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Wednesday, November 12, 2008
Uhm, I think I'm a goldbug now: Bank of England considering cutting interest rate to ZERO
I never really understood those economists who insisted that we need to return to a gold standard (more accurately: a commodity-based standard). No, let me rephrase that: I understand that we shouldn't permit a government central bank (or a private government-granted monopoly Federal Reserve like in the U.S.) to play with interest rates and with the money supply, I just didn't think it was as big a deal as the Ron Paul fans and Austrian economists happen to think.
But a new statement from Bank of England has me googling the local gold and silver dealerships. According to The Daily Mail, they're thinking of dropping interest rates to -- pay close attention -- zero. Yup, zero. Banks would be able to "borrow" money from the bank at no interest if they did this. And if Britain does do this, Canada and the U.S. might follow suit (or at least dramatically lower the interest rates at which they lend to banks as well).
From The Daily Mail:
Interest rates could be slashed to zero for the first time as the Bank of England battles the deepening recession.
Governor Mervyn King said he is ready to reduce rates to ‘whatever level is necessary’ to counter the economic storm.
He warned Britain’s economy could shrink by at least 2 per cent during 2009, pushing inflation into negative territory for the first time in almost half a century.
A worst-case scenario could see a slump of more than 3 per cent in gross domestic product, the biggest year-on-year fall since the beginning of 1981.
Dear British peeps;
Welcome to hyper-inflation.
Sincerely,
Bank of England.
Posted by P.M. Jaworski on November 12, 2008 in International Affairs | Permalink
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Comments
Zero percent for interbank loans doesn't mean zero percent for consumers so you'll still be getting screwed while they lend you free money.
And yes, hyperinflation is the goal to push towards a global currency which can be manipulated at will. The people will cry for salvation from their governments and the governments will blame the banks and corporations pushing for something like nationalization but rather internationalization where banking will be controlled by an elite few in an international organization lending in only one new world currency.
This has been the plan for nearly century now, progress is finally being made, the people of the world demand to be coddled and suckled.
Posted by: Pete | 2008-11-12 11:26:19 PM
This has been the plan for nearly century now, progress is finally being made, the people of the world demand to be coddled and suckled.
Posted by: Pete | 12-Nov-08 11:26:19 PM
I see you've been doing your homework. I've traced this movement back as far as Franfurt in the 1750's, to a man named Meyer Bauer. He changed his name to Rothschild. Unfortunately you're right Pete, the sheep like masses will look to the same governments that set them up to fall to be the saviours. Its really time to get the government the hell out of the shylock business.
And yep, the Amero is on its way.
Did anyone else notice how much money the Canadian government is sinking into the mortgage business? Money out of thin air? This is deliberate and funny how just "before" the election everything was fine, and we had the most solid bank system in the world...
But lets keep arguing about abortion, gay rights, left vs. right etc....after all its not as though we're getting one step closer to economic slavery or anything...
Posted by: JC | 2008-11-13 5:23:39 AM
This is stealing, pure and simple. The government, through its policies of inflation, is jacking up the cost of living. The only way to fight it is to educate yourself so that you can then educate others. Please read the book titled, "The Mystery of Banking", by Murray Rothbard, available from the Mises Institute:
http://www.mises.org/store/Mystery-of-Banking-P528.aspx
Posted by: Pablo Escobar | 2008-11-13 6:28:56 AM
You don't have to be a goldbug to think that this is horrendously stupid. You learn about the diminishing returns of cutting the interest rate and liquidity traps in introductory level economics courses.
Personally, I don't think gold would fix the problem so long as government/the central bank is able to revalue the currency. We might get a return to the gold standard, but we will not get an independent currency.
I still think the best potential for a fix to currency issues is competition in currency (which would allow for a gold-backed currency). It's a shame that more people aren't pushing for that instead.
Posted by: Janet | 2008-11-13 6:59:16 AM
I still think the best potential for a fix to currency issues is competition in currency (which would allow for a gold-backed currency). It's a shame that more people aren't pushing for that instead.
Posted by: Janet | 13-Nov-08 6:59:16 AM
I think I'm in Love. (kidding)
That makes just a TON of sense.
Posted by: JC | 2008-11-13 12:24:19 PM
There are glimmers:
http://en.wikipedia.org/wiki/Liberty_Dollar
http://en.wikipedia.org/wiki/Digital_gold_currency
http://en.wikipedia.org/wiki/Ithaca_hours
http://en.wikipedia.org/wiki/BerkShares
Posted by: Anonymous | 2008-11-13 1:24:45 PM
Devil's advocate mode:
I just checked out the stats at indexmundi.com for Japan, and Japan's inflation rate has followed lock-step with Japan's interest rates (downward) since 1985, while Japan's GDP has grown somewhat steadily during that time.
I'm no economist, so I welcome an explanation from the group.
Posted by: Anonymous | 2008-11-13 2:08:07 PM
I'm no economist, so I welcome an explanation from the group.
Posted by: Anonymous | 13-Nov-08 2:08:07 PM
I'm no economist either, but if I had to guess I'd say that perhaps they have a grip on inflation. Whereas we have an economist running our country and we're spending what, a hundred billion "thin air" dollars to bail out banks and corporations? I don't get it.
Posted by: JC | 2008-11-13 2:17:50 PM
JC:
Bailouts of Canadian banks? Where?
For corporations? Who?
Not in the world I'm living in.
Posted by: set you free | 2008-11-13 2:26:27 PM
I still think the best potential for a fix to currency issues is competition in currency
Posted by: Janet | 13-Nov-08 6:59:16 AM
We already have currency markets. What are you proposing that is new?
Posted by: The Stig | 2008-11-13 2:31:14 PM
As the anonymous fellow pointed out, Japan has had interest rates at this level in the past, and they haven't experienced hyper-inflation. Indeed, with a sustained drop in real estate prices and economic stagnation, the real danger seems to be deflation.
Posted by: Adam Yoshida | 2008-11-13 2:55:58 PM
JC:
Bailouts of Canadian banks? Where?
For corporations? Who?
Not in the world I'm living in.
Posted by: set you free | 13-Nov-08 2:26:27 PM
All over the news...50B to buy mortgages.
Talking about bailing out the big 3 auto makers as well, which means it will probably happen.
We're obviously taking our ques from south of the border and the insanity going on there.
Posted by: JC | 2008-11-13 3:07:41 PM
.after all its not as though we're getting one step closer to economic slavery or anything...
Posted by: JC | 13-Nov-08 5:23:39 AM
http://www.lasvegassun.com/news/2008/nov/12/paranoia-on-the-rise-experts-say/
Posted by: The Stig | 2008-11-13 3:46:22 PM
http://www.lasvegassun.com/news/2008/nov/12/paranoia-on-the-rise-experts-say/
Posted by: The Stig | 13-Nov-08 3:46:22 PM
Thanks Stig,
Plenty of ways to look at things and you and I know we can trade shots on this indefinately.
Whether its paranoid or not, there is no shortage of evidence that points to the idea that the shadow banking community has been tightening its grip on our economic freedoms for a very long time.
I forget exactly which Rothschild said it but: "Give me control of a nations money and I care not who makes her laws" And I think he meant it.
Posted by: JC | 2008-11-13 4:07:03 PM
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