US, world headed for 25 year depression: Jim Rickards

US, world headed for 25 year depression: Jim Rickards

“When I use the phrase 25 year depression, it sounds extreme but it’s not. We had a 30 year depression in the United States from about 1870 to 1900…The Great Depression lasted from about 1929 to 1940. The U.S. is in a depression today.” Well, it's been in the works for

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Canadian banking haven myth exposed

Canadian banking haven myth exposed

"One of the reasons that Canadians (and international commentators, other finance ministers and global financial institutions) buy this Canadian banking fairy tale is the way the government accounts for the money borrowed to support the banks." The sorry spectacle of Conservat

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Get rid of your mortgage, loans, because interest rates set to rise

Get rid of your mortgage, loans, because interest rates set to rise

Get rid of your loans, guys and gals, because we are going into a high interest rate period. Very high. It will be the equivalent of going into the double digit interest rates we had in the 80s where many people threw their house keys at the bank and we had record numbers of ba

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E-cigarettes save lives, money

E-cigarettes save lives, money

"We know that cigarettes have thousands of chemicals in them and we know that they are killing us. They have been for over a hundred years. So now, the e-cig industry comes along with only one or two chemicals in their mixture and people are freaking out over these as well. Whe

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US inches closer to big bank charges

US inches closer to big bank charges

Federal prosecutors are nearing criminal charges against some of the world’s biggest banks, according to lawyers briefed on the matter, a development that could produce the first guilty plea from a major bank in more than two decades. In doing so, prosecutors are confronting

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Canada’s home sales top predictions; why a real estate crash is inevitable

Canada’s home sales top predictions; why a real estate crash is inevitable

“The assurance of relatively low borrowing costs has likely given home buyers confidence while rising home values have kept new listings at a healthy level. Stable employment has provided some assurance to owners and buyers alike.” Our website is back after many months of

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Comparing today’s recession/depression to the 1980 recession

Comparing today's recession/depression to the 1980 recession

"Much like today, Americans were concerned not only with high unemployment but increasing budget deficits in the early 1980s. A September 1983 Gallup poll found that three-fourths of the public agreed that the federal government's budget deficit was a great threat (42%) or some

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Why savers are getting screwed

Why savers are getting screwed

"Without the intervention of economic policymakers, interest rates would be naturally higher. That would increase the cost of borrowing for businesses and consumers, but there would be some offsetting economic benefits. Savers are getting screwed by the current monetary policy

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Geithner admits USA bankrupt to US Senate

Geithner admits USA bankrupt to US Senate

"Never in our history has Congress failed to increase the debt limit when necessary. Failure to raise the limit would precipitate a default by the United States. Default would effectively impose a significant and long-lasting tax on all Americans and all American businesses

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World economies on verge of currency revaluations to deal with debt

World economies on verge of currency revaluations to deal with debt

"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." -- Henry Ford Basically what the world central banks are doing is increasing their money by devaluin

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Is Obama the next Mugabe of Zimbabwe?

Is Obama the next Mugabe of Zimbabwe?

"America, Britain, Japan, Germany, France, Sweden, Holland, Norway, Canada and Australia make up the Fishmongers Group and their meeting on Tuesday will deliberate on the state of the inclusive government, debt relief, public finance administration and the controversial economi

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US raiding foreign countries with dollars, not soldiers

US raiding foreign countries with dollars, not soldiers

""The United States is going to China and saying: we want you to commit economic suicide, just like Japan did. We want you to follow the same thing: we want you to revalue your currency, we want you to squeeze your companies, we want you to go bankrupt,” says Michael Hudson,

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“Without the intervention of economic policymakers, interest rates would be naturally higher. That would increase the cost of borrowing for businesses and consumers, but there would be some offsetting economic benefits. Savers are getting screwed by the current monetary policy, and screwing savers is seldom a wise economic move.” — Robert Robb

Fiat money requires that everyone using the currency has faith in the government that issues it – faith that it will be well managed & carefully looked after.

That faith in the US dollar is being destroyed. “Helicopter Ben” is creating new money out of thin air at a staggering rate to lend to a government that is spending so far beyond its means it’s a joke. The US monetary base has doubled since 2007. Since the economy hasn’t doubled that means each dollar is really only “worth” about half of what it was 3 years ago (yes, that’s overly simplified).

In as much as we keep hearing about gold, silver & commodities rising in value, they’re reflecting the dilution of the value of un-backed paper money and it’s consequent reduction in purchasing power.

It’s inflation, but most people won’t see it as that until it starts affecting the prices of their everyday shopping. It’s coming. “Smart money” is converting their paper wealth into physical commodities that retain value, and the barbarous relic (gold) just happens to be one of the oldest, most durable commodities there is.

The case for higher interest rates by Robert Robb

Here’s a contrarian thought: What the U.S. and world economies need are higher interest rates.

Economic policymakers are obviously pushing in the opposite direction.
In the United States, the Fed is expanding the money supply by more than $2 trillion to try to artificially drive interest rates down.
In Europe, the attempt is to artificially manipulate the interest rates on sovereign debt in the euro zone.

Economic policymakers didn’t like it when the interest rate spreads on sovereign debt among euro zone countries began to widen. When Greece tottered on default, they bailed it out and established a fund to backstop sovereign debt within the zone. Ireland has already had to access the facility.

Savers are getting screwed by the current monetary policy, and screwing savers is seldom a wise economic move.

Higher interest rates on sovereign debt, in the United States and elsewhere, create pressure on governments to clean up their finances. Artificially low interest rates subsidize profligacy, just delaying the day of reckoning and making it more difficult to handle. Read the rest of Robb’s article at bottom.

Read Robert Prechter’s famous deflation survival guide, free! Here’s what you’ll learn:

What Triggers the Change to Deflation
Why Deflationary Crashes and Depressions Go Together
Financial Values Can Disappear
Deflation is a Global Story
What Makes Deflation Likely Today?
How Big a Deflation?
More

References

1. Robert Robb’s article

Related posts:

  1. Is the Central Bank of Canada forcing deflation?“With economic recovery still looking shaky, the next move by the Bank of Canada may be to just start printing money. The price can be high. Devaluation of the loonie...
  2. Summary of Marc Faber’s speech at Mises Circle: Buy MetalsMarc Faber says 3-5% of his typical audience owns physical gold. And most of them not a meaningful position. Some quotes: “Zero interest rates create new bubbles” “Central banks can’t...
  3. Interest Rates To Rise Significantly WorldwideIt has been predicted by many financial analysts that the interest rates which central banks around the world set their prices at is about to swiftly move upward due to...
  4. Gold prices hit new high; estimated high of $50,000 per ounce“Gold futures rallied to a record over $1,380 an ounce Thursday, and silver futures rocketed more than 6%, after investors piled into precious metals as a hedge against the sinking...
  5. Dollar loses reserve status to yen & euroThe Banksters have destroyed our currency. Time to wake up your fellow citizens of the Republic of the United States. Get rid of your cash. Take your 401K and switch...
  6. Fed needs $4 trillion in new debt notes printed“With just over a month since the QE2 announcement, discussion over the amount, implications and effectiveness of QE2 are almost as prevalent (and moot) as those over the imminent collapse...

This entry was posted on Wednesday, January 5th, 2011 at 2:10 am and is filed under Main Street. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

1 Comment

  1. January 9, 2011 @ 3:54 pm


    U got it!

    With the BLS crap numbers game to keep the CPI below inflation so not to pay any COLA and this Bernakapart financial general keeping rates at 0, while the banks get all the free money they need. why pay the silly savers any better rates than a lousy 1 %

    I used to be OK with just a 2% COLA and 4 or 5 % on my CD’s, now its a crap shoot to “contribute” to the economy.

    Posted by No Stocks 4me Cramer

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