President Nixon’s abandonment of the gold window in 1971 administered the last rites to honest money, and the consequences have been disastrous. From Bill Bonner at active-man.com:
Low Interest Rate Persons
She is a low-interest-rate person. She has always been a low-interest-rate person. And I must be honest. I am a low-interest-rate person. If we raise interest rates, and if the dollar starts getting too strong, we’re going to have some very major problems.
— Donald Trump
wo low interest rate persons! The Trumpsumptive president (Donald the Tremendous) can be seen here indicating the approximate size of the interest rate that will still keep us out of “major problems”.
BALTIMORE – With startling clarity, the presumptive Republican presidential nominee described himself – and Fed chief Janet Yellen. But he could have just as easily been talking about his rival in this year’s presidential elections, Hillary Clinton.
Donald Trump had already gone broke – twice – by the time Bill Clinton took office. But then, the combination of lower interest rates and rising asset prices saved him.
And extraordinary abundance and prosperity of the Clinton years owes little to Mr. and Mrs. Clinton and much to the fact that Alan Greenspan had inaugurated his famous “Greenspan Put” in 1987.
1987 – the year of Greenspan’s original sin
Greenspan reassured investors that he had their backs with a rate cut whenever the stock market took a turn for the worse. This led to an “illusion of prosperity,” as stock prices rose, helping Bill get reelected… and gaining national prominence for Hillary as the aggrieved wife in the Monica Lewinsky affair.
Stock prices filled with hot air, until the bubble in the Nasdaq blew up in Clinton’s last year in office. Both of this year’s presumptive candidates are “low interest rate” people, all right. Their adult lives were marked by the credit cycle and their careers shaped by ballooning debt. And now, almost the entire world economy depends on low rates.
We live on Planet Debt.
Subzero Yields
The amount of government debt trading below zero yield rose to $11 trillion last week. In Japan, negative yields run out the yield curve until 2051. Overall, interest rates are said to be lower than they’ve been in 5,000 years.
This is a fanciful but entertaining factoid; you can’t compare the apples of Sargon the Great to those of Donald the Tremendous.
The famous (more or less) Sargon the Great, ruler of Akkad. What were interest rates in his time? And why did he get punched in the eye? Image pinterest.com
“How cometh it to be that interest rates ride so low… while the hack and the hustler ride so high?” you might wonder. We are glad you asked.
We have been connecting dots. These are dots that others do not want to connect. Because they connect to too many reputations, too many fortunes, and too many opinions.
We are talking about the line that runs from the post-1971 money system to the Deep State, passing through the spectacular rise of China… the spectacular fall of the U.S. (where the average man has made no financial progress in the last 40 years)… to the remarkable luck of the 1% (who got richer and richer, as most people around them lost ground).
To continue reading: Planet Debt
