Every day, we are bombarded with interest rate conjecture. When will they raise them? How can they?
The simplest answer is that they can’t. But why not? And who are they anyway?
They are the monetary authorities. They form the policy that shapes the politics.
What else can Central Banks do to stimulate the economy? They certainly couldn’t admit that they broke it to begin with.
But wait a minute. Aren’t we in a recovery?
The stock marker is up, housing prices are at record highs, the unemployment rate is back to normal. All the official statistics say so. So we don’t need the stimulus. We are on our way to sustainability.
The consensus says they will raise rates soon because we are improving, thanks to them!
And yet, all the while the consensus lives in a perpetual state of shock as week after week, one data point disappoints after another. Surely, they should do more.
Interest rates are historically low. If they raise them the stock market will fall.
But if interest rates go up, the stock market will fall. Confidence would falter, sending ripples through the system. New long term promises would command a higher rate and the need for more and better collateral. But they would not find any. Fear would set in. The search for safety and insurance would commence. None would be found.
None of these official economic statistics are an expression of reality. Housing and stock prices are a false dawn – just another perception printed on cheap paper promises, designed to distract you from the great, seemingly endless wealth confiscation.
What about precious metals? And doesn’t that also mean that prices for precious metals will go down? Perhaps in a normal world, or in a different phase of the cycle.
Controlling the price of money is the ultimate goal, whether it is fiat or gold and silver. Suppression of metals price (conveniently) enables the suppression of rates without causing inflation. But only for so long.
They've made billions controlling the price of money – both real and fiat. They are not going to let go of it anytime soon.
As soon as we cross the tipping point, where enough investors see how insanely underpriced precious metals have become against the backdrop of failed policy, prices will move far out of reach for 99.9% of the masses.
For the short term, prices arise from a rigged casino, with free drinks and buffet lines in the middle of desert.
And all the players believe in the game. They believe in the power. It’s a profitable enterprise.
Like the military-industrial complex (but only more so) the political-financial complex profits directly from all manner of crisis, from natural disaster, financial downturns, depressions, and currency wars. These monetary powers feed on chaos and imbalance because they retain at all cost the illusory control of money.
If interest rates were allowed to reflect the nature of the debt and the sheer lack of collateral that backs them, everything would freeze.
If they let the price of gold and silver go where nature would have them - to a fair market value based upon monetary demand --the fiat game would end overnight as the monetary (sound money) role of precious metals would be fully expressed for all to see.
Perhaps they assume that if they let a little air out slowly, it will keep together.
But the systems used are thin and imperfect, from the blatant media propaganda to the fragility and sheer lack of redundancy in the financial system infrastructure than runs everyday life for the majority. Think about what happens if the ATM’s and credit shut down for just a few days. A little panic is all it would take.
Even so, something tells me they are going to try raising rates anyway.