👉The Fed Trapped between Negative Interest Rates and Economic Collapse On The way to Japanification

👉The Fed Trapped between Negative Interest Rates and Economic Collapse On The way to Japanification This is a crisis like no other, and there is substantial uncertainty about its impact on people’s lives and livelihoods. The Worst Economic Collapse in history has started. When the financial media speaks of a V-shaped recovery, they are referring to Wall Street, not Main Street. Not just the US, but many countries now face multiple crises—a health crisis, a financial crisis, and a collapse in commodity prices, which interact in complex ways. There is considerable uncertainty about what the economic landscape will look like when we emerge from this lockdown. The rising wealth concentrations will increase social tensions, and this social instability can cause further hardships for the populace. It's vital for a society to do what is right and not do things like make the stock markets go up. A recipe for disaster: Fleeing tax base from income and property taxes. Public pensions, with impossible promises and expectations. Many double pensions being collected from former government employees who milk the system. Political gridlock that blocks any real resolution. Massive unemployment due to forced lockdowns or ridiculous restrictions by unlawful executive edict. A tidal wave of bankruptcies looming in both personal and businesses. Hesitation to establish and grow the new business due to high crime and all of the above. This is socialism for the rich. All the money is going to the top 5%. They have gotten obscenely richer while the masses have struggled and gotten poor. By buying companies bonds, the Fed is in effect bailing out failing zombie businesses instead of forcing restructuring in bankruptcy court, thus rewarding them and their rich CEOs who are failures and should be fired but instead are incredibly, getting raises! By the way, this is not what the Fed was intended to do when they were enacted! The Fed is Trapped between Negative Interest Rates and Economic Collapse. The Fed should have raised rates back when the economy was still humming, but Trump didn't want the markets to drop, so he bullied Powell on Twitter, and the Fed folded. So much for their famous political independence! Now the Fed is out of ammo, and we're all going to pay the price for that. Welcome back to The Atlantis Report. You are here for your daily dose of the truth, the whole truth, and nothing but the truth. Please take a second to click the like button. And don't forget to subscribe, And please don't forget to hit the little BELL button to get notifications. The Markets are run by sociopathic gambling addicts who have no worries about losing a bet (or causing total havoc on the rest of the world) cuz the Fed has their backs. President Donald Trump on Tuesday tweeted that the US should accept the gift of negative interest rates, joining other countries that already have them. "As long as other countries are receiving the benefits of Negative Rates, the USA should also accept the GIFT" Trump tweeted last tuesday . Setting interest rates below zero would, in theory, boost consumer spending and business investment by making it easy to get a loan. Still, places with negative rates such as Japan and Europe have had mixed results. Consumers don't always spend more, central banks have had a hard time raising rates again, and it leaves little room for action if there's another economic downturn. Negative interest rates will be fatal. They have created an economic Frankenstein. The FED is shooting arrows in the dark, trying something that hasn't been tried before. They painted themselves into a corner long ago so that there are precious few options. Careening down an impossible slope and trying to dodge boulders along the way. Not only that, but they’re doing it bouncing on one foot with one of their arms tied behind their back. They just don’t have the tools necessary to clean this up. This hole just keeps getting deeper. Madness. The real tell here is that the Fed is very worried about massive deflation, and for a good reason. For eleven years, the Fed flooded the system with artificially cheap money in the hope of sparking inflation. It failed. Now the storm has hit in the form of the pandemic, and the Fed is trapped. The result is already massive public and private debt skyrocketing, as the Fed props up the biggest everything bubble in history with ever more artificially cheap money. Billionaire investor Jim Rogers is right: "The Fed only cares about getting people reelected." The Fed has destroyed price discovery, creative destruction, and free markets generally. Meanwhile Mom and Pop retiree eat their seed corn because they cannot make interest on their life savings, or they enter the Wall Street Casino at the worst possible time. There is a reason Warren Buffett has $146 Billion setting in cash. This will end in disaster. M2 Money Velocity is still falling as we are in a depression. Japanification has arrived. Japan is the model if it was accidental or on purpose, who knows, but Japan has been the beta test for the world rollout of this monetary repression scheme. The Fed is trapped; it is holding back a huge dam that will burst at anytime soon, so get to higher ground investments, which are precious metals in your hand. Printing dollars and handing them out to the rich will cause asset inflation. This is happening, but the Fed ignores asset inflation. If they really wanted to increase consumer inflation (this is what the Fed looks at), they'd just have to hand out the printed dollars to everybody. It's the legal murder of the middle class, the greatest wealth transfer in history a reverse Robinhood effect, stealing from the masses, and giving to the rich! The next big crisis is hyperinflation is about to hit. Your money will be worthless overnight. Forget about buying toilet paper at Walmart. Just make a bank withdrawal of all of your money to use instead. Because everything is not going to get better...This is the direct result of miserably abysmal failed policies that have not only lead to failed states, but to the failure of all of humanity. The most important job of a central bank is to maintain the value of the currency. No inflation at all should be tolerated if it happens based on the money supply. Inflation should be 0. The average person should be able to get interest on their money that exceeds the inflation rate. In the past, banks lent out money based on deposits. Economies grew faster when people saved more. Saving is a good thing. Increased consumption led to slower economic growth. Only the absolute richest people and corporations are being exposed to all of the money printing. The inflation would show first in the assets that the rich put their money into gold, stocks, etc. That’s what has already happened. We’re are seeing roughly 8% inflation right now according to shadow stats in consumer goods, and that’s not including the borderline hyperinflation in the bond market and the very high inflation in the stock market. We’ll see if the true CPI starts to really pick up steam. It's food inflation that hurts the most. Everybody has to eat. The rich know what's coming , they are stockpiling food . And we are seeing inflation at the grocery stores, and sold out shelves and online of goods, backorders for weeks and growing. More dollars chasing less goods and less goods because less people are working, a triple whammy. Look at housing insurance, cars, etc. Everything has doubled in the past 10 or 20 years, while people’s salaries have barely increased. All currencies will hyperinflate eventually. All fiat paper and digital currencies will eventually meet their demise! The dollar being the world's reserve currency,inflation is our biggest export to the entire world. Other currencies take much less time. Funding government spending by printing money is as insane as it is evil. During the Carter administration, the Fed engaged in money printing. Prices doubled between 1977 and 1981. For most people, wages didn't keep up with prices. What was the economics that brought capitalism to its knees in the 1930s? Neoclassical economics. Let’s use it for globalization. It’s a global suicide mission. The trouble with neoclassical economics is that you get these Ponzi schemes of inflated prices. When they collapse, it feeds back into the financial system. Neoclassical economics still has its 1920’s problems. What is the fundamental flaw in the free market theory of neoclassical economics? The University of Chicago worked that out in the 1930s after last time. Banks can inflate asset prices with the money they create from bank loans. Economists Henry Simons and Irving Fisher supported the Chicago Plan to take away the banker's ability to create money. “Simons envisioned banks that would have a choice of two types of holdings: long-term bonds and cash. Simultaneously, they would hold increased reserves, up to 100%. Simons saw this as beneficial in that its ultimate consequences would be the prevention of "bank-financed inflation of securities and real estate" through the leveraged creation of secondary forms of money.” The IMF re-visited the Chicago plan after 2008. It looks like they did have some idea what the problem was. At the end of the 1920s, the US was a Ponzi scheme of inflated asset prices. The use of neoclassical economics and the belief in free markets made them think that inflated asset prices represented real wealth accumulation. 1929 – Wakey, wakey time Why did it cause the US financial system to collapse in 1929? Bankers get to create money out of nothing, through bank loans and get to charge interest on it. What could possibly go wrong? Bankers do need to ensure the vast majority of that money gets paid back, and this is where they get into serious trouble. Banking requires prudent lending. If someone can’t repay a loan, they need to repossess that asset and sell it to recoup that money. If they use bank loans to inflate asset prices, they get into a world of trouble when those asset prices collapse. As the real estate and stock market collapsed, the banks became insolvent as their assets didn’t cover their liabilities. They could no longer repossess and sell those assets to cover the outstanding loans, and they do need to get most of the money they lend out back again to balance their books. The banks become insolvent and collapsed, along with the US economy. When banks have been lending to inflate asset prices, the financial system is in a precarious state and can easily collapse. What was the Ponzi scheme of inflated asset prices that collapsed in Japan in 1991? Japanese real estate. They avoided the Great Depression by saving the banks. They killed growth for the next 30 years by leaving the debt in place. Debt repayments to banks destroy money; this is the problem. What was the Ponzi scheme of inflated asset prices that collapsed in 2008? It’s nearly $14 trillion pyramids of super leveraged toxic assets that were built on the back of $1.4 trillion of US sub-prime loans and dispersed throughout the world. They avoided a Great Depression by saving the banks. They left Western economies struggling by leaving the debt in place, just like Japan. It’s not as bad as Japan as we didn’t let asset prices crash in the West, but it is this problem that has made our economies so sluggish since 2008. If we had any sense as a country, we wouldn't be having deficits in the trillions year after year. This is the only reason why an inflation target above zero is desirable...because the US government is bankrupt and would have trouble servicing its debt at normal interest rates. All we would need to do is cut spending to match revenue, like any other responsible household or business. If interest rates were 5% and inflation was 0%, you'd actually have the incentive to save, and people would have a sense of security and well being for their future. What we have now is a few percent of people controlling all of the wealth, and everyone else is in debt up to their eyeballs. With higher inflation and low-interest rates, people are forced into the Wall St casino, and we know the house will win most of the time, skimming from the populace one bet at a time. This creates asset bubbles. In effect, we're rewarding and enabling an out of control government for perpetual and reckless overspending, we're rewarding over-leverage and speculation by greedy banks, businesses, and hedge funds. Socializing the losses every time there is a crash, and we are absolutely killing retirees and savers by devaluing their lifetime savings through artificially low-interest rates, intentional inflation, and currency debasement. In summary, we are doing everything wrong. This was The Atlantis Report. Please Like. Share. Leave me a comment. Subscribe. And please take some time to subscribe to my back up channels; I do upload videos there too. You'll find the links in the description box. You will also find a PayPal link if you want to make a donation. Thank you wholeheartedly to all those of you who have already donated. Stay safe and healthy friends! Nouriel Roubini is an American professor of Economics at New York University`s Stern School of Business and chairman of RGE Roubini Global Economics