The Talk of Interest Rate Hike (Part II)

[Cinvalo]

Source:http://www.corruptionofrealmoney.com/education.php

Goldman Sachs boosts rate hike expectation from 20% to 30% after Janet Yellen, the Federal Reserve Chainman, made a speech saying waiting too long to raise interest rates would be "unwise" as economic growth continues and inflation rises. Back in September 2015, I have written an article about the consequence of prolonged low-interest rate. (See article). It had been 17 months now, the "talk" of a rate hike continues, the interest rate remains low. So, why is the Fed bringing up the talk of rate hike again? What are the Fed's Chairman's worries? It is worthwhile to have an update.

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[James]

Any discussion of interest rates has to consider the largest debt market in the world - government bonds and in particular US treasury bonds. From what I can see, yields on government bonds have begun trending up in the last several months - that is bond prices going down which indicates that a higher rate of return is being set. I suggest that the US Fed will have to genuinely raise its official interest rate or the US dollar will in time suffer major devaluation against gold due to US government debt value destruction.
My 2 cents.

 

[tolly_67]

and it is a good 2 cents. I will go along with what you wrote.
I don't think it will be too long before European interest rates are going to spike higher. The Brits leaving the E.U. is only the beginning. Uncertainty brings risk, risk is reflected in the interest rates.

 

[Ipv6Ready]

No commentators discusses what will happens when the QE bonds come up for renewal, since Feds are unlikely to renew them but cancel them when they get paid.

Than Treasury will borrow from Banks, this will leads to trillions of dollars taken out of the system.

 

[Cinvalo]

QE is debt cancellation in disguise. I have devoted a Chapter on my book - Legacy of Debt, just to explain that. (with prove)

 

[Pirocco]

QE is debt cancellation in disguise. I have devoted a Chapter on my book - Legacy of Debt, just to explain that. (with prove)

The central planners entire goal is debt cancellation.
The alternative, would be a clearly visible taxation degree.
Money holders (savers) would clearly identify who took their property.
Money creation, inflation targeting and interest rates manipulation, are the means of disguisement.
QE, IS a means yes, but might not be in the way it seems to suggest and you seem to believe.
So far, QE was (by far) dominantly creating without spending money.
Totally contradicting the suggested "Easing", the central planning instead "disencouraged" spending, by paying banks a higher-than-"market" interest rate, to NOT lend it out, to let it stay as excess reserves on their accounts at the central banks.

QE was, after the 2000-2008 spending / boom, the contraction part of the cycle.
I'm not stating that QE made the money supply shrink, but that the spending level greatly dropped from that 2000-2008 level.
That rate (it's all about relatives not absolutes/zero as reference) contraction, was/is the real economical factor.
The QE, was and is the false opposite suggestion.
Its motivation is quite obvious: make money holders / savers concern about inflation to come, as to make them willing to pay frontrunned prices of various alternate storage of value products (ex gold, stocks), make them pay double triple and more, and bingo, they lost the purchasing power that the central planners and their parasites stole during the boom years.
This way, those money holders / savers just can't cause inflation beyond target anymore.

Talk, says nothing. The whole of the balances and rates that indicate their actions, do so, for those that look wider than a single one.
So, beware of suggested rates / suggested inflation. Just like in any soap, there's a window for the watchers, that doesn't show the dressers, haircutters, cameramen and most importantly, directors.
To give 1 striking example case: gold, how coincidental is it that all lbma bullion banks together end up paying governments a so called market rigging penalty / sum, that was about identical to the profit they realized during the gold price strong increase years, which in turn was due to governments central banks switching from net selling to net buying?
And that is to expect. It's just a transfer, of money holders / savers future purchasing power, wasted along temp higher (relative!) prices, reducing them to noncompetitors for the future lending and spending of the central planners side.
Heaps of data over many years put together, tend to make clear longterm strategies, and in fact, what else should we expect?
The days of stupid kings that replace or reduce gold in coins, or just brutally confisquate, are long gone.
"They" became smarter than that. Modern times.

Sometimes it's recommended to revert to the basis.
There are borrowers of property.
There are owners of property.
If the borrower does not return the property, then the lender lost the property.
But, sometimes lenders can cope with the loss. They don't go under. No end of the world.

Well, that is exactly how the central planning operates.
They "throttle" their theft, just like milking a cow.
They can take an axe, haw the cow into pieces and catchup the milk from the udder.
But the next day, the cow won't be there anymore and no next milking round.
That, is what is really behind that so-called 2% annual inflation rate.
The 2 of that 2%, is meaningless.
It's about the throttling itself, as to make their theft not exceed an at-the-time rate of production of their victims.
And that's why a focus on interest rate(s) alone misses half the story.
QE, is property holders / savers theft in disguise.
IF they fall into the QE show trap.
If not, well, expect some further "attacks" on cash, some further fees to pay for whatever asocial anti-environmental racistic speeding etc.
But this is a gradual process. No shocks. No cows humping 'round when trying to milk.

 

[tolly_67]

Perhaps it was the reason why usury was forbidden in days gone by.
We should consider the merits of a society where the saver and the investor are connected by a bank (middle man) that earns its keep by providing a service, not milking them like cows.
The return on capital is an agreement between saver and investor alone.

 

[bordsilver]

Perhaps it was the reason why usury was forbidden in days gone by.
We should consider the merits of a society where the saver and the investor are connected by a bank (middle man) that earns its keep by providing a service, not milking them like cows.
The return on capital is an agreement between saver and investor alone.

Usury was forbidden because they were mentally brainwashed religious dudes with no understanding of money, markets or economies.

Central banks with a government mandated single fiat currency monopoly is a different issue to usury.

 

[bordsilver]

A bit old, but still funny

 

[tolly_67]

Perhaps it was the reason why usury was forbidden in days gone by.
We should consider the merits of a society where the saver and the investor are connected by a bank (middle man) that earns its keep by providing a service, not milking them like cows.
The return on capital is an agreement between saver and investor alone.

Usury was forbidden because they were mentally brainwashed religious dudes with no understanding of money, markets or economies.

Central banks with a government mandated single fiat currency monopoly is a different issue to usury.

I would be inclined to say they understood exactly about money and markets. Religious dudes or not.
Central banks have simply replaced kings and land barons. This so called milking has been going on ever since money was created.

 

[bordsilver]

Perhaps it was the reason why usury was forbidden in days gone by.
We should consider the merits of a society where the saver and the investor are connected by a bank (middle man) that earns its keep by providing a service, not milking them like cows.
The return on capital is an agreement between saver and investor alone.

Usury was forbidden because they were mentally brainwashed religious dudes with no understanding of money, markets or economies.

Central banks with a government mandated single fiat currency monopoly is a different issue to usury.

I would be inclined to say they understood exactly about money and markets. Religious dudes or not.
Central banks have simply replaced kings and land barons. This so called milking has been going on ever since money was created.

Nope. It was always religious-based dipshit pronouncements. In every one of the societies where it was a thing, people came up with inventive ways to get around the laws because usury is natural, wanted and inherently beneficial.

 

[tolly_67]

'beneficial' for a few unfortunately. As for being natural, would you charge your mother or father interest on a loan? How about your children? It becomes natural when it not someone you know. Trust is not an issue because families can be just as untrustworthy.
Usury is simply opportunity. To make something for nothing.

 

[tolly_67]

on second thoughts it is 'natural'.....It is human behaviour for some who have to take advantage of those who don't. It is called greed and we all suffer from it in our own way.

 

[bordsilver]

'beneficial' for a few unfortunately. As for being natural, would you charge your mother or father interest on a loan? How about your children? It becomes natural when it not someone you know. Trust is not an issue because families can be just as untrustworthy.
Usury is simply opportunity. To make something for nothing.

:lol:

No one is forcing someone to sign a contract which asks for interest to be paid. People willingly do it because there is a difference in the relative time preferences of the borrower and the lender. They borrower's want, say, the other person's $100 now more than $120 in a month's time (and vice versa for the lender but with risk of nonpayment attached). While we may not know the specifics of why the people involved may have these preferences, we do know that the preferences are real. We can know it is real not because we can divine the borrower's specific utility function, but because we see him choose to engage in the very action itself.

To take and risk someone else's capital without paying some form of interest is to get something for nothing not the other way around. Money is a commodity just as much as any other commodity, it just also has extra uses as a medium of exchange.

 

[tolly_67]

Very true and in a perfect world...well it all works perfectly.
Banks are no different from casinos in the sense that understand human psychology better than anyone. I always say, don't waste your money and go to university to study psychology, just pay the casinos to teach you all they know. It will give a far, far better foundation from which to work from. How can you provide answers if you don't understand where the problem comes from.

You cannot protect people from themselves. If they want something shiny and new then nothing is going to stop them from getting it. That is why I get bombarded from credit card companies that hope they have found another sucker...I mean customer. Unfortunately from them the credit card I have is in credit and I don't use it. Every month they pay about 70 cents to post me a statement that tells me I am in credit. That is about $8 a year to tell me I have $3. This has been going on for years. I am hoping they will offer me $20 to cancel my card.

 

[bordsilver]

I don't think it has anything to do with "a perfect world". It simply is the reality of people living their lives.