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"Bail-Ins" Wealth, Savings, and Pension Confiscation.
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<blockquote data-quote="BMWMC" data-source="post: 1206112" data-attributes="member: 37461"><p>It's called "negative interest rates." Rates that are below the rate of inflation. It's simply a transfer from savers to banks. Bank take those deposit and pay virtually nothing then buy longer dated corporate and government bonds foreign and domestic and reap the "spread." Worst yet most of the major banks buy common stock and run hedge fund operations. Just in the last few weeks many of them have warned on earnings because<strong><em> trading</em></strong> volume is down. Many of these money center banks get 25% of there earning trading stocks. </p><p></p><p>That's one intended end to the Fed's ZIRP (zero interest rate policy) policy the other is to push people with savings or investments into riskier assets. Anything and everything other than cash or safe assets like CD or Treasuries. Right now junk bonds rated C now yield at or below 4%. That was the rate on AAA US 10 year treasuries not 5 years ago.</p><p></p><p>As a consequence of this massive <strong><em>mal-investments is that everyone is either in cash or on one side of the trade, that being UP UP UP. </em></strong> Eventually the Fed will get its inflation but not the way they envision it. They want inflation to spur people to buy before the price rises. That would generate purchases, rebuilding stock, and thus job creation. But, what we know from the 1970's is that once inflation get embedded its very difficult to stop. </p><p></p><p>There only two ways you can get out from under debt (if you own the money printing machine) you can't pay off. Inflate your way out via devaluation or declare bankruptcy and restructure (write off) the debt. The central banks are fighting a global deflationary spiral by printing many trillions of dollars to reflate or maintain asset price or better said, create the illusion of wealth. Its quite a balancing act. Reflate assets without creating a inflationary depression as purchasing power falls thus killing your buy, build, restock, job machine.</p><p></p><p>BTW, its never work for more than a few years. We have seen this story many many times in history.</p><p></p><p><a href="http://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_Republic" target="_blank">Hyperinflation in the Weimar Republic - Wikipedia, the free encyclopedia</a></p><p><a href="http://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_Republic" target="_blank"></a></p><p><a href="http://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_Republic" target="_blank"></a>[ATTACH]10207[/ATTACH]</p><p></p><p> <span style="font-size: 12px"><span style="color: #000080"><em><strong>Remember its not the kind of money its the amount in circulation that determines its value.</strong></em></span></span></p><p>[ATTACH=full]10207[/ATTACH]</p></blockquote><p></p>
[QUOTE="BMWMC, post: 1206112, member: 37461"] It's called "negative interest rates." Rates that are below the rate of inflation. It's simply a transfer from savers to banks. Bank take those deposit and pay virtually nothing then buy longer dated corporate and government bonds foreign and domestic and reap the "spread." Worst yet most of the major banks buy common stock and run hedge fund operations. Just in the last few weeks many of them have warned on earnings because[B][I] trading[/I][/B] volume is down. Many of these money center banks get 25% of there earning trading stocks. That's one intended end to the Fed's ZIRP (zero interest rate policy) policy the other is to push people with savings or investments into riskier assets. Anything and everything other than cash or safe assets like CD or Treasuries. Right now junk bonds rated C now yield at or below 4%. That was the rate on AAA US 10 year treasuries not 5 years ago. As a consequence of this massive [B][I]mal-investments is that everyone is either in cash or on one side of the trade, that being UP UP UP. [/I][/B] Eventually the Fed will get its inflation but not the way they envision it. They want inflation to spur people to buy before the price rises. That would generate purchases, rebuilding stock, and thus job creation. But, what we know from the 1970's is that once inflation get embedded its very difficult to stop. There only two ways you can get out from under debt (if you own the money printing machine) you can't pay off. Inflate your way out via devaluation or declare bankruptcy and restructure (write off) the debt. The central banks are fighting a global deflationary spiral by printing many trillions of dollars to reflate or maintain asset price or better said, create the illusion of wealth. Its quite a balancing act. Reflate assets without creating a inflationary depression as purchasing power falls thus killing your buy, build, restock, job machine. BTW, its never work for more than a few years. We have seen this story many many times in history. [URL="http://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_Republic"]Hyperinflation in the Weimar Republic - Wikipedia, the free encyclopedia [/URL][ATTACH]10207.vB[/ATTACH] [SIZE=3][COLOR=#000080][I][B]Remember its not the kind of money its the amount in circulation that determines its value.[/B][/I][/COLOR][/SIZE] [ATTACH=full]10207[/ATTACH] [/QUOTE]
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