E Summers And Roubini Talk Negative Interest Rates, Sound Logic But Uncharted Waters

Remember I said that Summers only cares about the banks. He would surely expect the banks to pass on negative Fed Funds rate to customers, making the negative savings rate even more negative than the Funds Rate. He would sacrifice the savings of Main Street Americans to keep the banking system afloat in a deflationary environment. Stimulus would come from savers, and while it makes logical sense, it is a real theft, a tax imposed by a financial system that is not our government, but is international and not beholden to, nor patriotic toward, any national government.

Negative interest rates could vary from nation to nation, but would be a New World Order private tax, collected by the  globalists and their banks, not from government. Talk about taxation without representation. Keep in mind that the St. Louis Fed said that rates are negative in unusual times, while Summers has said that rates are negative when there are no bubbles. Summers is saying that negative rates are a new normal, if you will.

How Americans react to this potential totalitarianism of finance will certainly be interesting to watch going forward. Perhaps if Summers is thwarted in his grand plan, the next downturn could see stimulus just handed out to regular people, with the caveat that it could not be used to pay down debt, only to spend towards a little prosperity for the economy. Summers' plan is totally reasonable, in a crazy sort of way, if his assumptions are correct about our "unusual times".

You would think consumer spending and dollar turnover would create a multiplier effect, if Main Street had any extra dollars, that is. But giving Main Street extra dollars risks overheating the economy, which I have already said cannot be stopped by conventional means. Volcker-type interest rate hikes would destroy the TBTF banks, not just S&Ls.

I am not sure the consumer's pocketbook can survive the potential triple Fed mandate of wage stagnation, asset inflation, and negative interest rates all happening at the same time. It sounds as if Larry Summers wants this, and if unusual times are the new normal, he is saying there is no other choice in the future.

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I am not an investment counselor nor am I an attorney so my views are not to be considered investment advice.

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