Central Banks at ‘end’ of options – Deflation coming!
The Financial Times, 02/18/2016, states that policymakers have run out of options! Negative thinking is now in vogue. JP Morgan economists state that central banks have a theoretical capacity to lower rates to minus 1.3% in the U.S., minus 2.7% in the UK, minus 3.45% in Japan, and minus 4.5% in the eurozone. What a change in thinking in just the last six months. Sweden, Denmark, Germany, Switzerland, Japan, and the ECB are now assuming that negative interest rates can continue to spur growth. Janet Yellen of the U.S. Fed is contemplating negative rates for America. Where is this leading and why? Let’s think about what is happening and the consequences of these central bank policies.
Yellen says she is not sure if she will go negative! But she is watching Europe for signals which might be implemented here later!
Home owners could benefit as they refinance their mortgages at lower rates!
Savers will suffer as their rates under NIRP will continue to fall!
What has emerged in the past few years is a gradual decoupling of our cyber prices from the underlying physical assets. As central banks attempt to create inflation in asset prices the real economy is actually deflating. The Baltic Dry Index is a good indicator of what is happening. Exports are slowing and Imports are slowing. Trade is slowing and our freight carriers are lowering prices to accommodate the trend. This reveals that the real global economy is slowing and that a deflation in asset prices is emerging with a vengeance. The MSCI world index also reveals that global growth is slowing and all the digital money creations (QE) are not creating any meaningful inflation. Our banking institutions should experience a lowing in their profits going forward.
Banking profits will decline as NIRP continues to drain income from banking assets!
The new acronym for all this is NIRP. There are other Keynesian economists who belief that this new tool of negativity is a powerful tool for future growth as investors can refinance at lower rates and this will continue to increase asset prices (inflation) for many markets. Real estate prices (for example) could benefit from NIRP. As rates decline people can refinance their mortgages at lower rates to reduce their monthly payments. Banks, however, could suffer from all this NIRP as their profits will likely decline and expose their assets to lower market values. So what is favorable for select sectors may be unfavorable for the overall economy. Savers, for example, will suffer from still lower interest rates. Savers are already revolting in Japan over all this negativity!
Monetary policy favors the 1% and the 99% must suffer from these corrupt NIRP policies!
The real beneficiary of NIRP could be the precious metals markets. As savers seek new safe havens for their store of value funds many will likely seek the security of a physical asset like silver and gold. Our elite policymakers, however, may sense this trend and go all out to ‘suppress’ these metals prices in our electronic futures markets. Algorithms and ‘naked shorts’ could increase the artificial ‘supply’ of ‘paper gold’ within our computer screen markets (this should really be called digital gold) to unimaginable levels (currently some 300 ounces of ‘paper’ gold is on the books for every ounce of physical in the warehouse). Our corrupt central bank trading rooms could attempt this price ‘suppression’ as one final move to force trader psychology into their deceptive digital investments. Watch the ‘tick charts’ at Kitco website for all this electronic rigging activity: http://www.kitco.com.
Deflation in China and the Eurozone will come to America later in 2016 and 2017!
Paper currencies (called Cash) and silver/gold (owned outside of the digital economy) could benefit as popular ‘safe havens’ during this period of NIRP!
The final end game is now here! The Keynesian economic model is broken and our central bankers and their private trading rooms will likely do whatever they can to continue their Ponzi charade. NIRP and QE are the final gimmicks available for our Keynesian manipulators. They will likely attempt to continue this corruption within economics until traders revolt and sell all the markets short. Eventually, the wise will discover silver and gold (the physical metals within their own possession) and this will become the final safe haven for those desiring a real ‘store of value’. The end game is here and 2016 is likely the start of a multi-year process of cleansing. Those with discernment will get into God’s physical money (with 5000 years of history) for this final end-time apocalypse. Enjoy! I am: https://kingdomecon.wordpress.com.