Zero rates means there is something very, very wrong.
By Daniel at 15 November, 2009, 4:27 am
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Japan has been in a zero rate crisis for over 2 decades during which time it has watched its stock market collapse in price by 80% and real estate fall by around the same amount. Low interest rates provide no solution whatsoever, and they are evidence of a very serious disease with an economy.
Low interest rates are destroying income for savers who are now seeing near zero returns on their lifetime savings. Small businesses are not benefiting in any way from the lower rates at the Federal Funds level. the big beneficiaries are the banks which are not paying interest to savers and who are earning record spreads on the money they borrow at zero rates from the Federal Reserve and the extremely high rates they are charging on loans of all types.
As a business owner I could careless if rates were zero or 2 %!!!! When they are zero it means there is something wrong, something very,very wrong! Besides all it mean is banks borrow zero and buy treasurys to make money. What small business would ever expand in “O”land? There is no room for small business in “O”land because he cannot control us. AND NEVER WILL
What is made very clear by the Bloomberg article and what I have been saying all year as the dollar has been declining since March is that IT IS IN CHINA’S BEST INTEREST TO HAVE A STRONG DOLLAR and China is very concerned about the weakness in the dollar.
Many people, particularly the commodities (including gold) speculators have been saying exactly the opposite. There is now no question but that both China and Hong Kong see the commodities bubble and the weak dollar stemming from the speculation in the dollar due to the inadequate interest rates set by the Federal Reserve on the US dollar. This is what has resulted in the carry trade and has fueled speculation in oil, causing the price of oil to double, and fueled the speculation in precious metals and other commodities. It has also fueled the equities bubble which we have seen throughout the world since March 2009.
China is now making it perfectly clear that this has led to huge potential problems and that it endangers the value of their dollar assets and their dollar trade with the US which is their largest export market. The bottom line here is that the interest of a strong dollar which is best for Americans coincides exactly with the interest of the Chinese to have a strong dollar. Our Federal Reserve is taking exactly the opposite action which is leading to the formation of unsustainable bubbles and perhaps a crash as serve as the 1997 crisis.
http://www.bloomberg.com/apps/news?pid=20601080&sid=aPggdjyUi.30
Read the Bloomberg article cited above carefully. This isn’t me saying this. These positions are being put forth by the head of the Chinese Central Bank and the head of the Hong Kong economic council. Japan also needs a much higher dollar to resuscitate its export industry. This is very important news and signals a strong push to get the dollar headed higher by Asia.
- American Patriot
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