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News Link • Central Banks/Banking

Check-Mate For Central Banks: Negative Rates & Gold

• https://www.zerohedge.com, Tyler Durden

Evidence mounts that the forthcoming recession is likely to be significant, even turning into a deep slump. Bullion bank traders are waking up to the possibility that dollar interest rates are going to zero and that pressure is likely to be put on the Fed to introduce negative rates. The laws of time preference tell us bullion banks must urgently cover their short bullion positions in anticipation of a dollar rate-induced permanent backwardation for gold, silver and across all commodities.

Introduction

For some time now, I have maintained the wheels are likely to fall off the global economic wagon by the year-end. Furthermore, for many of my interlocutors, the recent rise in the gold price is just evidence of an impending cyclical crisis, anticipating and discounting the certain inflationary response by central banks. But in this, we are describing only surface evidence, not the underlying market reality.

1 Comments in Response to

Comment by Ed Price
Entered on:

Negative interest rates! Does this mean that the borrowers are going to earn interest on the loans they make? --- Two Federal Reserve Bank publications show that bank loans are not loans at all, but are really, creations of new money - "Modern Money Mechanics" and "Two Faces of Debt." As creations of new money, there is no debt (at least not at the time the borrower receives his money from the bank). All of his payments to pay off the fake loan are really donations to the bank. See http://www.quartzmoon.com/bankdebt/index.html from a former bank CPA that shows all this. In addition, search on "Tom Schauf how lending works" - https://duckduckgo.com/?q=tom+schauf+how+lending+works&ia=web.



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