Loading ...Financial Insanity Grips The World
Tyler Durden’s pictureSubmitted by Tyler Durden on 05/28/2015 08:52 -0400
Via Dr.Sircus.com,
Rare is the person who is a realist. We collectively live in a world of pretend and extend. Every one of us wants our present civilization to continue, though for countless millions the world has already turned upside down as unemployment has soared and war and terrorism proliferate. The very structure of life in our world is threatened because madmen have undermined the financial system through the creation of debt instead of wealth. We have collectively borrowed against our children’s future until their very future is in doubt.
Dr. Paul Craig Roberts, former Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal thinks that insanity grips the western world. I have to agree and no one who reads the news would disagree. In the “The Sane Society” prominent psychotherapist Erich Fromm suggested that Western society as a whole was lacking in sanity; that the inequities and disharmonies of the entire society were pathological, not just the mental illnesses of people therein.
The newest mirror of financial insanity are the negative interest rates. Today if you are a manager of other people’s money, like a pension fund manager, you are forced to lend out hard-earned money at a loss, to buy worthless paper, issued by governments who only pretend they will be in any position to pay back. Bloomberg writes, “Negative interest rates are an odd fish in the world of finance given that they basically wreak havoc on a central tenet of investing; that investors will be compensated in some way for, you know, investing in things.”
The Secular Investor writes about this saying, “Who is going to save money then? Not a single soul, of course. People will start to create debt en masse, because it is the better and cheaper option. The resulting investments will rise in value, moreover, when an increasing amount of people take on debt in search for returns. Things cannot get a lot crazier than this. If this is how the system ends up working, we fear that the effects will be irreversible. It is like a black hole that sucks in more and more matter – read: capital – and never lets go. This financial black hole story will also end with a sudden implosion, a flash of light and a big bang, just like in space, and those who do not own hard assets at that point in time could lose every bit of wealth they’ve ever accumulated.”
“The negative interest rates are oppressing the elderly, robbing them of their dreams. They were told to save for retirement, but now they face negative interest rates after paying a lifetime of taxes……There is so much cash around and nothing to invest in, that we see companies buying back their own stock,” writes Martin Armstrong. “In the hunt for apparently “safe assets”, investors have thrown caution to the wind, and collectively determined to pay governments for the privilege of lending to them,” writes Jeremy Warner.
Pater Tenebrarum, writing about the new war against cash, says, “As the modern day fiat money system inevitably cruises toward its final denouement, individual rights will come increasingly under attack as the world’s ruling elites and centrally directed banking cartels begin to batten down the hatches.” “There is only one conclusion that can be drawn from such an anti-cash sentiment. Your property is no longer your own. This fundamental attack on the value of money should erupt in national outrage,” writes James Hall.
Many people are worried for good reason. If US inventories, already at record high levels, and with the inventory to sales rising to great financial crisis levels, had not grown by $121.9 billion and merely remained flat, US Q1 GDP would not be 0.2%, but would be negative 2.6%.Things are not looking good for America and the rest of the world economy. Human activity in the real world is deflating (contracting) at an accelerating rate.
The scenario (worst case) that I am betting my money on is presented by Gary Christenson, who writes, “Financial or economic collapse occurs. If credit collapses and businesses aren’t paid for products and services, the distribution system could temporarily shut down. Contemplate empty grocery shelves, empty gasoline stations, electricity and water outages, empty ATM’s, and EBT cards that don’t work.” This is exactly what to expect when our present financial system burns down to the ground.
Ambrose Evans-Pritchard writes, “The slump in the annual growth rate to 0.2pc in the first quarter does not convey the full horror of it. Once you strip out a surge in inventories – often a pre-recession warning – the economy contracted sharply. Investment in business buildings and factories fell 23pc. “A whiff of panic is in the air,” said theEconomic Cycle Research Institute.”
Charles Hugh Smith writes, “All the “saves” have done is guarantee the financial system will burn down in a conflagration ignited by a seemingly trivial spark somewhere in the vast global system of phantom collateral.”
more http://www.zerohedge.com/news/2015-05-28/financial-insanity-grips-world