Are Central Banks Really Thinking Of Raising Interest Rates, If So, This Will Be A SHTF Signal...

US Fed also has to keep interest rates on US Treasuries very low. If interest rates go up, the US Gov simply can not afford to pay interest on all that debt at higher rates.

no one has ever said, exactly, what force could have
brought down the Soviet Union in 1991.

but i think the actual FORCE was that all the banks
in the world finally refused to recognize any of the
soviet banks and refused to accept anything except gold.

what if the world did the same thing to america?

i like civil discussions like this.

it's agreed that it's not a matter of IF we are going to
hit the wall, you guys are arguing over HOW we are going
to hit the wall.

the WALL is our future, and we are going to HIT it.

Reagan helped bankrupt the Soviets and bring the end to the Cold War by keeping them occupied and spending money they didn't have in Afghanistan by supporting the rebels.


Sound familiar?

Well, that would be the catalyst for the Fed raising rates, but with so much excess electronic liquidity floating around out there, the markets would immediately see that as a panic move, and with the amount of sovereign and corporate debt out there, even a small raise in rates would cost them billions.

They would rather ride the backs of savers by giving them an essentially negative return on their money, but even that is killing the economy now.

Hence the Catch 22 the Fed finds themselves in...

There is a deminishing rate of return for monetary easing in a chronically low interest rate environment, and one of the best tools the Central Banks have to stimulate the economy is interest rates, but that has been used and used up, now it appears Monetary Easing has too been used up...

The Fed's tool box is looking a little bare...except for that nuclear option...

Last Edited by Saddletramp on 12/13/2012 07:09 PM

It's the dollar they "think" is invincible. However, the reality is that the dollar served as the world's reserve currency forming the standard unit of account for all bills of credit used in global trade. The more trade there is, the more demand for dollars there are overseas.

This has allowed our congress and banking system to export a lot of inflation to the rest of the world, however the elite circles that control commerce in the world didn't mind as they always pass the cost of inflation off onto the masses, while the percentage of their income/wealth required for items affected by inflation is insignificant in comparison to their total wealth.

However, as the dollar is the standard unit of account it becomes increasingly difficult to establish reliably or accurately calculate the future value of any bill of credit since that unit (the dollar) can be created by politicians, banks, corporations and even individuals at will. Even credit cards are unsecured credit that is fungible with cash in our economy, meaning consumers can inflate the monetary base just by their "animal spirits".

Eventually another currency or if we are all lucky, gold, will replace the dollar as the standard unit of account. That means all those tens of trillions of buckies overseas will come home like a tsunami, and that is when the hyperinflationary event window will commence IMO.

fuck reagan. he didn't have anything to do with the
fall of the Soviet Union. the Soviets dissolved because
they had lousy economics.

I get a lot of comments on my Avatar, some people really hate it, but according to they new psychiatric guidelines I have ODD (Oppositional Defiant Disorder), so the more people bash me for it, the less likely I am to take it down...It's really not meant to be mean spirited, I was on vaccation in Key West and we were just having fun. If it bothers you, just think of it as me saying, you're number one!!!

the problem is: that Economically the U.S. is in too deep
to turn back now.. we couldn't make things right if we wanted to.

You raise rates to pull money back, that's not inflation it's an attempt to combat too much inflation...and the Fed gives with one hand and takes with the other all of the time.

Monetary Easing (either through pumping money into the system or lowering interest rates) is an attempt to combat Deflation, but the problem is both tools are used up!

But really, my point is this, if the U.S. Treasury Market begins to soften even further as a result of this new QE, you could see a forced raise in rates through the bond market, the first indicators of inflation, but not inflation through growth, inflation through loss of confidence.

Never forget, inflation equals growth in a Keynesian Economic model, in fact Keynesian Monetary systems cannot survive without a constant rate of inflation, BUT Hyperinflation is NOT GROWTH!!! It is a loss of confidence in the currency...a very different animal than plain ol' inflation.

You can have negative growth, and crashing markets, during a hyperinflationary event...see The Soviet Union, or Argentina for examples of this.

Last Edited by Saddletramp on 12/13/2012 07:32 PM

I can see you are a brilliant scholar on the subject.
Go back to your grass.

I don't know that this issue is all that political, this happens because of the system we have, who is in charge when it happens has very little to do with it.

Did Reagan hasten the Soviet dimise, I think he probably did. Would it have died on it's own, yeah, it's a failed economic model...

So really, you are both right...

The Dollar would cave in on itself in a matter of hours if the Fed were to do that...

Besides, Bankers aren't in the business of "Forgiving" debt, they are in the business of collecting debt, and never forget, the Fed is a privately owned institution...

Last Edited by Saddletramp on 12/13/2012 07:41 PM

And the REASON the Fed is currently purchasing almost 90% of our long term debt, is simple...Interest Rates are being kept artificially low!!!

I know some people think it can go on forever...but Keynesian Economic Cycles were never meant to be perpetual motion machines...it's a cycle, it goes up, it comes down, it resets, then hopefully it goes up again...

Oh, just on this point I want to disagree. Bankers are in the business of creating debt, anymore they could care less if they can collect on it, that would require due diligence which is soooo much harder than bailouts.

Banks make a lot, a lot, a lot of $$ from the ability to create debt enabled by the FRB system.

OP, agree with your analysis. Going back to 1880/90s you had Bryan giving his "Cross of Gold" speech, McKinley defeating him in presidential run and US formally adopting gold standard and then Great Depression (Hoover, essentially, did nothing right) was passed on to FDR and he began draconian Fed measures to manipulate market (gov controls gold- keep it at price set by gov $35 an oz? to get people to fuel economy). Despite the machinations of all of the above, the only way out of the Depression was World War (manufacturing and other tangible stim to exonomy. Today, we're in the same boat. Given the economies of the rest of the world (the days of isolationists against world economy have been over for 90 plus years) even war won't turn this economy around.

When you say raise rates, how does this affect the average person ? does this mean that rates increase for those who borrow from banks , or do rates increase for those with savings in banks ?

I'd like to add a few bits of data to this thread.

My bank just notified me that they were lowering the interest rate in the savings account AGAIN to .03%. I originally put my money in that account when the interest rate was over 3%. It's a fucking waste to keep money in a savings account.

We sold our stock because it was losing thousands. If we wanted to hang onto what was left we needed to liquidate it.

In addition the property value of my house dropped 50% over the past 7 years. Don't see any increase in value there but it's rented so we make more money on the rental then if that money was in stock or the savings.

However, I still have a little bit I'm wondering how to invest. The two options left are gold or silver. Gold may go up 10% which is a whole heck of a lot better then just getting .03% in a savings account. And gold coins are easy to move around or hide.

So I'm leaning toward purchasing Canadian gold maple leaf as a hedge against devaluation of the dollar.

What do you recommend? Gold or silver? Or is there something else that is more stable you'd recommend.

TIA

No...it's a sign of the continuing cause of our economic problems...CORPROATE GREED...

Here is a question that rolls around in my head. Having read all this my thought is what will IRA's and 401K's look like? As I recall, 2008 they were referring to the retirement losses as the lost decade. Basically everyone was where they were 10 years ago. In my opinion I do not believe even half of invested money is there, gone, poof! So is this the way that Wall St can cover the true losses because if the dollar really starts to be devalued, people are going to start tapping into their 401K's, even willing to pay the penalties.

I hope I am making sense

^^^This

Did you ever stop to think that is why they want to suppress rates, to force you into risky markets where on average only the biggest players win (consistently).

That and as OP said by suppressing interest rates the gubment is allowed to cheaply deficit spend themselves into oblivion, oh and it also lowers rates on mortgages allowing non-qualified applicants access to credit/debt which the banks can then write off any risk of defaults through derivatives and regulatory capture (bailouts).

Every pay day - I visit the ATM - take out all except what is needed to cover the bills - and purchase Silver, food and gas.

damn fed

:Bernak is money :

I dunno, they always wanted us to collect on the loans we wrote, but I agree some of the inspirations for the big wigs at the Multi-Nationals is vague at best, criminal at worst...

I don't see rates going up at all for the next few years.

Bernanke said the official UE number will have to go below 6.5% before they would consider raising rates.

The simple answer is 401k's and IRA's and other retirement vehicles will be cut by whatever percentage they decide to devalue then re-value the currency.

But the government has had their greedy eyes on 401k's and IRA's for a long time now, and with the baby boomers coming of age, they will move on them sooner rather than later.

Countries like Ireland and France have nationalized private retirement accounts and pensions (for the good of the people you know!).

There has been talk about full nationalization, forcing them to invest in U.S. Treasuries, but the short answer on all of that is that it is still up in the air.

However, I guarantee you this, when there is another major crisis, and 401k's and IRA's begin to lose value dramatically, the government will step in under the auspices that they are going to save everyone's retirement!!!

That's when you know your fucked...

That is one of the problems but not the main one. Step back and look clearly at the people around you. Bankruptcies, buying houses one can't really afford, second mortgages to go on vacation or buy some material shit. We are our own worst enemy. We allowed, we didn't complain but now that we are close to the bottom the blame game is starting.

Sorry, I thought I got this question earlier, but my reply didn't post, and I was on to the next comment so fast I didn't notice.

I am not a financial advisor, so please don't consider anything I post as financial advise, however, that said, I more than willing to tell you what I do and what I think is going to happen.

I really like investing in some of the Assets they plan on making Tier I super assets in the new Basel III bank and financial company accounting rules that go into effect in the next fiscal year. Simply put, I think demand for these assets when these rules go into effect is going to exponentially increase their value.

These include Gold and Silver, which are two Liquid Commodities that are easily held physically, and AAA publically traded Equities and Securities...

However, I don't like holding paper assets long term, so my investing is primarily day trading commodity and derivative contracts and occasionally stocks for profit, then I use that excess profit in my investment accounts to invest in the stuff I really want to invest in and hold long term.

I take my excess profits from investing and my business ventures and I buy three things with that money depending on market and economic circumstances. I buy gold and silver, I buy things I will need for myself or my business six months down the road or longer if they are non-perishable, this way I am always at least six months ahead on my major purchases. And, last but not least, I buy Real Estate. NOT Single Family Residences!!! Mostly bare land or large acerage that just happens to have a house on it.

In my Investment and Bank Accounts, I only keep what I will need to cover expenses or investments for a three month period. I figure, even if I lose that, even though it might hurt, I will still be able to run my business and maintain my lifestyle without MAJOR changes.

I do keep some cash for contingencies, but not a large amount, about enough for one months living expenses.

That's my plan. It's not flamboyant, I don't drive expensive sports cars (I drive an F350 Pickup), and I don't fly around in Lear Jets, but it is practical, and it has worked well for me over the years...well enough I am able to do the things I want, when I want too, without borrowing ANY money for anything, and without asking anyone for permission...

Last Edited by Saddletramp on 12/13/2012 08:50 PM

I heard a report a month ago about Obama suggesting a nationalized plan. It was on the idea that workers would have a percentage go directly to the government plan. Wow, as I type this it sounds like social security... been there, done that and that is broke also. But I think this would be the way for the gov't to gain control of all retirement plans.

As for the re-valuing of the currency I don't even know how they could get an accurate 'value'.

*We don't rent pigs.... best book, admire McCrea

If I had a prize I would give it to you for recognizing the Lonesome Dove qoute in my tag lines!!!

Good catch sir!!!

On Re-Valuing the currency, this is why I think they will have to have the hyperinflationary crisis before they move on the devaluation then revaluation of currencies world wide, because this is going to a take a monumental agreement on how much currency each country or union that backs their currency with liquid commodites can print! And that will take a crisis of epic proportions to get that kind of agreement out of everyone. But our system is set up for a huge crisis, no doubt there.

And if the price of the commodities in your currencies particular basket of commodities goes up exponentially...what then?!?!? Are you allowed to print more currency to keep the value of your currency static?!?!?

It will take all the currencies being pegged together (essentially a world-wide currency with different pictures on the front) and it will take a world-wide regulatory agency to enforce the rules...just what they want in both cases!

Last Edited by Saddletramp on 12/13/2012 09:02 PM