Negative Interest Rates for a Negative Growth World

1/30/2016

Central Bank Intervention reached new all-time-highs last Friday as the Bank of Japan adopted a Negative Interest Rate Policy. What this means is Japan has officially joined the ranks of the now 25% of countries whose government bonds are trading at Negative Rates. Essentially a bond investor in a NIRP country is paying the bank for the privilege of holding their money...
Who has ever heard of such a thing? This nonsense is the latest chapter of the soon-to-be ending Keynesian drama I like to call 'Collapse.'
As global markets begin to head deeper & deeper into Bearish territory, the Bankster Cartel is getting desperate. These incompetent money handlers are quickly finding themselves in distress as defaults in the commodities complex increasingly become a reality.
The world is burdened with an unfathomable debt load. The only cure is recession, default, deleveraging. The process will be painful for the masses but it is the greedy Banks who will take the biggest hit.
In default, it is all about collateral. The creditor strips what collateral is available from the debtor & uses it to cover the margin debt. But the unique predicament of today's financial system is there is little real collateral. This market hasn't been propped up on economic growth, it has been propped up on credit-expansion, derivatives, margin debt. It is all hot air. All asset prices are inflated far beyond reason.
In deflation: asset values fall, collateral contracts. It is a vicious cycle that feeds on itself. Like all trends, it starts slowly but soon becomes so quick & violent, the process is sure to make even the most arduous Bears head spin.
A debt jubilee is exactly what this world needs to reset & get back to real economic growth but that means that the Banks take the hit & they are doing everything in their power to prevent the natural credit-cycle from occurring. They arrested nature from playing out in the 2008 banking crises with ZIRP & QE.
Now, the QE bubble has burst. The bankers are beginning to lose control.
However, what is coming will be devastating. These CB know this very well & so panic, desperation sets in..
It was once thought that interest rates could never go below zero. Until in a move of what can only be intense fear, the Banksters push rates lower yet into negative territory. A first for human civilization!
All this move does is attempt to pad the banks from the repercussions of their bad bets. The move is one that kills savers by directly transferring their hard earned wealth into the greasy hands of the shylocks.
BoJ going NIRP was a shock to the markets. I thought that people would be able to see right through the transparency but the markets reacted with a violent short-squeeze, seeing the Dow rise 400pts on the day. This is how the Banks will try to keep the bubble inflated. Through globally-coordinated shock-tactics intended to squeeze shorts.
I do not believe that NIRP will be enough to save this market. To me, it reeks of desperation. You can fight inflation by raising rates but you simply cannot fight deflation. The consumer is fully tapped-out burdened with debt & there is no incentive great enough in the world that can make them keep borrowing to spend beyond their means. The Keynesians think that spending is what leads economies to prosperity. They think that an economy can be modeled with numbers & computer algorithms but they are wrong. Look into the Austrian economic school, the Business Cycle, Saving & Common-Sense investing for the truth lies in that realm.
You simply cannot keep a bubble inflating forever. Bubbles always always burst. The more the CB Cartel fights the natural credit-cycle from playing out, the more devastating the downturn will be...
Good luck trading out there. It is a vicious market full of black-swans & land-mines!