Re: Dystopian future arrives - QE∞ - Denmark offers home mortgages at negative interest rates - [MONEY]

[Steven Schear]

Why wouldn't the same sort of time preference shift affect crypto?

On Sat, Aug 31, 2019, 5:37 PM Zenaan Harkness <zen at freedbms.net> wrote:

> In the OP below, s/50%/5%/.
>
> And a little more today from the "(((globalist bankers))) in distress
> dept"; interesting times:
>
>
>   Check-Mate For Central Banks: Negative Rates & Gold
>
> https://www.zerohedge.com/commodities/check-mate-central-banks-negative-rates-gold
>
> https://www.goldmoney.com/research/goldmoney-insights/negative-interest-rates-and-gold
>
>   … Yet, these were precisely the conditions in October 1929, when
>   Wall Street awoke to the certainty that Congress would vote in
>   favour of the Smoot-Hawley Tariff Act at the end of that month. The
>   shock of a 35% top to bottom fall in the Dow in October 1929 was
>   only a prelude to an extended collapse following President Hoover
>   signing it into law the following year. The economic research that
>   followed the subsequent depression was conducted almost entirely by
>   inflationists promoting reflation, so the destructive synergy
>   between a credit crisis and trade protectionism has been ignored.
>
>   … This article postulates how early evidence from the rising price
>   of gold suggests the shock is closer than even perennially bearish
>   analysts expect. We shall now take the inflationary consequences of
>   an unexpected slump as a given in order to predict the changes in
>   the relationship between physical gold and fiat dollars; a
>   relationship that has for the last four decades led to a massive
>   expansion of gold derivatives. To understand that relationship, and
>   why it now appears to be reversing requires a working knowledge of
>   time preference, the basis of interest; and more specifically the
>   changing relationship of gold’s time preference to that of dollars.
>
>   Interest and time preference …
>
>   Negative interest rates create permanent backwardations …
>
>   Negative dollar interest rates and gold …
>
>   Bullion banks are now faced with the prospect that the Fed will
>   reduce interest rates to zero again, even without a systemic crisis
>   such as Lehman. Traders, who are not often deeply analytical, will
>   almost certainly link gold’s move in the wake of the Lehman crisis,
>   once dollar liquidity concerns subsided, from under $750 to over
>   $1900, with dollar rates being suppressed at the zero bound. If
>   rates return there and LIBOR remains positive, that will be a
>   reflection of systemic risk, not time preference. Meanwhile, gold’s
>   time preference will almost certainly be increasing as markets
>   attempt to discount a new wave of base money expansion when the Fed
>   attempts to stabilise the US economy and manage government
>   finances.
>
>   Bullion bank traders can see therefore, the day has arrived when
>   gold’s time preference exceeds that of the dollar by an increasing
>   margin. Furthermore, there is the growing threat of negative dollar
>   rates, as economic conditions deteriorate. Putting other
>   considerations aside, the switch in time preferences suggests a
>   bullion bank’s future trading strategy should be the polar opposite
>   of their current position. Instead of holding a small stock of gold
>   to finance a large dollar position, logically they should maintain
>   a small reserve of dollars to finance a larger position in physical
>   gold.
>
>   It is for this reason that not only is the gold price rising, but
>   is likely to continue to rise, appearing to defy all expectations.
>   …
>
>   The consequences …
>
>   As well as being modified by its specific supply and demand
>   conditions, Gold’s time preference is essentially for its
>   moneyness, represented by its use as a medium of exchange and store
>   of value. The moneyness aspect links it to its exchange value for
>   all commodities, and it is this aspect of gold’s qualities that
>   should warn us that a backwardation in gold, emanating from
>   negative dollar interest rates, will herald a general backwardation
>   in commodities as well.
>
>   … Assuming economic prospects darken because of the coincidence of
>   American tariffs and the emerging crisis stage of the credit cycle,
>   it will be check-mate for central banks. They were never appointed
>   nor are they technically equipped to save the currency at the
>   expense of widespread bankruptcies, not just in the private sector,
>   but of their governments as well. And that is what markets will be
>   faced with.
>
>   The current situation has striking similarities with the 1930s, and
>   the prospects for the global economy are driven by the same broad
>   factors. With the gold standard then and not now the price effects
>   are already showing differences. Nor was there a bubble of hundreds
>   of trillions of outstanding derivatives then as there are today.
>   This time, the monetary sins since the ending of the Bretton Woods
>   agreement seem set to come home to roost all of a sudden, even if
>   dollar rates are lowered towards zero and only stay there. But if
>   they go negative and the more below zero that they go, the greater
>   the backwardation on the whole commodity complex. The more rapidly
>   commodities will be bought so the dollar, taxed with negative rates
>   can be sold, and the quicker market actors will devalue the
>   currency.
>
>   With all other fiat currencies referenced to the dollar, it will
>   mark the start of a process that is likely to collapse the entire
>   fiat currency system. Bullion banks which are too slow to recognise
>   the change and have not shut down their gold obligations will be
>   forced to steal their customers allocated gold, or go to the wall,
>   adding to the disruption. All commodity derivatives will face a
>   period of rapid contraction of open interest, in lockstep or one
>   pace behind those of gold.
>
>   Instead of central banks stabilising the system by monetary easing,
>   the easing itself will guarantee the crisis. The development of a
>   problem in gold markets, driving the gold price rapidly higher
>   while some banks are caught napping, is likely to anticipate a
>   wider financial and systemic crisis. Therefore, with gold’s sudden
>   move higher coupled with its persistent strength we can reasonably
>   certain that we are seeing the start of the dismantling of the
>   dollar-based monetary system, and that gold has much further to go.
>
>
>
> From The Collaborative International Dictionary of English v.0.48
> [gcide]:
>   Backwardation \Back`war*da"tion\, n. [Backward, v. t. + -ation.]
>      (Stock Exchange)
>      The seller's postponement of delivery of stock or shares,
>      with the consent of the buyer, upon payment of a premium to
>      the latter; -- also, the premium so paid. See {Contango}.
>      --Biddle.
>      [1913 Webster]
>
>
>
>
>
>   "Money For Nothing And Growth For Free": Dutch Considering €50BN
>   Growth Fund Financed With Negative Rate Debt
>
> https://www.zerohedge.com/crypto/money-nothing-and-growth-free-dutch-considering-eu50bn-growth-fund-financed-negative-rate
>   https://www.zerohedge.com/crypto/mr.rabobank.com
>
>   The Dutch coalition government is reportedly considering a EUR 50
>   bn investment fund to support economic growth, to be financed by
>   borrowing at negative rates …
>
>   How and when will it be financed?
>
>   The idea of the fund came shortly after the entire Dutch government
>   yield curve, including the 30 year rate, moved below 0 percent
>   (Figure 2). The possibility of borrowing money from the market and
>   getting paid for the privilege has captured the imagination of the
>   Dutch public and politicians alike. Some reports suggested the fund
>   might be immediately stocked by borrowing from the market. Perhaps
>   this reflects a sense that this opportunity to borrow at negative
>   rates is a fleeting aberration. …
>
>
>
> On Sun, Aug 11, 2019 at 10:50:40PM +1000, Zenaan Harkness wrote:
> > Some might wonder why literal negative interest rates where your home
> > loan reduces at the end of each year, even if you pay nothing all
> > year, is dystopian.
> >
> > This email, and the below linked Zerowedgie article, will not answer
> > that riddle for you, although perhaps it has something to do with
> > debasement of the value of governmnet monopoly (((fiat fake money)))?
> >
> > Who knows ...
> >
> > In the meantime, if you're a Denmark citizen, jump in on a 10 year
> > fixed rate morgage with an interest rate of negative 0.5% -
> > literally!
> >
> > Also, as there is no risk of default, there is no mortgage insurance
> > required, so any amount you would previously have paid on mortgage
> > insurance, can now be paid on the loan capital, along with any other
> > payments you might be inclined to pay, and of course no deposit is
> > required - this is literally 100% financing.
> >
> > But when there's no need to pay, why pay?
> >
> > And as a bonus, all the immigrants (((the elites))) have flooded your
> > nation with, can now afford to buy a home :D
> >
> >
> > Soap, very interdasting... how best to game this new, degenerate
> > (((Federal Reserve banking))) game?
> >
> > Buy every house for sale?
> >
> > Of course, in very short order one can imagine that every sane Dane
> > will refinance and not sell, so real estate should dry up almost
> > overnight.
> >
> > It's also an end game of sorts since everyone who at least holds
> > title to one or more properties, can now pay off all those titles
> > just by taking out new mortgages ... although interest rates may well
> > rise again at the end of that 10 year -0.5% rate mortgage, after
> > which you shall owe almost exactly half your initial amount.
> >
> > So that's effectively an automatic capital depreciation rate of 50%
> > every 10 years.
> >
> > The next trick the bankers can pull is to lower rates even further in
> > a year, after all the sheeple have refinanced at -0.5%, to say -2%,
> > and owe much less than 50% of the capital amount at the end of 10
> > years.
> >
> > It's all rather wierd.
> >
> >
> > Smells of a (((banking system))) effectively in collapse.
> >
> > Perhaps this is one way to unwind the almost unfathomable debt to
> > equity ratios which require a systemic collapse, in the face of a
> > populace who will literally just roll out thousands of local mini
> > digital currencies if we DO see a 1929-style collapse, and so the
> > incumbent - remember the Fed :) - wishes (naturally enough) to
> > maintain their incumbency status.
> >
> > But if collapse is your only option given that the masses are not
> > really falling into civil war due to infinigger immigration and a now
> > weekly stream of WHITE NATIONALIST TERRORISM SHOOTUPS (oh, wait, it's
> > mostly extreme leftist Antifa crazies and the occasional copycats),
> > but anyway, here's the bum out list for the Fed's "reset in the face
> > of Chaos by pretending to be the nights in white shining armour when
> > the chaos really hits the fan and the multitudes are screaming for
> > stability:
> >
> >  - China did not bite into a hissy fit of US Gov debt note selling,
> >    so China cannot be blames for the reset
> >
> >  - Russia stabilised Syria, Iran and Turkey, and to some extent
> >    Egypt, and failed to smash the CIA's "most public coup in history"
> >    in the Ukraine, and so World War 3 is close to no longer on the
> >    table and therefore "nations fighting to hell" cannot be blamed
> >    for the reset
> >
> >  - the Huwaite Nazi Supremacist Terrorists in the USA have so far
> >    demonstrated an utter inability to effectively unite and stand for
> >    or even trigger a civil war in North America, so THEY can't be
> >    blamed for the coming reset
> >
> >  - Trump is too boldly all but (well, actually doing so), blaming the
> >    Fed outright for every step the fed takes ("too little", "not
> >    enough", "the Fed is crippling our economy", "Obama had much
> >    looser policy, I should get that too" etc etc), and despite a few
> >    timid shots in response, the Fed is bound to demonstrate a
> >    conservativeness unable to decend to the depths of "popular
> >    discourse" Trump, and so Trump cannot effectively be blamed for
> >    the looming USD financial reset
> >
> > So what other tricks have they got to deflect blame from (((the
> > Fed)))'s predatory usury upon most of the world for the most recent
> > century gone?
> >
> > They could let Wall Street/ Main Street crash as happened in 1929,
> > but this time we're onto the game, and so are the traders and
> > business operators - everyone knows to blame the Fed for
> > "artificially tight monetary policy", "insufficient $ stimulus" etc -
> > so the Fed is going to get blamed this time, and they know it :D
> >
> > Shit! The Fed is pretty close to all outta options. What now?
> >
> > The banks don't want to collectively fall over, so what do they do?
> >
> > When the world is held to crippling financial "debt" of $150,000 per
> > man, woman and child on this planet, it's farcical - bring on the
> > reset, no one gives a shit any more :)
> >
> > But the banks don't want to collapse - there's every bloody chance
> > they will lose their (illegal, unconstitutional) incumbency of the
> > right to print cash.
> >
> > So you start giving the money away.
> >
> > They have no other option.
> >
> > Why no other option?
> >
> > There are some systemic reasons (phenomenally inter-leveraged banks
> > and nations), but also the simplest of reasons:
> >
> >   - If I don't personally have an economic stake in the economic
> >     system, I have no interest support, or even to use, that system.
> >
> > Multiply this for every man, woman and child on the planet.
> >
> > The point is, there's a very real issue of shared common delusions
> > and tacit consent - if we stop using a system, that system dies. A
> > mental structure (shared common delusion) of money controlled by a
> > very few, only lives to the extent that we all partake of/in, that
> > system!
> >
> > And now that we can roll out digital currencies for every pub,
> > possibly for every family even (although that might not be so useful,
> > whereas a local public bar has enough of a community/ group effect to
> > actually be useful to that local community), we literally do not care
> > about any coming/ looming/ threatening financial terrorism brought
> > about by the Federal Reserve banks - in fact, the sooner this reset
> > comes, the better, since when the money collapses, we have IMMEDIATE
> > SANCTION to roll out our own local currencies, EXACTLY as happened
> > towards the end of the great depression - usually centered around/
> > run by, the local pubs across North America.
> >
> > So hey, how awesome could this reset be?
> >
> > Danged, bloody awesome mate! Absolute ripper!
> >
> > And so now we see negative mortgage rates, actually being rolled out.
> >
> > Well firetruck me sideways till Sunday! Did NOT see that one coming.
> >
> > Suddenly there's a real possibility that 10s of thousands of Denmark
> > (and soon other country's) sheeple, may well just go and lock
> > themselves with a stake, into the incumbent Federal Reserve banking
> > system, thereby providing somewhat of a breather to said (((Federal
> > Reserve de Rothschild))) banking system.
> >
> > Interesting times, that's for bloody sure :)
> >
> >
> >   Denmark's 3rd Largest Bank Is Now Paying People To Take Out A
> >   Mortgage
> >
> https://www.zerohedge.com/news/2019-08-10/denmarks-3rd-largest-bank-now-paying-people-take-out-mortgage
> >
>
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