The rise of the interest rate

It's just a thought exercise. Tying monetary supply to population fixes many monetary supply issues, but creates (or re-creates) many societal issues.

originally posted by: Flyingclaydisk
a reply to: peck420

The west would come out on the losing end of that stick though wouldn't they???

Because of our population versus that of, say China? I think you're right there.


Side note: I'm really appreciating this conversation. I love talking about economic theory such as this

a reply to: FamCore

Yes, that's what I meant (i.e. not western US, but western world).

If I were "King", here's what I think I'd be trying to implement...

1. Fix the current money supply at current levels. Prohibit the Fed from increasing the supply (under penalty of law).

2. Raise the interest rate to about 1.5 - 2% and peg it.

3. Use the expanding economy to retire money from the current levels of supply (i.e. pay down debt).

4. Outlaw derivative trading on Wall St.

5. Severely restrict (or ban altogether) short-selling on Wall St.

6. Force hedge funds (by law) to open their doors to all traders, or yank their trading licenses.

It is my firm belief that you cannot address the money and debt issues without also addressing the markets where much of this money moves around. The last three items (items #4 -6) would plumb up the trading markets in short order and not have any significant negative effect on the populace. The financial markets are rife with false-value because of these practices.

Oh, and one last thing...

7. EXECUTE the next world leader who utters the words "too big to fail"! Nobody, and I mean NO-BODY, is 'too big to fail'!!

That concept of 'too big to fail' is the biggest evil monster ever created in the history of the civilized world!!

a reply to: Flyingclaydisk

You propose some great ideas.. I agree derivatives, "quantitative easing", and many Wall Street "products & services" are unethical and are threats to the global economy.

Do you think we will see a repeat of 2008 this coming October/September based on the overinflated bubble and the continuation of reckless practices on Wall Street? Trump would be the perfect "fall guy", and it's been overdue for awhile (based on my understanding of the global economy anyway)

What we have here is "Bagflation"...

The bag used to be full, but now it's half empty and costs the same.

Interest rates go up and the bag will only be 1/4 full.

a reply to: FamCore

I don't think we'll see that in '17. '19 might be more interesting to watch, but I believe there is much too much confidence in the market right now and for the next 24-36 months. If the markets start to tank in '18 then it's possible in early '19. That's just my take though.

If Trump is smart he'll stick a fork in these guys before they stick one in him. You're right about him being the perfect fall guy, but he could head it off pretty easily actually. All he'd have to do is stand up and say one sentence...

"There's no net this time, fellas!! NO NET! You're on your own!"

a reply to: MyHappyDogShiner

That's not true. You're confusing inflation with interest rates. When interest goes up, inflation goes down. It forces more competition and rewards value.

If Trump were to stand up right now and tell Wall St. there's no net this time I'd bet 1,000 heads would roll on Wall St. within one week...and a 1,000 more the week after...and so on. And, if he implemented the measures I suggest above before making that pronouncement then two things would happen...

1. The numbers above would double or even triple.

2. Big Banking would defund the hedge funds overnight and they'd be screaming bloody murder because of it (thieving heartless bastages)!

a reply to: Flyingclaydisk

A car which cost $20,000 just 15 years ago now costs $40,000, but in real terms the actual value of the car (when you consider what materials went into it) is less than the $20,000 of 15 years ago. That's inflation.

Very good example - not to mention the total man hours (vs robotics savings) and the "deflated" (less purchasing power) that the men take home form building that one particular $40k car today.

a reply to: Flyingclaydisk

www.rollingstone.com...

Fleischmann is the central witness in one of the biggest cases of white-collar crime in American history, possessing secrets that JPMorgan Chase CEO Jamie Dimon late last year paid $9 billion (not $13 billion as regularly reported – more on that later) to keep the public from hearing.

Six years after the crisis that cratered the global economy, it's not exactly news that the country's biggest banks stole on a grand scale. That's why the more important part of Fleischmann's story is in the pains Chase and the Justice Department took to silence her. She was blocked at every turn: by asleep-on-the-job regulators like the Securities and Exchange Commission, by a court system that allowed Chase to use its billions to bury her evidence, and, finally, by officials like outgoing Attorney General Eric Holder, the chief architect of the crazily elaborate government policy of surrender, secrecy and cover-up. "Every time I had a chance to talk, something always got in the way," Fleischmann says.

If Trump were to stand up right now and tell Wall St. there's no net this time

He'd be deader and quicker than LBJ's ghost could summon another single bullet op.

a reply to: Flyingclaydisk

Of note was also the PPT actions in manipulation...

www.zerohedge.com...

One year after the great stock market crash in 1987, US President Ronald Reagan launched the "Working Group on Financial Markets." Conspiracy theorists believe, however, that the real task of this committee is to protect against a renewed slump in the stock market. In the jargon of Wall Street, the working group is known as the "Plunge Protection Team." One glimpse at a few days suring 2007/8 and it is clear that 'someone' with infinitely deep pockets was able to support markets on several critical days - though, of course, anyone proclaiming intervention was propagandized away as a conspiracy theory wonk. However, as Dr. Pippa Malmgren - a former member of the U.S. President’s Working Group on Financial Markets - it is not conspiracy theory, it is conspiracy fact: "there's no price discovery anymore by the market... governments impose prices on the market."

a reply to: FamCore

Maybe not this year...a few more pieces have to come into play...a "fake" war with CHina...to bring about a new Reserve currency and an equilibrium between the US debt carried by China...a stock market crash prior to the War.
The wild card will be Russia...do they sit by and see China forced to be non aggressive like the Japanese had to after WW2?
(U.S.-Japan Security Treaty). Russia needs a strong China to keep the USA at bay.

But then again they (the Slavers/Bankers) may stop credit to China like they did to the USSR causing a change in ideology.

I agree derivatives, "quantitative easing", and many Wall Street "products & services" are unethical and are threats to the global economy.

ah yes derivatives, the dirty word no one talks about

www.globalresearch.ca...

Global Derivatives: $1.5 Quadrillion Time Bomb

NOTE: Total World GDP
google:
"Gross world product in 2016 is projected at $75.21 trillion, its GDP (PPP) is forecasted at $119.1 trillion. Global economy is 1.58 times greater in PPP terms compare to nominal terms"

remember a quadrillion is 1,000,000,000,000,000

a reply to: Flyingclaydisk

You forgot the most important change - let the market truly discover the true price of Gold. Return wealth to sovereign Nationhood.

www.gata.org...

For 15 years the Gold Anti-Trust Action Committee has been documenting and publicizing the largely surreptitious manipulation of the gold market by Western central banks, a longstanding policy of gold price suppression aimed at controlling the currency markets and interest rates. While GATA is a research, educational, and civil rights organization, those who object to examination of our topic call us a "conspiracy theory" organization. There is much conspiracy here, but it is easily ascertainable as fact rather than mere theory, conspiracy occurring whenever people gather in secret to plan or implement some undertaking or policy. Meeting in secret to plan or implement policy is, of course, the very definition of modern central banking.

After all, when is the last time you were invited to a meeting of the G-10 Committee on Gold and Foreign Exchange or were even told that such a committee exists and meets secretly? When is the last time you were allowed to learn the results of the committee's work without having to bring a lawsuit against the participants, as GATA did a few years ago?

originally posted by: Flyingclaydisk
a reply to: kwakakev

Increases in interest rates are a good thing (contrary to what some here may say). Without higher interest rates you have runaway inflation. Or worse, as we are seeing in countries like Greece, negative interest rates (which are a very bad thing)!

High interest rates do reduce inflation by reducing the money supply. Deflation is another term for this. Increases in taxes, hoarding money, blowing up banks and burning cash can also have a similar effect as the money supply is reduced.

Negative interest rates are tricky, Greece is very much in a bad situation with very high levels of debt that cannot be repaid. The European Central Bank would rather get something back than nothing, so applying a negative interest rate can help get the debt back to a realistic and manageable level. The compounding effects of interest is a real benefit for savings, but its costs on debt can be destructive when out of control. Negative interest is one way to help get things back on track, but like so many other things in the economy is open to exploitation and mismanagement.