Before the Fed implements QE, next stop may be the ending of capitalism

Raising interest rates?  That’s so last September.  Instead mainstream economists are leaking new prognostications that signal the Fed is quickly adjusting their programs to instead focus on their next round of Quantitative Easing.
However, one of the biggest factors holding back the central bank’s plans for final annihilation of the dollar and the economy is the fact that after they failed to raise interest rates last month, the Fed’s credibility is coming into extreme question.  And should the global leader in monetary policy choose to shift gears and scare the markets with more money printing after years of lying on how much the economy was in recovery, it must first ensure that the American people won’t rebel, and by this I mean take their consumer ball and go home.

Which brings us to an even more interesting trend that is taking place among mainstream financiers, and that is the elimination or banning of cash.

When economic conditions worsen, they react by reducing interest rates in order to stimulate the economy. But, as has happened across the world in recent years, there comes a point where those central banks run out of room to cut — they can bring interest rates to zero, but reducing them further below that is fraught with problems, the biggest of which is cash in the economy.

In a new piece, Citi’s Willem Buiter looks at this problem, which is known as the effective lower bound (ELB) on nominal interest rates.

Fundamentally, the ELB problem comes down to cash. According to Buiter, the ELB only exists at all due to the existence of cash, which is a bearer instrument that pays zero nominal rates. Why have your money on deposit at a negative rate that reduces your wealth when you can have it in cash and suffer no reduction?

Cash therefore gives people an easy and effective way of avoiding negative nominal rates.

Buiter’s note suggests three ways to address this problem:

  1. Abolish currency.
  2. Tax currency.
  3. Remove the fixed exchange rate between currency and central bank reserves/deposits.

Yes, Buiter’s solution to cash’s ability to allow people to avoid negative deposit rates is to abolish cash altogether. (Note that he’s far from being the first to float this idea. Ken Rogoff has given his endorsement to the idea as well, as have others.) – Bloomberg

But the problem today is, even banning cash is no longer a viable solution.  If consumers and depositors have access to their money in some form or fashion, then transitioning that digital currency into a hard asset will negate the bank’s purpose in eliminating cash altogether.  So to accommodate this in a fully functional scheme, one other piece of the American system must be eliminated.

Capitalism.

The reasons behind the concepts of banning cash and banning capital markets is due to the fact that people, both savers and consumers, don’t always participate in markets as central banks and governments desire them to.  After 9/11, the very first thing that President George W. Bush asked Americans to do was to go out and keep spending, because it is usually during crises and traumatic events that people pull back from un-necessary spending and instead save their money in case the crisis remains active.

Fascism

Since 2008, quantitative easing and zero interest rate policies were intended to allow consumers to borrow like there was no tomorrow, and to keep buying the goods the corporate world wanted them to.  But as jobs, wages, and price inflation became real road blocks for Americans to follow these desired policies of the establishment, the banks are coming to feel that they may have no choice but to take decision making completely out of the hands of the people, and implement a completely fascist economy where not only is production controlled by the state, but what consumers can and may buy with the money they are allowed to earn is as well. – To the Death Media

That’s right, the answer the central banks are moving towards is a fully functional form of Fascism, where not only are the means of production controlled by either corporations or the state, but what consumers and depositors are allowed to do with their money as is controlled by them as well.

Make no mistake, with the soon to be passage of TPP on the horizon, the handing over of the legal mechanisms of the economy are now fully in the hands of the banks and multi-national corporations.  And since the regulators will now be working for these two private entities, it will only be a matter of time before all money earned, controlled, or saved in the hands of the populace will be relegated under the dominion of corporate powers, and anything tied to the dollar or globally accepted fiat currencies will be seen as chips from a casino, which are only good for playing on their tables and are otherwise worthless when taken outside the confines of their ‘house’.

29 comments

      1. This is probably not the place for this question, but to be honest I don’t see where else to post a question. I have looked all over roguemoney.net site and still have not found a “donate now” option. Someone needs to let the site manager know.

    1. That I have no idea on… what I wrote is speculation based on comments being made by those in control (Bankers, economists, government officials). To note, something like this probably wouldn’t fly in the Eastern bloc coalitions but most of us are involved in Western finance at the moment.

  1. Verrrry Interesting. Ken, in your opinion, what form would the control of consumption look like? I’m thinking food stamps are kinda like that, since you can’t use them for something other than food purchases like, say, entertainment. Would other voucher systems emerge to both stimulate demand and control it? Is this the model you are thinking of?

    1. Great question. I think it would be along the lines of something Andy Haldane and Willen Buiter spoke of… forced digital accounts where they would fine you if you didnt spend and consume enough, or fine you if you spent too much and helped create inflation.
      It would also be used by the govt to take out money for their health care programs, and who knows what else before you can even determine how much you have remaining to live off of.

  2. I’ve also wondered whether in a totally manipulated system, whether people would still be in paper markets at all. With price discovery gone, seems there would be little point in having ordinary folks invest in stocks, if most spending is controlled by the bureaucracy. Your thoughts? Or would people be compelled to play, (as in the lottery), so as to maintain some liquidity?

    1. I have come to ignore Fedspeak and other central bank BS. We saw Draghi jawbone for 2 years before implementing QE, and now its been a year since the end of the taper and no rate rise.
      hundreds of trillions of paper assets are tied to interest rates… if they raise even a bit, BOOOOOM!

  3. This is making me glad that I am old. I would not want to live in the world that is coming.
    I have to wonder whether people will accept this or show their independence by bartering and by creating their own (local) currencies or using virtual money (which I do not trust since I do not trust in the future existence of the internet).

    Personally, I have not left money in the bank that was not needed for conducting business since 1995.

  4. @Ken
    I also read http://benjaminfulford.net/ and am interested in your opinion. I read several sites that I don’t fully agree with, including Martin Armstrong and Jim Stone.

    Ben Fulford’s information puzzles me since some has merit but his premise that there are good guys getting ready to intervene seems a bit unbelievable. His latest (Oct 13 posting) includes a different take that seems plausible based on an nterpretation of recent events/facts, but hmmmm….

    1. Im like Dr Jim Willie in my opinion of this guy… in some cases his impossible information has been dead on… in others, not so much. So its hard to pin him as a kook or insider, but I guess the thing to do is read his stuff, hold with a very big pinch of salt, but do know he has been right perhaps 50% of the time.

      1. I’ve followed Fulford for a while. He does seem hit and miss and seems to follow a Kumbayah Mindset. I think his info is 50/50. Fulford’s latest AI audio mentions a webpage change to the Federal Reserve. Going from .org to .gov. Look it up. Intriguing to say the least. Maybe the China/Rockefeller connection has control now for the Boiling Frog asset stripping of the former Republic of the USA. Prez Trump has experience in this field.
        https://www.youtube.com/watch?v=WgFYDzqLEhU

        Going cashless per the Western Globalist’s desires ain’t gonna happen. The New Eastern Sheriffs loves “pet rocks” and will make the call going forward.

  5. @Ken
    Thanks, yeah that is why I can’t quite figure him out. One thing that I appreciate about Ben Fulford is his description of the different factions with diverse goals. Most people talk about TPTB without realizing that this is not one group all acting in unison with one mind and one objective.

    1. Maybe the powers that be aren’t one group, but perhaps one spirit (evil, of course). The scriptures talk of these entities, such as “the prince of Persia” in the book of Daniel. An evil spirit that controls an entire nation, and so it is today. The problem is today it’s not one nation, but the entire world and as the Bible says “the entire world lies in wickedness”. The problem is these evil people (who don’t see themselves as such) sitting on city counsels and such implementing things like Agenda 21 to bring this one world order about. I watched a video on youtube yesterday about what was going on in Santa Cruz that made me sick, literally. Maybe I’m too sensitive to where all this negativity is affecting my health. I need to buck up and “Fear not” as Jesus said. Easier said than done.

  6. Ken, wanted to provide a little explanation for one of the charts I sent you.
    On this one:

    http://3.bp.blogspot.com/-yJsIjkdrCuo/VcfYSOANqlI/AAAAAAAADNU/JRvomFL1OB8/s1600/Future%2Bbottom.jpg

    The dashed Brown line which travels flat over most of the graph and then rolls down near the end, was support for the 2002 and 2009 bottoms as can be seen. The inverse calculated trendline is the green one, and they meet where the X-axis is labelled -1.0, which in this system is a place where things often ‘change’. The two trendlines crossing over, is also an indicator, usually, and these two markers are at the same point in time. So, if Armageddon doesn’t happen, that spot in price and time is a potential target for a future S&P 500 market bottom, at about 520 on price, and mid 2021 for the time (-1.0 node). Because of the error tolerances the price parameter will exhibit greater accuracy then the time parameter. That said, since we have bottoms at 2002 and 2009 (7 year cycle) and I’m expecting a bottom of some importance in 2016 (7 year cycle again), then 2021 would be another 7 year cycle further out. All of it fits…

    Don’t really want to call this a prediction, we all know how dangerous that is. Call it a point and time of interest.

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