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Axel Merk Warns ZIRP Is Bad For Everyone, "May Lead To War"
Submitted by Axel Merk via MerkInvestments.com,
We call on central banks to abolish their zero interest rate policy (ZIRP) framework before more harm is done. In our assessment, ZIRP is bad for all stakeholders and may even lead to war.
ZIRP: Bad for Business?
At first blush, it may appear great for business to have access to cheap financing. But what may be good for any one business is not necessarily good for the economy. When interest rates are artificially depressed, it can subsidize struggling enterprises that might otherwise be driven out of business. As a result, productive capital can be locked into zombie enterprises. If ailing businesses were allowed to fail, those laid off would need to look for new jobs at firms that have a better chance of succeeding. As such, the core tenant of capitalism: creative destruction, may be undermined through ZIRP. In our assessment, the result is that an economy grows at substantially below its potential.
ZIRP: Bad for Investors?
Investors may have enjoyed the rush of rising asset prices as a result of ZIRP. However, this may well have been a Faustian bargain as the Federal Reserve (Fed) and other central banks have masked, but not eliminated, the risks that come with investing. Complacency has been rampant, as asset prices rose on the backdrop of low volatility. When volatility is low (more broadly speaking, we refer to "compressed risk premia"), rational investors tend to allocate more money to historically risky assets. While that may be exactly what central banks want - at least for the real economy - investors may bail out when volatility spikes, as they realize they didn't sign up for this ("I didn't know the markets were risky!").
We believe that until early August this year, investors generally "bought the dips" out of concern of missing out on rallies. Now, they may be "selling the rallies" as they scramble to preserve their paper gains. This process is driven by the Fed's desire to pursue an "exit." For more details on this, please see our recent Merk Insight "Lowdown on Rate Hikes."
But it's not just bad because asset prices might crumble again after their meteoric rise; it's bad because, in our analysis, ZIRP has driven fundamental analysts to the sideline. For anecdotal evidence, look no further than the decision by Barron's Magazine to kick Fred Hickey (who may well be one of the best analysts of our era) out of the Barron's Roundtable. Instead, money looks to be flocking towards investment strategies based on momentum investing, a strategy that works until it doesn't. Again, ZIRP gives capitalism a bad name because we feel it disrupts efficient capital allocation.
ZIRP: Bad for Main Street?
Excessively low interest rates are also bad for Main Street. In our analysis, excessively low interest rates are a key driver of the growing wealth gap in the U.S. and abroad. Hedge funds and sophisticated investors seemed to thrive as they engaged in highly levered bets; at the other end of the spectrum are everyday people that may not get any interest on their savings, but are lured into taking out loans they may not be able to afford. We believe ever more people are vulnerable to "fall through the cracks" as they encounter financial shocks, such as the loss of a job or medical expenses; hardship may be exacerbated because people had been incentivized to load up on debt even before they encountered a financial emergency. Again, we believe ZIRP gives capitalism a bad name, although ZIRP has nothing to do with capitalism.
Low interest rates may not even be good for home buyers: it may sound attractive to have low financing cost, but the public appears to slowly wake up to the fact that when rates are low, prices are higher: be that the prices of college tuition or homes. It's all great to have high home prices when you are a home owner, but it's not so great when you are trying to buy your first home.
ZIRP: Bad for Price Stability?
While we believe inflation may ultimately be a problem if interest rates are kept too low for too long, ZIRP may temporarily suppress inflation. While this may sound counter-intuitive, it is precisely because of the aforementioned capital misallocation ZIRP may be fostering: when inefficient businesses are being subsidized, as we believe ZIRP does, inflation dynamics may not follow classical rulebooks. That's because an economy with inefficient capital resource allocation experiences shifts in supply of goods and services that may not match demand leading to what may appear to be erratic price shifts. The most notable example may be commodity prices, where the extreme price moves in recent years are a symptom that not all is right.
ZIRP: Bad for Politics?
In our assessment, Congress has increasingly outsourced its duties to the Fed (the same applies to politicians and central bankers to many other parts of the world). The Fed now ought to look after inflation, employment, and financial stability. The Fed, in our humble opinion, is not only ill suited to tackle most of these, but invites political backlash as they step on fiscal turf. Let me explain: monetary policy focuses on the amount of credit available in the economy; in contrast, fiscal policy - through tax and regulatory policy - focuses on how this credit gets allocated. If the Fed now allocates money to a specific sector of the economy, say, the mortgage market by buying Mortgage Backed Securities (MBS), they meddle in politics. Calls to "audit the Fed" are likely a direct result of the Fed having overstepped their authority, increasingly blurring the lines between the Fed and Congress.
More importantly, the U.S., just like Europe and Japan, face important challenges that in our opinion can neither be outsourced, nor solved by central banks in general or ZIRP in particular.
ZIRP: Bad for Peace?
In 2008 and subsequent years, you likely heard the phrase, "Central banks can provide liquidity, but not solvency." In essence, it means central banks can buy time. But what happens when central banks buy a lot of time and underlying problems are not fixed? In our assessment, it means that the public gets antsy, gets upset. When problems persist for many years the public demands new solutions. But because monetary policy is too abstract of an issue for most, they look for solutions elsewhere, providing fertile ground for populist politicians. Here are just a few prominent political figures that have thrived due to public frustration with the status quo: Presidential candidate Donald Trump; Senator and Presidential candidate Bernie Sanders; Greek Prime Minister Tsipras; Ukrainian Prime Minister Yatsenyuk; Japanese Prime Minister Abe; and most recently the new leader of UK's Labor Party Jeremy Corbyn.
And what do just about all politicians - not just the ones mentioned above - have in common? They rarely ever blame themselves; instead, they seem to blame the wealthy, minorities or foreigners for any problems.
We believe the key problem many countries have is debt. I allege that if countries had their fiscal house in order, they would rarely see the rise of populist politicians. While there are exceptions to this simplified view, Ukraine may not be one of them: would Ukraine be in the situation it is in today if the country were able to balance its books?
Central banks are clearly not appointing populist politicians, but we allege ZIRP provides a key ingredient that allows such politicians to rise and thrive. ZIRP has allowed governments to carry what we believe are excessive debt burdens though ZIRPs cousin quantitative easing ("QE"). QE is essentially government debt monetization in our view. Take the Fed's U.S. treasury buying QE program. Those Treasuries (or new Treasuries that the Fed rolls into) might be held indefinitely by the Fed (despite claims of balance sheet normalization) - meaning that US Government will never pay the principle, and the U.S. Government effectively pays zero interest on that debt because the profits of the Fed flow back to the US Treasury. ZIRP allows governments to engage on spending sprees, such as a boost of military spending Prime Minister Abe might pursue.
The Great Depression ultimately ended in World War II. I'm not suggesting that the policies of any one politician currently in office or running for office will lead to World War III. However, I am rather concerned that the longer we continue on the current path, the more political instability will be fostered that could ultimately lead to a major international conflict.
How to get out of this mess
It's about time we embrace what we have been lobbying for since the onset of the financial crisis: the best short-term policy is a good long-term policy. We have to realize that when faced with a credit bust, there will be losers, and that printing money cannot change that. In that spirit, we must not be afraid of normalizing policy in fear of causing an economic setback. When rates rise, businesses that should have failed long ago, are likely to fail. Rather than merely rising rates, though, policy makers must provide a long-term vision of the principles that guides their long-term policy. In our humble opinion, "data dependency" is an inadequate principle, if it is one at all.
The Fed needs to have the guts to tell Congress that it is not their role to fix their problems. It requires guts because they must be willing to accept a recession in making their point.
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Because Axel Merk is finally recycling my commentary on zerohedge after 3 years
War by other means...
That's what we've been missing the last 16 years.....why didn't anyone think of that sooner.
16 years......rough math.....I'm sure I'll be corrected.
Well, somebody's finally coming around to your view, Tyler.
The irony of which is it's not as if the world's at peace today in any case ....
Madness I say! Madness!
Our house is in the middle of the street.
When you rape the system and nothing left to do I suppose it’s normal to blame someone else? The Fed blame congress?
That was the San Fran theme song after the Loma Prieta earthquake in 1989
It was!
I ws thought it would have been cooler if it happened during an NFL playoff game and the quake caused a fumble. Some asshole running down the field and BAM the earth sends him ass over tea kettle.
Uh, won't financing a coup on Russia's door step in the Ukraine and then lying about Russia being "aggressive" in the Ukraine and financing terrorists to overthrow countries in the Middle East possibly lead to war, too?
How about covering up the empirical and observable truth that the top of the WTC North Tower DID NOT pile drive the lower section of the building? A crushing force would, by definition, cause an equal and opposite force (Newton's Third LAW!) acting against the pull of gravity and this would have decelerated the falling top portion of the building.
THERE IS NO OBSERVABLE DECELERATION. THIS IS 2+2=4 stuff, NOT 2+2=5, Winston!
Adventures in the Trivium - Sir Isaac Newton Weighs in on the World Trade Center North Tower Collapse Official Narrative http://www.weaponsofmassdebt.com/index.php/blog/aitt-sir-isaac-newton-we... No wonder the artificial scope ended at "the initiation of collapse!" That enabled them to avoid this issue all together and...
“The omission is the most powerful form of lie, and it is the duty of the historian to ensure that those lies do not creep into the history books.”
~George Orwell
I'm doing my part, are you?
Spread the trtuh. Keep it simple. People will argue and say you are wrong, but only because they are rationalizing creatures and not rational creatures.
What people can't do is explain how there was a downward crushing force with no equal and opposite force acting to decelerate the top of the building AS REQUIRED BY THE LAWS OF NATURE!
There are non contradictions in nature, so the argument that one popular blogger put forward that they've spent thousands of hours proving that the WTC buildings could collapse as observed on 911 is irrelevant GIVEN THIS SINGLE CONTRADICTION TO THE LAWS OF PHYSICS.
Of course, this blogger never explained the contradiction with the laws of physics and then blocked further discussion - I think his subconsciious did that because he knew I was going to expose his coveted irrationality and rationalization.
One commenter on a blog post said the material in the blog post "abused physics."
Of course, he couldn't explain how I abused physics, he just declared it.
This is "crimestop" at work in the real world.
"The first and simplest stage in the discipline, which can be taught even to young children, is called, in Newspeak, CRIMESTOP. CRIMESTOP means the faculty of stopping short, as though by instinct, at the threshold of any dangerous thought. It includes the power of not grasping analogies, of failing to perceive logical errors, of misunderstanding the simplest arguments if they are inimical to Ingsoc, and of being bored or repelled by any train of thought which is capable of leading in a heretical direction. CRIMESTOP, in short, means protective stupidity... orthodoxy in the full sense demands a control over one's own mental processes as complete as that of a contortionist over his body.
~George Orwell, 1984
Note that the downvote can't explain why there was no marginal upward force decelerating the top of the building as the claimed crush force ground down the building to dust.
That negative vote is crimestop, not rational, intellectual analysis and thought.
Your emotions are being used by the Debt-Money Monopolists to manipulate you...
"We all have a tendency to think that the world must conform to our prejudices. The opposite view involves some effort of thought, and most people would die sooner than think – in fact they do so."
~Bertrand Russell, Top Level Debt-Money Monopolist Technocrat, The ABC of Relativity (1925), p. 166.
THINK!
Explain why there was no upward force to decelerate the top of the building or admit there was not downward building crushing force.
If for no other reason than to maintain your honesty and integrity!
I know most of you will blow this off, but hey, the world really might be flat.
https://www.youtube.com/watch?v=kFjG4jpUhQI
They moved to ZIRP becuase everyone got scared that the supply chain was going to collapse and that the economy would never fully recover.
ZIRP was introduced becuase for a moment it looked like capitalism might end.
Now we are in a very different place, now we have ZIRP because everyone is so heavily indebted that hardly anyone can survive even a minor recession.
ZIRP is like cancer, it just slowly kills an economy with ballooning debt and falling productivity as creative destruction is made impotent by free refinancing.
We are reaching a previously unseen ceiling in the world economy. There is no more demand growth. With no productivity gains there is no wage growth, with no wage growth there is no demand growth.
We need to get off ZIRP to reignite creative destruction which will restart productivity gains then wage gains then demand growth.
Schumpeter's creative destruction is the engine and for 6 years it's been switched off.
Yes, much easier to "grow" after you cut the population in half.
Fucking bring it on already motherfucker!!!
ZIRP isn't the disease, it's a symptom of what is ailing the world.
"Today our system is in the grasp of psychopaths whose hubris and myopic focus on enriching themselves will ultimately be their downfall."
http://www.zerohedge.com/news/2015-09-28/fourth-turning-crisis-trust-par...
Get rid of the "Myopic Psychopaths" in Government and Business and a whole lot more evil than ZIRP will go away.
Axel Rose
Welcome to the jungle
King Crimson - "21st Century Schizoid Man"
well it s obvious.
DUH!
The Fed's policy has been bad for peace.
The cost of the Vietnam war, $738 billion in 2011 dollars, caused the US to go off the gold standard on August 15, 1971.
But the cost of the wars in Iraq and Afghanistan of $6 trillion in similar dollars has hardly caused a dent in America's wars.
Infinite printing by the Fed enables eternal war.
Let's not forget the bond holders that are willing to buy all this debt.
Imagine what happens when you not only have unlimited war funds, but also unlimited "soldiers"...aka "robots and Drones".
The navy is building ships with tiny crews, the AirForce is eliminating the need for pilots, the Army wants swarms of war drones to fight on the front lines.
Yes, but the government's cost is somebody else's revenue.
And jobs, always jonesin for jobs, lots o jobs.
JustObeserving, the underlying reasons why your statements were correct were that the Federal Reserve Board was due to the successful application of the methods of organized crime through the political processes, which, in turn, exists inside the context that warfare was always organized crime on larger and larger scales. Civilization is dominated by the biggest bullies' bullshit, which promotes DUALITIES in the form of false fundamental dichotomies and the related impossible ideals. Those present the mechanisms regarding how things work in ways which are absurdly backwards, and which promote bogus "solutions" which always backfire badly.
On the contrary, what should be done is to regard human beings and civilizations as entropic pumps of energy flows, manifesting as general energy systems, through UNITARY MECHANISMS, because it is all the same energy. However, attempting to do that runs into head-on collisions with the biggest bullies' bullshit world views, which includes head-on collisions with the various controlled opposition groups that surround the core of organized crime, namely the governments which are the biggest forms of organized crime, which are controlled by the best organized gangsters, which are currently the banksters.
Superficially, it would seem that it ought not be too difficult to develop better political science which became more consistent with physical science. However, what appears at first glance ought to be elementary becomes quite hyper-complicated after one does a deeper analysis into how and why successful warfare was based upon deceits and treacheries, upon which basis was built financial success based upon governments enforcing frauds by privately controlled banks.
ZIRP and NIRP are both phenomena that are emerging due the basic dilemmas that being able to back up lies with violence enables those lies to become socially dominate, but does not stop those still being lies. Since the entire political economy is based upon enforcing frauds, while that force never stops those frauds from being false, the entire economy is necessarily driven to become more psychotically out of touch with relatively objective realities. Hence, the trends for debt slavery to generate numbers which become debt insanities, which provoke death insanities.
The powers of central banks, such as the Federal Reserve Board, are due to the social successfulness of the applications of the methods of organized crime through the political processes. However, most of the few that begin to perceive that continue to want to see that in terms of DUALITIES, and therefore, propose bogus "solutions" which go to the wrong pole of their false fundamental dichotomies, because they understand the mechanisms in absurdly backward ways. The degree to which we are living inside of a society based upon sophisticated integrated systems of legalized lies, backed by legalized violence, has resulted in society operating as a Wonderland Matrix Bizarro World, where almost everything is publicly presented in the most absurdly backward ways possible.
IT IS ALMOST IMPOSSIBLE TO EXAGGERATE THE DEGREE TO WHICH CIVILIZATION BEING CONTROLLED BY BACKING UP LIES WITH VIOLENCE HAS MADE THOSE LIES BECOME SOCIALLY SUCCESSFUL, WHILE, AT THE SAME TIME, THAT CIVILIZATION MANIFESTS RUNAWAY PSYCHOTIC CRIMINAL INSANITIES, DUE TO THOSE LIES STILL BEING FALSE.
The article above was another grossly superficial assessment of what has gone wrong, and therefore, presents similarly superficial notions regarding what the remedies for that could be. There is no doubt that privately controlled banks being able to make the public "money" supply out of nothing as debts, which frauds were enforced by governments, enabled "paying" for wars, inside of the overall context of "paying" to strip-mine the natural resources of a fresh planet at an exponentially accelerating rate, which activities were presented through fundamentally fraudulent financial accounting systems as being "productive" and "good things."
The deeper problems have been due to progress in physical science, enabling awesome technological progress through the industrial revolutions, all of which were still being channeled through social pyramid systems based upon being able to back up lies with violence, and thus, drove the development of a globalized economy based upon enforcing frauds, which was able to continue to present the socially successful stories regarding that in ways which were always as absurdly backwards as possible, but yet, continued to be triumphant due to the degree that social successfulness continued to be based upon being able to back up lies with violence.
More and more we have been living inside of an oxymoronic scientific dictatorship, which applies science and technology to become better at backing up lies with violence, or enforcing frauds, but which deliberately refuses to become more genuinely scientific about itself. Instead, political science has mostly become another oxymoron itself, because of the degree to which political science is NOT willing and able to go through the profound paradigm shifts which would be required in order to regard human beings and civilization as manifestation of general energy systems. Indeed, the biggest bullies' bullshit world view has more been able to destroy the philosophy of science, rather that had to change to accommodate progress in physical science.
Hence, ZIRP and NIRP are manifesting through globalized systems of electronic monkey money frauds, backed by the threat of force from apes with atomic bombs. The basic concepts regarding "interest" operate through the utterly bullshit-based views regarding economics, which tended to deliberately ignore the ways that human beings and civilization operated as entropic pumps of environment energy flows, but rather, inverted the basic concept of entropy, to develop that absurdly backward perception to become consistent with the biggest bullies' bullshit world view. It is difficult for human beings to develop better economic systems when they mostly continue to deliberately misunderstand the concept of entropy in the most absurdly backwards ways possible, as well as tend to deliberately ignore the conservation of energy, because their existing social systems were being based upon enforcing frauds, whose social successfulness was based upon misrepresenting all of that to the greatest degree human possibly.
After life exists, then the death controls direct the evolution of that life. Natural selection pressures were internalized as human intelligence, which was then applied to the greatest problem, which was other human beings. That then drove the history of successful warfare based on backing up deceits with destruction, that became successful finance based upon enforcing frauds. At the same time, the biggest bullies' bullshit world views developed to become layers of controlled opposition groups, surrounding that core of organized crime.
At the current time, the international banksters have become excessively successful in creating their systems whereby governments enforce symbolic robberies, where the public "money" supplies are made out of nothing as debts, and can disappear back to nothing, when those debts disappear. In that MAD Money As Debt system, if there was no more debts, then there would be no more money. Therefore, in order to keep that MADNESS going, the interest rates have been driven towards ZIRP & NIRP. However, the deeper problems are way worse than that, since the previous pattern of exponentially increasing debt slavery systems were "paying" to strip-mine a fresh planet, with the newly emerging technological advances through industrialization, all of which is just beginning to run into various real limits of diminishing returns.
The history of wars have been struggles over the control of natural resources, which were focused through struggles over the control of the money that measured those resources, and thereby provided access to those resources. Hence, money is measurement backed by murder, as the most abstract form of private property being claims backed by coercions. Indeed, human beings, as soon as we define them as separated from their environment, necessarily operate as robbers in their environment. Human beings and civilization are, and must necessarily be, dynamic equilibria between different systems of organized lies operating robberies.
The international banksters, as the best organized gangsters, effectively controlling governments, have become way too excessively successful, for way too long. However, one of the ways that manifests is that there is almost nothing which is publicly significant that resists them than controlled opposition groups, which continue to operate inside of the same frame of reference of bullshit that the banksters originally promoted regarding the political economy. Inside that context, the article above was quite correct, that debt slavery, becoming debt insanities, could lead to war as death insanities. Furthermore, your point, JustObserving, is also obviously correct, that primarily warfare (as well as welfare) were being "paid" for by more and more "money" made out of nothing as debts, within the existing MAD Money As Debt systems.
However, the article above does not propose any realistic resolutions to those real problems, nor does almost anybody else that continues to still operate inside of the biggest bullies' bullshit world views. Of course, human beings and civilization have NEVER actually broken the laws of nature. However, the social successfulness of backing up lies with violence, becoming an economic systems in which financial successfulness was based upon enforcing frauds, has enabled most human beings within the currently established civilization to misunderstand everything in the most absurdly backward ways, as well as generally trend to deliberately ignore the most basic laws of nature as much as possible.
Of course, that is a hyper-complicated situation, since those human beings are NEVER actually able to violate the laws of nature, and everything they actually do operates inside of their behavior being consistent with the laws of nature. However, the social successfulness of integrated systems of legalized lies, backed by legalized violence, drives there to develop various social groups which do specialized labour, each of which believes to the maximum possible degree in bullshit, while what they actually do fits into overall integrated systems that they do not perceive, because they do not want to perceive those.
Overall, it is quite astonishing to recognize the degree to which human economics has been able to develop in ways which deliberately ignored environmental ecology as much as possible. The deeper reasons were that the death control systems were always central to natural selection systems, and so too, human death control systems are central to human artificial selection systems. While human artificial selection systems were driven to develop by natural selection pressures, those resulted in human intelligence being more and more applied to successfully back up deceits with destruction, and then to enforce frauds.
I find it to be INTENSELY PARADOXICAL that all of those things make sense, no matter the degree to which those resulted in us living inside Wonderland Matrix Bizarro Worlds, since the social successfulness based upon governments enforcing frauds by privately controlled banks has driven civilization as a whole to become more and more psychotic. After all, it makes sense that civilization controlled by the principles and methods of organized crime would end up having its excessive successfulness through those means manifest as runaway criminal insanities.
At first glance, it seems that it should be possible to develop political science in ways which became more consistent with physical science. Moreover, it also appears initially obvious that prodigious progress made in physical science indicates that it is imperative for progress in political science to surpass that. However, when one attempts to follow that through, one then runs into the head-on collision with the history of successful warfare based upon deceits, and the history of successful finance based upon frauds, in which contexts almost nobody who was successful within those systems is willing and able to admit and address what their systems were really doing, especially since those were developing for thousands and thousands of years, for generation after generation, so that the most recent generations tend to completely take for granted the past.
Of course, there are severely problematic aspects regarding longer term developments based upon: "Infinite printing by the Fed enables eternal war." Making more and more "money" out of nothing as debt, in order to pay for strip-mining the planet, are the basic problems. Using those funds to "pay" for destructive warfare and welfare programs, that mostly wasted those natural resources, are related aspects of those problems. Endless exponential growth is absolutely impossible. There can NOT be "infinite printing" to pay for "eternal war." Rather, some new evolutionary ecologies will emerge, one way or another, sooner or later, that adapt to the real limits. However, since those real limits tended to be as deliberately ignored, and deliberately misunderstood in the most absurdly backward ways, due to the established systems being based upon their social successfulness through enforcing frauds, wherein those frauds have become electronic, while the threat of force to back those up have become atomic, it is extremely difficult to speculate what sort of new kinds of integrated human, industrial and natural ecologies might survive through ???
At the present time, it is painfully obvious that there is nothing which is publicly significant other than the banksters, as the biggest gangsters, controlling their puppet politicians, who are voted for by enough of the masses of muppets, all of which are collectively indulging in psychotic attitudes, based upon their deliberate ignorance and misunderstanding of the nature of the enforced frauds that their lives were built upon. Therefore, it continues to appear that the most probable resolutions to the problems that a political economy based upon debt slavery systems, operating through enforced frauds, having generated numbers which have become debt insanities, are for those to necessarily provoke matching levels of death insanities.
I would not consider those debt insanities to still be "wars" in the old-fashioned sense of what "wars" used to be. Rather, those are more like severe social storms blowing through, with corresponding levels of psychotic breakdowns, and crazy collapses into chaos. There are no longer likely to be any "winners" to such "wars," but only increasingly miserable groups of survivors. Meanwhile, the only better alternatives would require series of technological miracles, surpassed by series of political miracles, where those political miracles would be more important than any of the other technological miracles.
The underlying issues continue to be the imperatives to develop political science to become more consistent with physical science. The problem with doing that is that pretty well all of the established systems, operated by both the core of organized crime, as well as by the surrounding layers of controlled opposition groups, are obstacles in the ways of doing that, since they would have to go through radical paradigm shifts in their perception of politics in order to begin to do that. After one thinks through the analyses of the deeper levels that money is measurement backed by murder, because the debt controls are backed by the death controls, it is hardly surprising to consider that malfunctions in the abilities of the established financial systems based upon enforced frauds, showing up as unprecedented ZIRP and NIRP, are merely the tip of the iceberg. The basic problem is how to operate the human murder systems after the development of weapons of mass destruction. That is the issue which underlies the ways that there are now runaway systems of "money" as electronic frauds, backed by the threat of force of those weapons of mass destruction.
Since the overwhelming vast majority of people do not understand, because they do not want to understand, that money was always measurement backed by murder, because the debt controls were always backed by the death controls, it is hard to imagine any other resolutions for the real problems respecting debt insanities manifesting as ZIRP and NIRP, that can not be corrected within those systems, other than for those to provoke runaway death insanities, whose magnitudes will match those of the debt insanities driving them.
While it should be theoretically possible for human beings and civilization to better understand themselves as energy energy systems, in order to do that would require series of intellectual scientific revolutions, and profound paradigm shifts in the ways that we perceive the problems of political economy, within the human ecology, which, in turn, was always inside the infinitely bigger natural environments, whose natural selection pressures drove the development of social systems based upon backing up deceits with destruction, morphing to become the current systems based upon enforcing frauds.
& by the way, I watched this 20 minute show made in 2013, which I found was remarkably stupid, but still, it pointed out the personal effects of ZIRP on people who had been "good savers:"
http://www.youtube.com/watch?v=7T_VxdLJdDU
The Monarchs of Money
"The Fed needs to have the guts to tell Congress that it is not their role to fix their problems. " wait what? The criminal bankers would kill themselves in quick sand for a wooden penny. The criminal bankers running the FED don't care about guts....they are greedy beyond comprehension. We need people to wake up and vote in politicians that won't kill them. Just completed a book about Teddy Roosevelt a trust buster and the awful Taft and Wilson? I pray that Trump wins as he appears to be the only one on the scene that "may" be different. As for anyone in Washington more than a year or two...will just be more of the same...drip, drip, death
If they have a lot of money then they are no different. They have sold their souls. They have only one master, who cares nothing about them except to use them.
Pity them because they are lost.
trav7777
'The entire system of debt is an attempt to get something for nothing. This is the crux of why usury is historically reviled and usurers hated'
Fear is the weapon for manipulation. How long can you leave in fear that the world is about to collapse. ABOUT TOO... and whole your life is gone, and you die of old age, still fearing world is about too collapse. The world will keep on spining and you are already dead. What is that fear good for?
Prilosec sales.
Bad for Peace? That is the real message in this because the financial powers and their masters are trying to get us into a war and it is very hard to create a war because people hate war and are now wising up to the tricks of the parasites that have previously led us into war.
I find it interesting that starting recently those in power have gone to great lengths to discredit themselves. It is as if those currently in power will be the ones sacrificed so that they can get their war, their population reduction and their one world government.
How does it feel ass-clowns to be sacrificed for your master's whim. Right, I know, you signed up for it. Wealth and power for total submissions. Have fun with that!
People hate war but they will get it regardless.
It is brewing in Europe.
ZIRP essentially implies that capital and money creation involves no risk and no work.
We all know that is bullshit.
execute the bankers and financiers already. They are useless middlemen anyway.
Exactly! ZIRP also implies that money has ZERO VALUE..which, means, naturally, that it does NOT have value. It is rather incredible when we think in these terms.
In one word. Wow!!!
Wonder what would have happened if Merk had decided 4 years ago to campaign this? How much damage they might have avoided and won over "bit-by-bit" a class of conservative investor with "integrity"? But the answer to that is easy... That would mean they would have had to put a "Closed for Business" sign in the window because nobody but nobody wiould take those kinds of risks to rebuild a name and a professional reputation towards sound investing! Right?...
We'll ride this shark all the way down to the bottom of the Marianas "Tranche"...
Delusional bitches!!!
Try to buy an SME from a clown that has a bank ready to sustain his mediocre performance. How many times have I met guys thinking their equity had positive value when the business had negative net worth, simply because the bank had not turned off the credit for fear of realising a writedown.
It is bizarre to have crappy owner-managers living the lifestyle through milking a business thinking they can get a positive terminal value and ignore the huge investment required from a new owner to turnaround a business unable to repay its debts other than through inflated enterprise valuations
Zirp is the ultimate crime against capitalism : that there is no risk associated with return!
The negation of Ethics : That life is without crime and punishment.
The negation of man's mortality : That man is eternal and can live off the low hanging fruit on the tree of never ending replenishment.
Indeed the world is flat as the Obscurantists said bUT ALSO that there is no Day of Final Judgement; which is insulting Obscurantist Dogma of man's finality.
Seems like Alan G, Ben B and Janet Y, along with Super Mario, have broken every law of the Tabernacle!
And tweeked Aristotle's nose as well !
The Sistine Chapel twice disparaged when they laff at Raphael's masterpiece : The school of Athens and also at Michael Angelo's tales of 12 Apostles; Adam's magical touch!
So now Zeus can throw down his thunderbolts!
Ye pagans are back !
Falak, are you down with the "Neo-Platonics"?
https://www.youtube.com/watch?v=tZO-CYpvzf0
Congress abdicated their responsibilities and duties long ago, in favor of lobbyists, political campaign contributions, getting re-elected and bribes.
Corporations have been mis-allocating capital in stock buybacks, instead of reinvestment and retiring debt.
All ZIRP has done, is encourage the creation of more debt and accelerate the debasement of currencies.
The clearing of all this debt, bad investments, and poorly run companies was espoused here years ago, which is how I came to find the Hedge...
Tyler, the members and especially the comments section, truly opened my eyes and ears as to what really needed to be done then and especially needs to be done now.
poop
I guess since they cant use 'eyesis' as an excuse anymore, this is the next best scenerio...
It's interesting that none of these financial manager(s) still will not speak directly to the source of the problem and the mechanisms or lack thereof that created this mess in the first place after Larry Summers abolished it in 1999...
"Yes" of course these banks need to be be gutted along with the bankers that run these houses that's a given. But without the rules in place that provide the conditional restraints that kept this from happening in the first place none of this will ever get fixed until we have another major war first in order to distract and divert just like the hall of mirrors that is ZIRP soon to be NIRP and QE!!!
I watch airline crash videos when I'm not here at ZH...
Russian dashboard cams were fun for a while but there are too many survivors to keep my interest for long.
Roller-Derby with swords and maces might be fun.
We call on central banks to abolish their zero interest rate policy (ZIRP) framework before more harm is done.
If you do, you are obviously clueless fools.
In a properly managed MOE process with 100% responsible traders (i.e. they "always" deliver as promised), inflation of the MOE itself is "guaranteed" to be perpetually zero ... everywhere. And with no deadbeat traders there are no defaults. Thus there are no interest collections to recover them. That means zero interest.
In a properly managed MOE process, only irresponsible traders incur an interest load. And that interest load is "exactly" equal to amount of their defaults. It's an actuarial process much like managing an insurance risk portfolio. With insurance, underwriters anticipate claims and set premiums accordingly. In a properly managed MOE process, underwriters anticipate propensity to default and set interest collections accordingly.
The operative relation is: INFLATION = DEFAULT - INTEREST =zero.
yes, however 2 considerations:
• the worst businesses have been bailed out in 2008. We were supposed to let them fail.
• second... raising interest rates is like feeding only the better performing firms. Unfortunately I do not see them... it would be like killing the entire herd. Actually the best performing are the ones that are doing the real damages!!!
So... it is bad if we do... it is bad if we don't... The mistakes were done in 2008 and kept going. We broke the business cycle. Now we can go only from bad to worst till a major reset. Actually our aversion for clensing starts in 2000. The events of 2001 helped avoid a major collapse then, refocusing on war and fueling a kicking of the can down the road longer. Yet the 2000 crack was never completed. The 2008 cleansing was even less complete... We keep adding pressure inside a bottle. Eventually it will explode... We'll see how...
;-)
At first blush, it may appear great for business to have access to cheap financing.
At first (and last) blush, it is obvious traders are free to make trading promises. These promises will result in a trade if they have a reputation for delivering on those promises.
Financing is a "corruption" of trade installed by "capitalists" and "governments". Governments use it as a source of funding ... i.e. inflation. Capitalists use it as form of "tribute paying". They take a small portion of every trade and deliver nothing.
Hmm...
Article began well... and then descended into typical economist's drivle and prevarication. What about the fact that CBs produce nothing but evil... corruption, perversion, world wars, and an entitled ruling class are the fruits of cheap money, while the bulk of the people become serfs... or worse yet, simply prey...
Central banks are a con and nothing more. To suggest that they ever had a legitimate role is nothing more than an attempt to propagate the con.
The argument over interest rates is much akin to the argument over abortion. To set an arbitrary moment when 'life begins' is ultimately to cheapen all life. To set interest rates is little more than an establishment of the acceptable level of theft.
To set interest rates is little more than an establishment of the acceptable level of theft.
In all properly managed MOE processes, interest collections exactly equal defaults incurred.
The operative relation is: INFLATION = DEFAULT - INTEREST = zero.
To the extent INFLATION is negative, there is theft. To the extent it is positive there is counterfeiting. Our governement and central bank declare the proper balance between this theft and counterfeiting to be 2% and deliver 4%.
The proper balance is of course 0%.
NIRP.
ZIRP.
Burp.
Think about the companies and plans that need secure bond investments to run their businesses like insurance companies and pensions.
We are in the sixth year of ZIRP and a lot of bond portfolios are yielding nothing. Think about the life and health insurance companies that went from maybe a 6% yield to a 2% yield. They will raise premiums to the policy holders to make up the difference in an environment of lower wages and higher inflation. Auto insurers will do the same and pensions will require more money to maintain pension payments.
The Fed has destroyed the financial assets of millions of Americans and refuse to change their ways to keep their masters on wall street happy. They also allow the federal government to keep borrowing at near zero rates to maintain their power.