

 

Making debt bigger is not going to make it go away.

 

Thu, 06/05/2014 - 10:49 | 4826782 OC Sure
OC Sure's picture

 

 

 

There is good debt and there is bad debt.

If Midas Mulligan exchanges money with in the form of debt, you can bet it is a good.

If Janet Yellen exchanges currency with you in the form of debt, you can bet it is a bad.

"Good debt is represented by money, the money represents the product of work, the work is necessary to meet the demands of living. Bad debt is represented by counterfeit, the counterfeit represents the absence of product, the absence of product represents the impersonation of work, the impersonation of work represents the necessity to steal to meet the demands of living."

 http://ocsure.blogspot.com/2014/06/debts-and-wages.html  

Thu, 06/05/2014 - 10:03 | 4826631 BullyBearish
BullyBearish's picture

Pure levitation...while they prepare to drop this sucker

Thu, 06/05/2014 - 10:06 | 4826638 Madcow
Madcow's picture

how is Euro-Co going to prevent people from withdrawing their money from banks and putting it under their mattress or using the cash to buy precious metals (to put under their mattress) ??

i would imagine this policy must be enforced - with daily withdrawal limits, capital controls, criminal prosecution of precious metals owners ... and ultimatly some kind of "iron curtain" to prevent people from fleeing the continent. 

how does it not end that way ?  please inform 

Thu, 06/05/2014 - 10:07 | 4826642 emmalex
emmalex's picture

Since i'm in the middle of buying a house, is this going to effect the interest rate of the money i'm lending to buy my new home? is it wise to wait a bit because rates are gonna lower or be quick before they rise?

I'm living in Belgium.

Thu, 06/05/2014 - 10:19 | 4826683 AynRandFan
AynRandFan's picture

Isn't the more important question whether the house will be worth less than you paid for it in a few years?

Thu, 06/05/2014 - 11:19 | 4826873 emmalex
emmalex's picture

I like the house, i wanne live there, i'm not buying just to sell it with a profit.

What i whould like to know, is if its the right time to take a loan? or wait a month or two?

Fri, 06/06/2014 - 09:24 | 4829690 B.J. Worthy
B.J. Worthy's picture

"I'm living in Belgium."

Buy U.S. Treasuries instead. It's what everyone else in your neck of the woods is doing. Allegedly.

Thu, 06/05/2014 - 10:20 | 4826686 Tortfeasor
Tortfeasor's picture

Protip: Don't live in the EU

Thu, 06/05/2014 - 11:16 | 4826859 emmalex
emmalex's picture

I know but since i dont have that option i'm trying to make the best of it.

Thu, 06/05/2014 - 12:08 | 4827049 IridiumRebel
IridiumRebel's picture

Protip: Don't buy a house

Thu, 06/05/2014 - 10:08 | 4826643 gnomon
gnomon's picture

The ECB went "nuclear" because they saw no help coming over the horizon from either  the U.S. or China.  The U.S. is slipping back into a MSM "recession" even with the ponzi accounting that has disguised our continued greater depression.  And China is accelerating downward with the rehypothecation of commodity backed loans beginning to unwind while their real estate bubble continues to collapse.

So the collective welfare state that is euroland, not being able to reform their sorry socialist asses, (any more than the U.S. can change its stripes short of collapse), decided to bring out the monster leeches to attach to the body politic intent on either curing or killing them.  

Either outcome would be okay with the ECB, if truth be known.

In other words, the beatings will continue until morale improves.

Thu, 06/05/2014 - 10:15 | 4826669 Ungaro
Ungaro's picture

I harken back to the good old days, when people used to rob banks, not the other way around. This is insanity raised to the power of grotesque. Want to know what it looks like when a pinch of deranged is added? We are living in Europe for a while and I, as a US citizen would not dream of opening a bank account here due to FATCA. But, a good friend I know has one. Every account has a monthly maintenance fee (local currency, foreign currency, demand and time deposits, all). Every transaction (deposit, withdrawal) carries a fee, plus a financial transaction tax (FinTrax). They charge for every ATM withdrawal and balance inquiry, even to change your PIN. Credit and debit cards also have a hefty monthly fee. Exchanging currency also carries a fee as well the FinTrax. When I grow up, I want to be a bank or at least a banker!

Thu, 06/05/2014 - 18:20 | 4828266 smacker
smacker's picture

That list of fees may exist in some European countries but certainly not all. Yet.

Thu, 06/05/2014 - 10:15 | 4826671 kchrisc
kchrisc's picture

"as in you pay the bank to hold your deposits"

So one will have to pay them so that they will continue to hold your deposits that they have already stolen.

“Is it time for the guillotines yet?!”

Thu, 06/05/2014 - 10:15 | 4826673 luckylongshot
luckylongshot's picture

NIRP does not apply to gold.

Thu, 06/05/2014 - 10:17 | 4826676 AynRandFan
AynRandFan's picture

Central bank stimulus is like a drug in that it takes more and more as time goes on. Too little, way too late, and the hangover looms larger all the time. Deflation still rules.

Thu, 06/05/2014 - 10:22 | 4826691 JR
JR's picture

The silent destruction of savers by the international owners of the Federal Reserve, the enablers of the IMF and ECB, is a broad step toward the establishment of socialism in the United States and Europe via the deliberate destruction of the middle and upper-middle classes. This strike against savers using artificial interest rates has the same purpose as ObamaCare, which is not healthcare at all, but universal control.

In Marx’s theories of conflict and change between two groups, the propertied (bourgeoisie) and the unpropertied (proletariat), the propertied had to be destroyed.

The central planners, the international bankers, in the US and EU purposely are dismantling capitalist production that enriches nations and replacing it with government programs and central planning that destroy nations – as they built their mammoth power network to take over the world.

Jim Grant in his recent talk on what “Henry Hazlitt Can Teach Us About Inflation 2014” delivered at the 2014 Austrian Economics Research Conference, explains that,

“In 1946, as now, the government held up the threat of deflation to justify a policy of ultra-low low interest rates and easy money. … Just as it does today, the central bank pushed money-market interested virtually to zero and longer-dated Treasury securities to less than 3 percent. Just as it does today, the Fed had its thumb on the scales of finance.

“Hazlitt urged the government to remove it:

‘When interest rates are kept arbitrarily low by government policy, the effect must be inflationary,” he wrote. “In the first place, interest rates cannot be kept artificially low, except by inflation. The real or natural rate of interest is the rate that would be established if the supply and demand for real capital were in equilibrium. The actual money interest rate can only be kept below the natural rate by pumping new money into the economic system. This new money and new credit add to the apparent supply of new capital just as the judicious addition of water add to the apparent supply of real milk.’

“Hazlitt  concluded that ‘the money rate of  interest can be kept below the real rate of interest only as long as the supply of new money exceeds the supply of new real capital. Excessively low interest rates are inflationary in the second place because they give an excessive stimulation to the volume of borrowing.’”

Continued Grant: “Why, I could quote those perfectly formed sentences in Grant’s today, and I believe I just might. They’re as timely now as they were during the administration of Harry S. Truman. The effective federal funds rate has been zero for well nigh six years.

“There is a doctrine in finance called the dividend discount model. It says that the price of a common stock is the present value of its future cash flows discounted by a suitable rate of interest. Now what would happen to the calculation of the value of that stock if the rate of interest were unsuitable – if it were artificial?

“Hazlitt says this: ‘Excessively low interest rates are inflationary because they mean that bonds, stocks, real estate and unincorporated businesses are capitalized at excessively high rates, and will fall in value even though the annual income they pay remains the same, if interest rates rise.’

“If interest rates were artificially low, it would follow that prevailing investment values are artificially high. I contend that they are, and you may or may not agree. But you must allow the observation that we live in a kind of valuation hall of mirrors. We don’t exactly know where our markets should trade, because we don’t know where interest rates would be in the absence of central-bank manipulation. Natural interest rates—free-range, organic, sustainable—are what we need. Hot-house interest rates—the government’s puny, genetically modified kind—are the ones we have...

http://www.lewrockwell.com/2014/06/james-grant/journo-capitalism/

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