Tag Archives: negative interest rate

Prepare To Be Vastly Richer or Poorer After The Fed Introduces Negative Interest Rates

Summary
  • Negative interest rates are little understood in the U.S., and this may lead to very expensive mistakes by many investors.
  • The move to negative interest rates can be extremely profitable – but investors have to be prepared before it happens or the opportunities will be gone.
  • Detailed analysis of how the Fed using trillions in quantitative easing to force negative interest rates can directly create hundreds of billions of dollars in profits for sophisticated insiders.
  • When we “follow the money”, quantitative easing in a new recession would use monetary creation to force artificially high prices and vastly overpay knowledgeable investors.

(Daniel Amerman) “Following the money” can be a good way of unraveling complexity. Sometimes what the technical jargon is covering up can be as simple as Insider A handing money over to Insider B in massive quantities – and when we understand that, our whole perspective can change.

In this analysis, we will explore how a potential future of negative interest rates in combination with quantitative easing could become one of the largest re-distributions of wealth in U.S. history, with hundreds of billions of dollars in profits going disproportionately to insiders – at the expense of the general public. As illustrated with a step by step example when we follow the money – $279 billion out of every $1 trillion in newly created money could end up going straight into the hands of organizations and individuals who make up a relatively small percentage of the nation.

If there is another recession, then the Federal Reserve intends to engage in what could become the largest round of monetary creation in U.S. history. Those dollars will be quite real, and the reason for their creation is to spend them. A big chunk of that spending will become profits going straight into the pockets of investors. This won’t actually be a closed game – anyone can try for a share of those new Federal Reserve dollars, but first, they have to understand that the game exists, and then they need to learn how it is played.

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Negative Interest Rates Are Destroying the World Economy

https://i0.wp.com/armstrongeconomics-wp.s3.amazonaws.com/2015/11/Negative-Rates.jpgQUESTION: Mr. Armstrong, I think I am starting to see the light you have been shining. Negative interest rates really are “completely insane”. I also now see that months after you wrote about central banks were trapped, others are now just starting to entertain the idea. Is this distinct difference in your views that eventually become adopted with time because you were a hedge fund manager?

ANSWER: I believe the answer is rather simple. How can anyone pretend to be analysts if they have never traded? It would be like a man writing a book explaining how it feels to give birth. You cannot analyze what you have never done. It is just impossible. Those who cannot teach and those who can just do. Negative interest rates are fueling deflation. People have less income to spend so how is this beneficial? The Fed always needed 2% inflation. The father of negative interest rates is Larry Summers. He teaches or has been in government. He is not a trader and is clueless about how markets function. I warned that this idea of negative interest rates was very dangerous.

Yes, I have warned that the central banks are trapped. Their QE policies have totally failed. There were numerous “analysts” without experience calling for hyperinflation, collapse of the dollar, yelling the Fed is increasing the money supply so buy gold. The inflation never appeared and gold declined. Their reasoning was so far off the mark exactly as people like Larry Summers. These people become trapped in their own logic it becomes irrational gibberish. They only see one side of the coin and ignore the rest.

Central banks have lost all ability to manage the economy even in theory thanks to this failed reasoning. They have bought-in the bonds and are unable to ever resell them again. If they reverse their policy of QE and negative interest rates, government debt explodes with insufficient buyers. If the central banks refuse to reverse this crazy policy of QE and negative interest rates they will see a massive capital flight from government to the private sector once the MAJORITY realize the central banks are incapable of any control.

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The central banks have played a very dangerous game and lost. It appears we are facing the collapse of Social Security which began August 14th, 1935 (1935.619) because they stuffed with government debt and robbed the money for other things. Anyone else would go to prison for what politicians have done and prosecutors would never defend the people because they want to become famous politicians. We will probably see the end of this Social Security program by 2021.772 (October 9th, 2021), or about 89 weeks into the next business cycle. These people are completely incompetent to manage the economy and we are delusional to think people with no experience as a trader can run things. If you have never traded, you have no busy trying to “manipulate” society with you half-baked theories. So yes. The central banks are trapped. They have lost ALL power. It becomes just a matter of time as the clock ticks and everyone wakes up and say: OMG!

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We have government addicted to borrowing and if rates rise, then everything will explode in their face. Western Civilization is finished as we know it just as Communism collapsed because we too subscribe to the theory of Marx that government is capable of managing the economy. Just listen to the candidates running for President. They are all preaching Marx. Vote for me and I will force the economy to do this. IMPOSSIBLE! We have debt which is unsustainable the further you move away from the United States which is the core economy such as emerging markets. Unfunded pensions destroyed the Roman Empire. We are collapsing in the very same manner and for the very same reason. We are finishing a very very very important report on the whole pension crisis issue worldwide.

Source: Armstrong Economics