Tag Archives: negative interest rates

This is my last report from the good old “twenty-teens”.

In some respects, they didn’t turn out at all like I thought they would. But in many others, exactly as predicted.

But, given today’s systemic distortions and deformations, predicting the events of the next ten years will be much easier than it was for the twenty-teens. Largely because there’s little room left down the road to kick the can further.

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My business partner Adam and I recently met with a successful business owner whose career began on Wall Street. The kind of guy who should be rooting for the system, because it has treated him well.

Instead, he was quite nervous about the sustainability of the status quo. “Starting in August,” he said, “Maybe it was the Amazon catching fire, maybe it was the negative interest rates – I don’t know for certain what the trigger was – but something has snapped.”

I agree. Because I feel it, too.

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The Powers That Be, like central bankers and politicians, are only human. They err. They have to operate with imperfect information.

But they are also mostly untrained in systems thinking, resource limits, and other such necessary fields — which they could correct for if they cared or dared.

But they aren’t. And because of this, the pace and the scope of the changes happening are beyond their powers of comprehension, let alone their powers to fix.

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Yes, the world is busy collapsing around us. That’s true.

But collapse is a process, not an event. It can be ameliorated and even reversed, depending on the actions we decide to take from here.

And there’s still time left to change our fate.  Not much, mind you. But enough to matter.

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Have you moved a material percentage of your financial portfolio to cash? Have you become so concerned about the meteoric ramp upwards in asset prices that you find it wiser instead to move to the sidelines, build "dry powder", and wait to re-enter the markets at saner valuations?

If so, you have my sympathies.

The past 5+ years have been brutal for savers pursuing this strategy. I know this well, as I'm one of those folks, too.

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As we've been watching closely, something is wrong with the big banks. Their shares have lost 25-33% of their market value since the beginning of the year. What's going on?

The turmoil seems greatest in Europe, where bank shares have fallen the hardest, and negative interest rates have appeared with increasingly frequency across member countries.

To make sense of it all, we've invited Steen Jakobsen back on, Chief Investment Officer of Saxo Bank, who can provide an eyes-on-the-ground perspective on the European banking system from his location in Copenhagen.

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You’ve probably read that there is a “war on cash” being waged on various fronts around the world. What exactly does a “war on cash” mean?

It means governments are limiting the use of cash and a variety of official-mouthpiece economists are calling for the outright abolition of cash. Authorities are both restricting the amount of cash that can be withdrawn from banks, and limiting what can be purchased with cash.

These limits are broadly called capital controls.

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