Tuesday, April 26, 2016

Fed's Idea for the Economy: Tax Money

- "The care of human life and happiness, and not their destruction, is the first and only object of good government."

- Thomas Jefferson

- "Negative rates is a destructive principle."

- Sebastian

The Yellen Fed has kept its key rate at 0.38%. Do you know what the normal average rate is? Here is a clue. It is the same rate that every bank use to give passbook savings. The answer is 5%. Yelling, Yellen has already screamed that negative rates are "on the table." The seed is in the ground.
What will you do
My first thought was CDs or Money Market Funds. However, they both have problem. CDs tie up your money for nothing in return. Money Market Funds dropped below a buck during Bernanke's tenure. Liquidity can effect this passive market. He made a temporary fix, but no real solution was developed. There is a danger and the problem has not been fixed. Not good.
I think Americans will just pull their money out of the banks which will produce another problem. The capitalization of the banking system, but first things first. Because the word will spread that people are taking their money out of the banks and putting it in the cookie jar or under the mattress, home invasions will grow. The doom and gloom movies that Hollywood creates will become a reality. We will live in fear. Gun sales will soar. This is not a society that I would want to grow old.
and I'm talking the philosophical concept, could die.
Italy, Spain, Mexico and Russia have already banned large cash transactions. You can't just go to the bank and ask for your money, 'cause they won't give it to you. Can you see your local branch bank refusing to give you your money? At best, they will offer you a check to which you have to find another institution to cash without a fee.
We have allowed the Federal Reserve, which really is socialism for the banking industry, to control our way of life. This is where it is leading us.
At present, there are $7.67T worth of negative interest rate bonds in the world with Japan leading the charge. In this fiat world, your central bank works with your treasury. One creates a bond and the other buys it. The Fed claims deflation must be stopped. They suggest a 2% rise in inflation, when in reality, they are creating deflation.
Corporate Bonds
are joining the party. Who is buying this crap? Probably, central banks and their shills. Royal Dutch Shell PLC and Siemens AG, both had bonds that dropped below zero and according to Bloomberg, another $16B of euro-corporate bonds are trading with yields below zero.
Where does this leave you? You can leave your money in the bank. It will be a digit in the banking system and a credit for the government. You see, dear reader, they control your money and with negative interest rates, they will tax it. What ever happened to, "No taxation, without representation!" End the Fed!