Jim’s Quote of the Day:

“Negative interest rates are Mammon’s Götterdämmerung. The money cult is bolstered by the idea that its huge and all-powerful deity will be even more huge and all-powerful tomorrow; if the opposite is demonstrably the case, then people’s faith in it begins to falter and fade. Negative interest rates are like an icy-cold bath for Mammon, causing its godhead to shrink a little more with every dip. People see that, and think, ‘I don’t want to worship his shrinking yarbles.’ Then they go and spend their own yarbles on anything they can find—fallow land, vacant houses, golden calves, boxes of brass knobs… They don’t bother investing their yarbles in growing turnips, because what’s the use of turnips if all you can do with them is sell them for even more shrinking yarbles?

Negative interest rates are an excellent idea—and perhaps the only way to keep the financial game going a bit longer—but, given these unintended consequences, they are also a terrible idea. The bankers know that. They want to preserve their cult’s status, and constantly talk about raising interest rates. But they haven’t yet, because they also know that just a small increase will result in trillions of dollars of losses, triggering widespread business failures and ushering in the Greatest Great Depression Ever. This is not a problem for them to solve; this is a predicament. They will delay and pray, and make pronouncements loaded with keywords designed to please the high-frequency trading algorithms that are in charge of artificially levitating the “free market” with judiciously timed injections of “free money”. But in the end all they can do is act brave, wait for a distraction and then… run for the exits!” – Dimitry Orlov, in a recent post on negative interest rates, titled “The Money Cult” at his Club Orlov blog

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