Why wouldn't the same sort of time preference shift affect crypto? On Sat, Aug 31, 2019, 5:37 PM Zenaan Harkness <[email protected]> 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 > > >
