Debt Rattle January 23 2015

[Raúl Ilargi Meijer]

Harris&Ewing Army Day Parade, Memories of the World War, Washington DC Apr 6 1939 • Love In A Time Of Crisis In Greece (BBC) • Syriza To End Greece’s
[See the full post at: Debt Rattle January 23 2015]

[skintnick]

Inspired by the work of Bernard Lietaer, Charles Eisenstein, Silvio Gesell and others I’ve come to believe that widespread adoption of money with demurrage – negative interest which reverses the future discounting of investment under usury – is a fast-track to sustainable finance. More recently I’ve started to look at Miles Kimball’s work and wondered if breaching the Zero Lower Bound (ZLB) is another way of achieving similar results through central bank policy. We know Switzerland and Denmark (and, briefly, the ECB a year or two ago) have done so for more mundane reasons, but the Fed and Banks of Japan and England have not so far as I know. Can anybody tell me if the decision not to impose negative rates is legally enforced in these last three/other cases, or just a policy choice?

[SteveB]

I don’t have an answer to your question, skintnick. With respect to any change in monetary systems (note: plural), the omnipresent challenge is the “widespread” aspect. Even widespread isn’t enough. It would need to be total, global, and that’s sitting on the lap of impossible. There is no global currency, and so all governments would have a say. That’s a dead end. The only viable choice is that of individuals, who are apart from governments, to end the global use of money and exchange if a critical mass of them decide that they’d prefer to live without them. By definition of critical mass, no government or corporate efforts could stop it.

[E. Swanson]

I just finished reading David Stockman’s long book, “The Great Deformation” (2013).
Here’s a prophetic quote from page 703:

“But it was the Swiss National Bank which was the ultimate canary in the mine shaft: it has been forced into massive expansion of its balance sheet in order (?) offset the destructive flare-up in its exchange rate owing to flight capital out of the euro zone into the “swissie.” Indeed, when the Swiss central bank, the paragon of “hard money” in modern times, is forced into negative interest rates on deposits and an explicit policy of trashing its own money, then the currency wars have started , and there is no turning back.
…
The Japanese government has buried itself in debt building roads to nowhere and implementing every hoary fiscal stimulus device ever conceived. With government debt at 250 percent of GDP, it now stands not only as a monument to Keynesian folly, but as a potent warning about how thoroughly and swiftly financial discipline has been destroyed by the Fed and its convoy of monetary roach motels”

While I have some issues with his presentation, especially his treatment of oil and energy in general, I can’t argue with his view of our political and financial mess. Events since he wrote the book, such as the US election just past, simply confirm most of what he posits. The crash in oil price and the continuing mess within the Euro Zone appears to follow his grim projections rather perfectly. Hold on to your hat, the winds of change are blowing strong and the inmates have taken over the asylum:

New Senate Environment Chair Gets His Gavel, Goes On Rant Arguing Climate Science Is A Hoax

[Raleigh]

“‘Widespread manipulation of key benchmark interest rates such as the London Interbank Offered Rate, or Libor, threatens public confidence in the financial system, and must be prevented through fines and criminal prosecution,’ Federal Reserve Gov. Jerome Powell said Tuesday. Dealers at major Wall Street firms are alleged to have manipulated interest rates to benefit their trading positions, and banks were accused of reporting artificially low rates in the financial crisis to conceal their problems. Seven banks and brokerages have settled with regulators over alleged manipulation, and some of their employees have been criminally charged.”

Karl Denninger responds with: “How about Treasury rates? Is manipulating them something that must be prevented through fines and criminal prosecution too? The Fed is a private bank; yes, they operate under a government charter, but in fact so do all federally-linked banks — which is basically all of them.

So if it’s improper to manipulate various rates if you’re JP Morgan, why isn’t it equally improper to manipulate rates at the Federal Reserve through programs such as “QE”?”

https://market-ticker.org/akcs-www?post=229761

It is equally improper, and they should be facing jail time too.

[Nassim]

skintnick,

Comments like yours convince me that it is wise to keep spare cash in physical gold. ZIRP and all the rest of it has decimated savers – people who save for investment, for retirement and for emergencies.

[VisionHawk]

A MESSAGE FOR THE DAVOS CROWD:

An anthropologist proposed a game to children of an African Tribe. He put a basket of fruit near a tree and told the kids that the first one to reach the fruit would have them all.

When he told them to run, they all took each others hands and ran together, then say together enjoying the fruits.

When asked why they ran like that – as one could have taken all the fruit for oneself – they said “Ubuntu, how can one of us be happy if all the others are sad?

Ubuntu is a philosophy of African tribes that can be summed up as “I am because we are”.

(From the GreatSpiritGod on Facebook)

[V. Arnold]

@ Nassim

I was married to the daughter (the daughter was not born in the U.S.) of Ukraine immigrants and her father told me something I never forgot: During and just after WWII, there were two ways to get bread; gold and lacking that, stealing it. I’ve never, before or since, met a man with such a deep hatred of Jews, whom he blamed for this. They (according to him) had the gold.
Gold’s value in times of monetary failure is out of most people’s grasp or understanding.
Asians understand this; that’s where I’m living…

[Author]

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