Hi Kieth: Your take on what is happening is very close to mine. The reduction of interest rates is for the benefit of the Chartered Banks, which have moved aggresively into stock ownership (In Canada) having taken over both Trust Companies (real estate) and stock brokerages.
High interest rates helps (Gov.) bond holders, which the CB;'s were mostly before deregulation . The low interest rates are also to assist the companies that the CB's own stock in. The profits and dividends of the mega corporations are not enough to pay the interest on the loans taken out to buy the stock, either by individuals or the CB's. Regarding Japan, I expect you have heard that the Japan Gov has set up a Gov owned (by the people) bank to buy the none performing loans (read bankrupt) held by the private CB's. The habit in the past, in Japan, has ben for the CB's to "roll over" the noneperforming loans. By lending the bankrupts enough to pay the interest in the forelorn hope that "things will turn around because the fundamentals are sound". Note that interest rates are not being lowered on credit cards for consumers. Yet the mantra is that the recoovery must be led by the consumers. A classic 30's depression scenario. There's not enough purchasing power (in consumers hands) to buy the goods produced. An excellent book by Michael Rowbotham (UK) "Grip of Death" sets it all out very clearly, including why there must follow an international trade war and a subsequent depression. I predict that the solution will be that Governments are not to be trusted to manage the money/credit supply through their central banks and that a world currency will solve the problem, issuance in private banking hands of course. I'm sure that most on this list have heard of the "Stockholm Syndrom". Victims are not to be trusted because, beingb dependant for their well being and lives upon the kidnapper, they identify with that on which they are dependant. Less are familiar with the "Patty Hurst Syndrom" where a victim not only identifies with the kidnapper, but actually becomes a particiipating ally in obtaining goals, due to an interlocking of dependancies. Our dependance upon money is a classic example of our victimizaton. After 30 years of observing activist people trying to break the hold the private money system (Banking industry) has on people, the masses will never vote for its abolition, since niether the victimization nor the alternative is understood, or understandable, by the masses who vote. The kidnappers can say anything to stir up opposition to reform by using the classic propaganda tools of fear and anger. May I recommend Rowbotham's book as a clear antidote to Hayek's book, "Denationalisation of Money"? Money has only two forms of collateral. Issued by governments the collateral is the trust people have in their elected people and in each other. Issued by the private CB's, the collateral is the market value of anything of market value. That market value is determined by the very issuing CB's who, by the quantity they issue, determine the value of the good. There has to be an independant authority. The situation we are evolving to aka Hayek, is where Gov have less and less oversight on the CB issuance of money or the appraisal of market value. For the CB's to be allowed to issue money on the anticipated future market value, which is predicated only on past perforance (unsustainable growth) is much like allowing the soccer umpire to own teams or players while issuing the currency with which to buy them. There has been poor performance by out elected representatives in the past. However, they are the only people who stand between us and fascism, where the corporations and the state fiind common cause. i.e. the control of the people aka Brave New World" ================================ At 12:16 PM 13/11/2001 +0000, you wrote: >I cannot help thinking that the rush to reduce interest rates by the Fed in >the US, the Bank of England and the European Bank (and several more central >banks) in the hope of re-igniting the recession is pushing on string and >that interest rates will end up at around zero. This has already been the >case in Japan for several years and has done nothing to regenerate economic >growth. I fear that the same will happen in the remainder of the western >developed world. > >On the face of it, the situation between Japan and the others is different. >Japan's main problem is that their banks are stuffed full of grossly >over-valued assets and are technically bankrupt (rather like many American >banks during the Great Depression of the 30s). They dare not reveal the >full extent of their liabilities and, so far, the Japanese Government is >not courageous enough to insist on full disclosure. > >In the West, however, the problem is more subtle. It's much to do with what >is called Goodhart's Law. Strictly speaking it isn't a "law", or an attempt >at one, but merely an observation. Prof Goodhart (in his retirement, not >during his term as chief economic adviser at the Bank of England!) >suggested some years ago that any measure of the money supply behaves >differently when it becomes an official target by the very act of targeting >it. (It's actually rather like Heisenberg's Uncertainly Principle in >physics -- that the very act of measuring a sub-atomic event causes a >change in it so that one can never know what the situation was before the >observation, never mind afterwards.) > >The latest fashionable theory of central banks is that the money supply, >inflation and, hopefully, employment, can be regulated by the interest >rate. Now that governments/central banks are concentrating their minds on >this alone I cannot help thinking that there are sufficient signs already >that it's not working. > >Perhaps this will stimulate some economists to enquire more deeply about >the real nature of what has been the subject of so many Keynesian and >monetary theories in recent decades -- that is, money itself. Perhaps they >will come to the conclusion that money should be restored to having real >value -- instead of being, what is in effect, a paper token whose validity >is sustained only by governmental say-so and the unthinking compliance of >those who use it, or who can speculate against one currency or another for >profit. > >At the present time, all large banks have derivative funds which are >supposed to be assets but whose true values they refuse to disclose. Basel >2 is failing at the present time to insist on being able to measure these >(as counting towards the credibility of a bank) but even if it succeeds in >the coming months/years, we can be sure that banks and other financial >bodies will find new ways of disguising their real state of affairs. At >present, if large banks fail then governments (that means all of us who pay >taxes or buy goods) have to save them and pick up the bill because it's the >whole government-issued money system that has to be protected. > >However, if, and I believe when, banks are allowed once again to issue >their own currencies then they will have to make their accounts fully >transparent. The banks will have no chance of persuading customers, >investors and, above all, financial analysts and journalists, that they >have a chance of guaranteeing the convertibility of their currencies unless >they do so. > >Until recently the restoration of real-value currencies rather than >national currencies was considered ridiculous. But I've noticed a few >straws in the wind that suggest that this might start to be discussed much >more seriously in the years to come. Hayek's book, "Denationalisation of >Money", published in 1976 is being mentioned more than ever in various >articles and books I've read recently. > >When could sensible value-currencies be restored? Much depends on whether >the earliest interest rate reductions of a year ago have any effect. They >should have have done by now, but if it becomes increasingly apparent in >the coming few months that they're not working then I think that many >economists will question the continuation of the present headlong run of >reductions. Quite rightly, they will start to say: "What if the interest >rate becomes zero and still nothing happens, like Japan? Where do we go >from here?" > >And, of course, there's nowhere to go. There are no other wonder theories >doing the rounds. There'll only be one thing to do: to restore money to its >rightful historical place as the meaningful basis on which all economic >transactions depend. > >Keith Hudson > > > > > > >___________________________________________________________________ > >Keith Hudson, General Editor, Calus <http://www.calus.org> >6 Upper Camden Place, Bath BA1 5HX, England >Tel: +44 1225 312622; Fax: +44 1225 447727; >mailto:[EMAIL PROTECTED] >________________________________________________________________________ > >
