I read a great article written by Dr. Thorsten Polleit, Chief Economist of Degussa and macro-economic advisor to the P&R Real Value Fund in Europe. Here are some “high”lights from his article—

  • It appears the ECB, European Central Bank will lower rates further into the negatives this month.
  • Negative interest rates are highly attractive to countries deep in debt as running debt now becomes a profitable business.
  • Central banks around the globe are forcing both short-term and long-term interest rates below 0% and thus there is no longer a “natural” rate of interest between a borrower and a saver.
  • As interest rates drop demand for credit should soar and he says the ECB will be forced to resort to credit rationing meaning the ECB will determine who is “worthy” to borrow money at a negative interest rate. Thus, the ECB will be picking winners and losers.
  • Thus, there is NO FREE MARKET LEFT.
  • Lower interest rates will drive asset price inflation in stocks houses, and land until the bubble POPS
  • And all saving and investing will stop when there is no positive rate of return in view to earn.
  • Over time economic growth will dwindle (it already is), income distribution income conflicts will increase, the State will become more powerful, and consumers and businesses will experience less freedom.