With part of Europe continuing to remain on lockdown, today King World News is featuring a powerful interview with one of the greats in the business that warns about the endless propaganda being used to deceived the public as well the coming shock waves.
King World News note: KWN was taken offline for lengthy periods of time shortly after the Dr. Paul Craig Roberts audio interview was released. A powerful entity did not want the contents of his interview to be heard across the globe.
James Turk: “There are two central bank meetings over the next few weeks, Eric, that need to be watched closely. The ECB meets this Thursday, and then the Fed has its long-awaited meeting on December 15-16…
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James Turk continues: “It is generally accepted that these two central banks are headed in opposite directions. One is easing by lowering interest rates, and the other is supposedly ready to start raising rates.
The ECB on Thursday is poised to make euro interest rates even more negative as well as possibly announce more quantitive easing. Economic activity in Europe continues in the doldrums, with more bad news than good.
Even though the ECB’s monetary experiment with negative interest rates is not working as can be seen from economic activity that remains subdued, the ECB thinks more of the same medicine will do the trick. But the medicine is killing, not helping, the patient because intervention by central planners is always disruptive to the free-market process.
Coming Shock Waves
As one recent example of bad news, the largest ever insolvency of a Spanish company was just recently announced. This is sending ripples around the European financial system, but they have not yet turned into shock waves.
It is still too early to say what the knock-on effect will be from this insolvency because under Spanish law, the company has four months to reach an agreement with its creditors. Only if no work-out arrangement is reached will the company go into bankruptcy.
In the meantime, the €20 billion it owes to banks will be reclassified as non-performing, adding to a growing pile of potential bad debts in Spanish and other European banks. As economic activity slows, loans borrowed in good times or borrowed in anticipation of good times that never arrive can indeed go bad, as happened with this company.
On the other side of the Atlantic and in contrast to the ECB, the Fed is supposedly ready to raise US dollar interest rates for the first time in seven years. Will it happen?
Propaganda
I’ve been saying all along that the Fed can’t raise interest rates because the US government cannot afford to pay a fair rate of interest. Its $19 trillion debt load is too huge, and far outstrips the government’s ability to generate enough revenue to service its debt. So the US government’s huge debt load means higher interest rates are no longer an alternative the Fed can use to entice people to hold dollars.
For the past 7 years, the Fed has used the promise of raising interest rates, going back to Mr Bernanke. Rates remain near zero if you are a saver, but ironically, in double-digits if you are a consumer borrowing money. That wide margin being earned by banks and engineered by the Fed’s policies is keeping US banks profitable. But let me get back to the point — the Fed’s promise to raise rates is by now looking very thin. Thus the Fed has stepped up its rhetoric as we approach its Dec 15-16 meeting to try giving its promise more credibility.
If the ECB acts to further weaken the euro this Thursday, it is possible that the Fed will use the ECB’s action as a reason not to raise dollar interest rates. After all, the Fed at its last meeting used China as a reason for not raising rates. So a European excuse is a reason to not raise Interest rates needs to be considered as a possibility.
The other alternative is that the Fed announces a 0.25% increase in rates, which is the outcome widely expected. The reality is that the Fed is so far behind the curve, this token increase won’t really matter.
More Fed Propaganda
After all, Mr Benrnanke said he would raise interest rates when the unemployment rate dropped from its high after the 2008 financial collapse to 6.5% and that happened 1½ years ago, but the Fed has done nothing. So even if the Fed finally does act, it is inconsequential, particularly when considering that the Fed will not implement further interest rate increases in 2016, which of course is an election year.
What all of this means, Eric, is that the dollar strength we have been seeing is the result of a weak euro, yen and other currencies that make the dollar look like the best choice when compared to the other alternatives. And consequently, gold’s weakness appears only when calculating its price in terms of dollars, but not dozens of other currencies around the world.”
***To listen to the powerful interview with Egon von Greyerz, the man who has become legendary for his predictions on QE, historic moves in currencies, and major global events CLICK HERE OR ON THE IMAGE BELOW.
***To listen to one of the greatest interviews ever with Dr. Paul Craig Roberts CLICK HERE OR ON THE IMAGE BELOW.
***ALSO JUST RELEASED: This Will Cause The Price Of Gold To Jump Hundreds Of Dollars In A Matter Of Days CLICK HERE.
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