July 6, 2016
A normal, benchmark interest rate for a
national economy is between 3 – 5%. Indeed, if we go back a little
, a normal rate was significantly higher than that range. This
fact is mentioned because after eight years of monetary madness in the West,
many (most?) people have completely forgotten what “normal” is with respect to
The title of this article is something of a
misnomer. There are, in fact, numerous big lies being disseminated concerning
the Western world’s utterly insane, totally criminal, near-zero interest rates
(and now “negative” rates). However, all these Big Lies are then piled on top
of each other, in order to create an even Bigger Lie.
When Japan introduced the world to the “0%
interest rate”, it was universally castigated for this monetary voodoo. But
when the Western world
(after Japan’s policy had already
failed for more than 20 years), suddenly near-zero interest rates became normal
and acceptable. This brings us to the 21
st Century Principle of
Monetary Policy. If one nation institutes a really crazy monetary policy, by
itself, it is labeled as “insanity”. But if everyone engages in that same,
really crazy monetary policy (
it has been proven to be a failure) then it becomes “normal” and acceptable.
To deceive our Zombie populations into
believing that these Criminalized Interest Rates are “normal”, the mainstream
media has turned up its propaganda machine to maximum decibels, broadcasting an
endless series of lies and half-truths, as our governments
pretend that they are not perpetrating the complete
of our economies. A particularly obvious-and-nauseating example
of such lying comes from (where else?)
People have come up with a lot of reasons to worry about zero
interest rates. At first they worried about inflation, and later about financial
instability and bubbles caused by a reach for yield. But the years passed, and
there was no inflation, no bubble or
instability in financial markets
. [emphasis mine]
Clearly the remarks above represent such
audacious lies that no sane writer could possibly believe them to be true. “No
inflation”? Food costs have more than doubled over the past eight years.
Housing costs (in many markets) have also more than doubled.
“No bubble”? U.S. equity markets are at
all-time bubble-highs. The U.S. bond markets is also at an all-time bubble-high
– and it isn’t even supposed to be
to have a stock bubble and a bond bubble, simultaneously. There
throughout all Western regimes.
“No instability”? We see daily headlines from Europe, across
various jurisdictions of Big Banks in grave,
. Indeed, more “bank
have already begun. However, for the moment, let’s pretend that all
of the pathetically obvious lies above were actually true – for the moment –
and simply examine the reasoning behind the lies.
But the years passed, and there was no inflation, no bubble or
instability in financial markets.
More generally, this reasoning translates
as follows: our economies haven’t been destroyed
yet, so this means there is no problem with near-zero interest
rates. The ‘logic’ behind this assertion is so infantile that we have a
joke/cliché which exposes such stupidity.
A man jumps off the roof of a 100-storey building. As he sails past
an open window on the 50
th floor, someone inside the building hears
him remark, “So far, so good.”
Here we have a liar/apologist hired by
Bloomberg to pretend that near-zero interest rates are not destroying our
economies, and this is the best fiction the writer could produce. Near-zero
interest rates haven’t destroyed our economies
yet, so they are OK. And (as already noted) every facet of the
“evidence” used by the writer was a bald-faced lie. We
do have raging inflation. We do
have extreme asset bubbles. We do
have massive, financial instability.
Using the allegory above, what we see is
that the man who “jumps off the roof” is about to hit bottom, and be splattered
all over the pavement. However, we have the propagandists still
pretending that he is merely sailing
past the 50
th floor, without a care in the world.
Meanwhile, as these criminal central banks
lower and lower, we now have several corrupt regimes in the
negative interest rates –
and the rest of these Traitor Governments will obviously soon follow.
“Negative” interest rates represent open criminality: borrowers literally
stealing from lenders/savers. Yet even here we have the liars of the Corporate
media attempting to deceive us into believing that such criminality is not
merely acceptable, but actually “normal”. The example used is Denmark, and the
propaganda comes from (once again)
The Land Below Zero: Where Negative Interest Rates Are
Once again, we are tortured with the same,
infantile pseudo-logic: negative interest rates haven’t destroyed Denmark’s
yet, so this means they are
Although some dovish economists have advocated negative interest
rates as a salve for deflation and anemic growth, if Econ 101 is to be believed
they should have stomach-churning consequences: asset bubbles, capital flight,
and the frenetic manufacture of very heavy vaults to hold money pulled from
Central bankers looking to Denmark for evidence of such trauma
aren’t likely to see much. If anything, they might find the Danes’ approach
Really? Look at the economic policies which
Denmark’s government has been forced to enact, just to keep its economy from
completely disintegrating in the four years since its interest rate first began
to creep into negative territory:
- While interest rates are
officially negative, the banks aren’t allowed to steal “interest payments” from
the bank accounts of ordinary depositors. In other words, a large portion of
Denmark’s financial system has had to be
from this monetary criminality
Corporations, which are not exempt from such stealing, began to
pre-pay their taxes as a means of reducing their cash-on-hand, so it couldn’t
be stolen by the banks. Thus the government had to enact a law limiting
corporations from pre-paying their taxes.
Even the Bloomberg propagandists
acknowledge there is a real estate bubble in Denmark. To try to prevent this
bubble from spiraling out-of-control, Denmark’s government has imposed the
i) Virtually no foreign ownership
of real estate is permitted.
ii) Buyers can only purchase homes
that they intend to live in (i.e. no “speculation”).
iii) Minimum down payments of 5% and rigorous “stress tests” for all
buyers, showing that they could afford ownership even if interest rates
Understand that these draconian policies don’t
make negative interest rates sustainable, they are just economic band-aids to
reduce the bleeding. Over the long term, it’s impossible to exempt a large
portion of the economy from that nation’s official interest rate. Over the long
term, it’s impossible for corporations to sustain having their operating
capital steadily bled away, stolen via “interest payments” (and remember that these
negative interest rates are supposed to
Then we have the real estate bubbles. No
foreign ownership? No real estate speculators? Only responsible buyers are
allowed to purchase property? Try translating those policies into North America’s
property-bubble, where our real estate market is
primarily composed of foreign buyers, speculators, and “sub-prime
The Bloomberg article attempts to construct
the lie that negative (i.e. criminalized) interest rates have virtually no
harmful repercussions, and thus we in North America should find this
criminality “tempting.” What Bloomberg has actually demonstrated is that it is
impossible to sustain such monetary criminality over the longer term, and it
would never be possible to use “the Danish approach” in North America – where
our real estate bubbles would instantly and violently implode, should our
governments attempt to “regulate” the market in such an ultra-extreme manner.
The reason why it could never be
sustainable or even sane for a central bank to push interest rates to extreme
lows over an extended period of time can be summarized in two words: easy
money. As a matter of the most elementary logic (and arithmetic),
if you reduce the cost of capital to zero
(or less) you will see real estate
bubbles, market bubbles, and other forms of speculative malinvestment – in epic
Compounding this arithmetic, we have
“fractional-reserve banking”: the monetary multiplier of insanity. Looking at
just the U.S. system, every one of the $4 trillion which B.S. Bernanke
helicopter-dropped onto the U.S. economy as the U.S. began monetizing its debt
has been multiplied by the ratio-of-criminality of our “fractional-reserve
system”: 35-to-1. Suddenly, that $4 trillion mushrooms to over $100 trillion,
an amount equal to roughly
global GDP, and this is even without factoring in any interbank lending.
As was explained and demonstrated in previous
, thanks to the combination of a 0% interest rate and
fractional-reserve banking, U.S. Big Banks have been able to
counterfeit literally infinite
quantities of U.S. dollar funny-money
. “Easy money” is a serious danger to
Infinite easy money is a
guarantee of complete economic Armageddon.
To summarize: everything that the puppet
politicians, criminal bankers, and media drones have told us about near-zero,
0%, and below-zero interest rates is a lie. All of the “evidence” they have
manufactured to supposedly show that these ultra-extreme interest rates are not
destroying our economies is a lie. This leaves one, last point for discussion.
Why have our Traitor Governments permitted
the Big Bank
(and their central bank lackeys) to impose these ultra-extreme
interest rates on our economies – permanently – when it has always been
completely obvious and absolutely inevitable that such a monetary policy would
lead to the total destruction of our economies?
Here the answer to the question is the same
as with most questions we ask about our corrupted economic policies. It is
to facilitate the theft of all of our
. The primary mechanism by which the central banks enable
the theft of all our wealth is the financial crime they call “inflation.” This
is not an assertion. Rather, it is an elementary fact, backed up the famous
confession of the worst of these monetary thieves.
In the absence of the gold standard, there is no way to prevent confiscation of savings through inflation.
There is no way to protect ourselves from the financial crime that the
central bankers call “inflation”, as they steal from us on behalf of their
Masters. The lower the interest rate, the higher the inflation rate – i.e. the
faster the Banking Oligarchs can steal all our wealth. First it was near-zero
rates, then 0% interest, now “negative” rates.
Faster and faster the Thieves steal our
wealth. Bigger and bigger are the lies which our puppet politicians and central
bank criminals engage in, in order to conceal the systematic looting of all the
wealth from all of our economies. It is the single, largest economic
in the history of our species.
Jeff Nielson is co-founder and managing partner of Bullion Bulls Canada; a website which provides precious metals commentary, economic analysis, and mining information to readers and investors. Jeff originally came to the precious metals sector as an investor around the middle of last decade, but with a background in economics and law, he soon decided this was where he wanted to make the focus of his career. His website is www.bullionbullscanada.com.
The views and opinions expressed in this material are those of the author as of the publication date, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.