This is a critical update from one of the best financial commentators I know, a good friend of ours, Mr. Lior Gantz of WealthResearchGroup.com and we’re excited to share this one with you!
In both Japan and Europe, negative rates are part of the culture, at this point. We’re not seeing any significant inflation, resulting from this, nor are we seeing corporations rushing to grab their share of these cheap loans any longer. The only segments of the population that borrows at these low rates are (1) governments, which need ENDLESS amounts of money to fund their outdated entitlement programs, and (2) RICH PEOPLE.
Since governments need to keep borrowing for as long as the eye can see, it’s actually better that they do it without interest payments added onto it (interest payments would require additional taxation). The real problem is not that they borrow at 0% rates or, in some countries, actually GET PAID to borrow, it is that politicians are wasting so much time on issues that don’t deserve to be contemplated, when many nations around the globe should be concerned with bigger challenges.
The wealth divide is getting bigger, since the wealthy get access to credit that middle-class and lower-income demographics have no prayer of receiving.
In fact, while the wealthy borrow at these attractive rates, the other 90% of the population are paying RECORD-HIGH consumer interest debt.
In 2020, as the economy continues on this same trajectory of prolonging the wealth and income inequality, disgust will reach volcanic heat and erupt.
On one hand, we have a businessman, a hardcore negotiator, as leader of the free world while, on the other hand, we have central bankers, which mostly come from academia, not from the street.
Here’s how the clash of both worlds looks:
You tell me what you would do if all of your co-workers got better wages than you did, despite the fact that you’re a more accomplished employee? You’d be furious with your boss and would do anything and everything to make sure justice is served.
This is how President Trump sees interest rates as they pertain to the Federal Funds Rate, which he wants set to ZERO.
He’s a businessman and looks at it from the standpoint of both his own administration, as well as the fact that even at zero rates, Treasury bonds and U.S. dollars are probably a safer bet than most other currencies.
It’s clear, though, that the world needs monetary reform badly. Fiat currencies are basically different types of junk, competing with each other over which smells worse.
Effectively, the global economy’s relationship with fiat currencies is that of a dissatisfied married couple, in which both sides are more fearful of divorce, so they stay together, for now…
Monetary crisis or not, the free markets are delivering real value. The amount of knowledge increase, technological revolution, and impressive innovation and ingenuity is unbelievable.
I can’t even begin to compare the access we have to possibilities that were labeled a dream just a few years ago.
Don’t let these current points of friction within government, between countries, between rich and poor, right and left and the rest of it, hold you back.
For 5,000 years of recorded history, the world has been the same and will continue to be: OPPORTUNITY mixed with HARDSHIP – don’t be naïve, as many seem to be, demanding government do something about it.
Nothing worthwhile has ever been the work of bureaucrats. We, the people, are the source of drive, the catalyst for innovation and the spirit of progress.
Image credit: Alt-Market
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