NIRP

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The Banquet Of Consequences Is Being Served

Prepared just for us by the central banking cartel
Wednesday, September 28, 2016, 9:58 AM

The Fed and its central banking brethren (most notably the European Central Bank, Bank of Japan, Bank of England and Bank of China), have decided to sacrifice investing for tomorrow (namely savings and productive enterprise) in favor of higher prices today for financial assets. By keeping interest rates historically low -- and increasingly negative -- around the world, they have pushed capital much farther out the risk curve than it deserves to be, added trillions of more debt into an already dangerously over-leveraged economy, and lavishly rewarded the rich elite at the expense of everyone else.

As Stevenson wrote, sooner or later, the banquet of consequences must be supped on. And for the Fed, the dinner bell is ringing. » Read more

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The Year Of The Red Monkey: Volatility Reigns Supreme

To preserve capital, you need to outsmart the monkey
Friday, March 11, 2016, 3:16 PM

In the lunar calendar that started February 8, this is the Year of the Red Monkey. I found this description of the Red Monkey quite apt:

"According to Chinese Five Elements Horoscopes, Monkey contains Metal and Water. Metal is connected to gold. Water is connected to wisdom and danger. Therefore, we will deal with more financial events in the year of the Monkey. Monkey is a smart, naughty, wily and vigilant animal. If you want to have good return for your money investment, then you need to outsmart the Monkey. Metal is also connected to the Wind. That implies the status of events will be changing very quickly. Think twice before you leap when making changes for your finance, career, business relationship and people relationship."

(Source)

In other words, the financial world will be volatile. And few will have the agility and wile to outsmart the market-monkey. » Read more

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The Future Of Interest Rates

The Fed faces an increasingly bad set of options
Friday, April 17, 2015, 3:36 PM

Executive Summary

  • Why the Fed may no be able to raise rates from here
  • Will the Fed go to negative interest rates instead?
  • Why the next recession will limit the Fed's options greatly
  • Why it may well be too late for the Fed at this point to act

If you have not yet read Part 1: Has The Fed Already Lost? available free to all readers, please click here to read it first.

What If The Fed Isn't Actually Able To Raise Rates From Here?

Let’s start with a look at the history of the Federal Funds rate (the shortest maturity interest rate the Fed directly controls).  Alongside the historical rhythm of the Funds rate are official US recession periods in the shaded blue bars.   

Chart Source:  St. Louis Federal Reserve

Of course there is one striking and completely consistent historical commonality in the behavior of the Funds rate over time.  The Fed has lowered the Federal Funds rate in every recession since 1954 at least.  There are no exceptions.  You can see the punchline coming, can’t you?  Just how does one lower interest rates from zero to stimulate a potential slowdown in the economy?

Of course in the banking system... » Read more

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Off the Cuff: That Sinking Feeling...

The multiplying signs that we await a rude date with destiny
Friday, April 10, 2015, 4:24 PM

In this week's Off the Cuff podcast, Chris and John Rubino discuss:

  • The Police State
    • Too much evidence to ignore
  • How Low Can Interest Rates Go?
    • Looking for the limits to NIRP
  • That Sinking Feeling....
    • Why the next economic bust is going to be just horrible
  • Oil
    • What the heck is going on in that market?
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Oil And The Global Slowdown

It's time for central banks to admit their failures
Wednesday, December 3, 2014, 8:08 PM

The world economy is slowing down and the authorities are fretting. 

Japan, Italy, Greece and Austria are all in recession.  China is slowing down according to their official statistics, and even more according to the whispers. 

Germany, France and the Netherlands are all at stall speed. 

The US is, according to the BLS, doing just great at nearly 4% growth, but you wouldn't know that from either the quality of the few jobs being created (which is low) or consumer spending (also low).  » Read more

Podcast

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Alasdair Macleod: All You Need To Know About Negative Interest Rates

The implications of the ECB's radical decision
Sunday, June 8, 2014, 10:14 PM

On Thursday, the European Central Bank (ECB) took the historically unprecedented step of lowering certain of its interest rates below 0%. In a report to our premium subscribers immediately following the announcement, Chris likened the move to the policy equivalent of dropping a neutron bomb.

In the days following, despite the ECB attempting to clarify its stance further, many questions still linger; most notably: What exactly will the implications of this negative interest rate (NIRP) policy be? » Read more