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Warning: Central Banks CANNOT Normalize Policy… Ever

Interest-Rates / Negative Interest Rates Mar 31, 2019 - 03:54 PM GMT

By: Graham_Summers

Interest-Rates

As I have been warning for years, Central Banks CANNOT normalize the Everything Bubble they created between 2008 and 2016.

Yesterday, yet another major Central Bank confirmed that I was correct. In this particular case, it was the European Central Bank (ECB).

The ECB first cut interest rates to NEGATIVE in 2014. It then lowered them an additional three times to -0.4% in 2016.


With negative interest rates, this means that EU banks are forced to PAY to sit in cash. Suffice to say, this has been a major drain on EU bank profits.

The ECB was able to pull this off by promising this was only an Emergency Situation, however it’s now been three years and the ECB has yet to raise rates even once. In fact, the ECB is now revealing it will probably NEVER be able to bring rates back to positive.

Yesterday ECB President Mario Draghi revealed that the ECB is current analyzing whether or not to implement a “tiered deposit rate” through which certain banks wouldn’t have to pay as much interest for sitting in cash.

This was an implicit admission that rates will have to stay NEGATIVE for a long time… possibly forever.

A so-called tiered deposit rate would mean banks are exempted in part from paying the ECB’s 0.40 percent annual charge on their excess reserves, boosting their profits as they struggle with an unexpected growth slowdown…

A problem with a tiered rate is that it would signal that rates are going to stay low for a very long time, in potential conflict with the ECB’s forward guidance, which sees rates at record lows only until next year, one of the sources added.

Source: Reuters.

Why should US-based investors care?

Because the Fed’s #2 has already stated the Fed will be forced to cut rates to NEGATIVE during the next downturn. And the ECB is showing us that when this happens rates will stay there for years… possibly forever.

This is just one part of the Great Global Wealth Grab that will soon be hitting the US shores. The fact is that there is simply too much debt in the financial system. So the political elite are looking for means of grabbing capital to prop up insolvent institutions/ governments.

That capital will come from wealth grabs and taxes. 

Consider the following: 

  • The IMF has already called for a wealth tax of 10% on NET WEALTH.
  • More than one Presidential candidate for the 2020 US Presidential Race has already openly called for a wealth tax in the US.
  • Polls suggest that the majority of Americans support a wealth tax.

And if you think this will stop with the super wealthy, you’re mistaken. You could tax 100% of the wealth of the top 1% and it would finance the US deficit for less than six months.

Which means…

Cash grabs, wealth taxes, and more will soon be coming to Main Street America.

Indeed, we’ve uncovered a secret document outlining how the Fed plans to both seize and STEAL savings during the next crisis/ recession.

We detail this paper and outline three investment strategies you can implement right now to protect your capital from the Fed’s sinister plan in our Special Report The Great Global Wealth Grab.

We are making just 100 copies available for FREE the general public.

You can pick up a FREE copy at:

http://phoenixcapitalmarketing.com/GWG.html

Best Regards

Graham Summers

Phoenix Capital Research

http://www.phoenixcapitalmarketing.com

Graham also writes Private Wealth Advisory, a monthly investment advisory focusing on the most lucrative investment opportunities the financial markets have to offer. Graham understands the big picture from both a macro-economic and capital in/outflow perspective. He translates his understanding into finding trends and unde74rvalued investment opportunities months before the markets catch on: the Private Wealth Advisory portfolio has outperformed the S&P 500 three of the last five years, including a 7% return in 2008 vs. a 37% loss for the S&P 500.

Previously, Graham worked as a Senior Financial Analyst covering global markets for several investment firms in the Mid-Atlantic region. He’s lived and performed research in Europe, Asia, the Middle East, and the United States.

© 2018 Copyright Graham Summers - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Graham Summers Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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