Time to Confront Central Bank Lies: Opinion
NEW YORK ( Bullion Bulls Canada ) -- For three years, we have had to listen to Ben Bernanke drone on and on about the mythical "U.S. economic recovery." I recently pointed out with an abundance of long-term charts and elementary reasoning that it wasn't even theoretically possible for the crippled U.S. economy to be growing.
However, don't take my word for it. Instead, let's look at Bernanke's actions. Until Japan's failed experiment with taking interest rates to zero -- and leaving them there -- no nation in modern history had ever engaged in such recklessly insane monetary policy.
There is a very good reason why this had never happened before in economic history. Zero percent interest rates (as I have noted previously) are nothing less than the economic equivalent of a defibrillator. It is a last-ditch, desperation measure designed to attempt to shock some life back into a dying body.
Ultra-low interest rates (interest rates much lower than inflation) were never intended as a permanent prescription for any economy. They rape "savers." And with rapidly greying populations, we are becoming societies of savers. Leaving interest rates at near-zero is simply serial rape.
What happens when you rape savers again and again and again? They stop saving. They begin spending their paper as fast as they get it -- the inevitable consequence of near-zero interest rates.
The math is simple. When you have "negative interest rates" (savings rates much lower than inflation), every day that people hang on to their money, it loses value. So people spend that money today, rather than waiting until tomorrow to spend it --- when it will be worthless. And when all the consumers start spending all their money as fast as they get it (and then borrow more at those near-zero interest rates), asset bubbles start cropping up all over the economy -- starting with the real estate market.
This is what must happen with any/every economy with near-zero interest rates...with one exception. When does the human body no longer respond to a defibrillator? When it is already dead. When does an economy not "respond" to near-zero interest rates (i.e. explode into asset-bubbles)? When an economy is already dead.
All that Japan has accomplished with nearly two decades of near-zero interest rates is to prove beyond a shadow of a doubt (in hindsight) that its economy has been dead for all these years. Similarly, all that Bernanke has proven with his three-plus years of near-zero interest rates is that the U.S. economy is already dead.
We don't need two decades of near-zero interest rates to prove the U.S. is an economic corpse. Defibrillating an economy with near-zero interest rates for three-plus years (and getting no response) is proof of death just like defibrillating a body incessantly for three years would prove it's a corpse.