The zero interest fraud

by Professor Dr Eberhard Hamer, SME Institute Lower Saxony*

It hasn’t happened in 5,000 years: Zero interest for public and bank credits. Even financial science still teaches that loans are only available for interest. The normal interest rate (previously 4% to 6%) would be the price for the inflation loss during the term of the loan, for the waiver of time to invest the money and for the risk of repayment by the debtor. These risks still exist today with every loan. So why zero interest?
If a price control system no longer works in the market economy, this always shows public market intervention. If the price control system is completely eliminated by zero interest in the financial market, this shows an unprecedented degree of intervention in this market, i.e. more administrative than market economy.
In this case, however, the market was not managed centrally by state intervention, but by private monopolies.

The dollar empire of the Anglo-Saxon financial syndicate

A global financial syndicate consisting of a handful of families owns the FED, the world’s largest money printing machine. With the help of the FED, they can multiply money at will and at the same time reduce it at will via the Bank of England, which it also owns, or by central banks of the world dependent on the FED, and use it for their purposes.
Thus, the Anglo-Saxon financial syndicate has built up a dollar empire by imposing more dollar credits on 196 countries than these countries can pay, so that they are now, as before, a Roman colony in interest slavery and colonial status.1 Not only has the FED-led central bank cartel tripled global debt from $80 trillion to $250 trillion, but the central bank cartel itself, in its failed attempts to save the financial system, has already expanded its lending by $170 trillion this century; it is therefore unrestrained borrowing and unrestrained lending of freshly printed money in unprecedented proportions in recent decades with increasing acceleration.

Fatal consequences of rampant money multiplication

Rampant money multiplication usually has the consequence that the abundant money is opposed to scarcer goods, i.e. inflation occurs. Inflation, in turn, would mean that devaluation would benefit debtors at the expense of creditors. In order to prevent this, the central bank cartel had to prevent inflation.
This in turn was achieved by the growing flood of money remaining tied up in public debt and in the banking system itself, but not entering the real economy as a price-driver.
The largest money bubble ever artificially created from debt and credit has already had an impact on the private sector and private households:

  • A creeping flight into tangible assets has already begun, into equities, real estate and gold with corresponding price effects there (bubble formation).
  • In the real economy, the normal regeneration process no longer took place, with over-indebted or unprofitable companies having to withdraw from the market. Here, too, there has been a backlog of capital reorganisation.
  • Since the states were able to lend money abundantly and cheaply, they lived beyond their means and thus created political claims that they can no longer withdraw without protests.
  • In the euro zone, too, the debtor states were able to have more and more written off in the movement of goods, so they did not have to pay on time, but were able to park balance of payments deficits bilaterally or in the European target system. As a result, some of the countries became more and more indebted, while a minority had increasingly higher credit balances. Since most debtor countries can no longer get out of their debt orgy, however, they have to incur ever higher debts with the central banks and the creditor countries.

“Rescue“ actions with more and more debts

  • If a country can no longer pay its debts, it must be “saved” by the central bank and the solid countries (Greece has been saved three times, increasing its debt from 80 to 350 billion euros). Thus, we must not allow one country to become illiquid and declare bankruptcy, because then the whole artificial financial bubble threatens to burst.
  • The same applies to the international banks, which have pumped themselves full of speculative assets. Deutsche Bank, for example, has derivatives worth 45 trillion euros, i.e. thirteen times the annual German net domestic product (GDP). Likewise, most other major banks in France, Italy, Spain and other countries are over-indebted. Even the ECB is over-indebted. Its capital and reserves amount to 150 billion euros, but its balance sheet total is 4.7 trillion euros. The equity base of this bank is therefore only 2% of its total balance sheet. Thus, 2% losses are enough to drive the ECB into bankruptcy. Probably, however, the losses will be between 50% and 100%. The downfall of the ECB is therefore certain.
  • An interest rate rise of just 1% would drive Greece, Italy, France and Spain into insolvency. They are “with the interest rates at the end”. Therefore, the interest rate must not rise, the collapse of one of the debtor countries would tear a hole in the money bubble and burst it.

No prospect of debt repayment

  • However, a repayment of the debts is also no longer possible without the collapse of the aforementioned countries and the over-indebted banks, which means nothing other than that Germany, as a major creditor of the EU (2.3 trillion total debt) and the target debt tower of almost 1 trillion euros, will never get its credit balances paid again. Therefore, Germany might as well have given away its export balance. The effect is the same.

Costs for citizens and SMEs

  • The emergency measure of zero interest to prevent the debt bubble from bursting cost German savers alone over 350 billion euros in interest losses by 2018 (according to DZ Bank). The banks themselves had to pay 7.5 billion euros to the ECB for negative interest rates in 2018 (9.1 % of their pre-tax profit).
  • The servants of the World Finance Syndicate (Draghi, Lagarde, Macron, Juncker, Merz and others) have juxtaposed the proliferation of state and major bank financing with a backlog of inflation for the real economy, thus cutting off the financial air from national producers, SMEs and the SME banks under the heading of “globalisation”.

With the help of the Basel III/IV regulations, corporate loans are linked to existing tangible assets in the same way as for corporations. For medium-sized personnel companies, however, the person of the entrepreneur is the decisive basis. The tax office also taxes the person, not the physical capital. In the five million medium-sized enterprises (94% of all our companies), however, it is not the physical capital but the entrepreneur himself who is the decisive core, initiator, growth driver and credit security of his company. This person may no longer be taken into account for the new Basel rules and also for the SMEs’ cooperative banks. Practically, the SMEs are excluded thus from credits to a large extent, and the credit business of SMEs’ banks also decreased drastically.

Even an attack on SME banks

Like Austria or Denmark, Germany has a completely different structure from the other countries dominated by the financial syndicate. Great Britain, for example, has only five major banks belonging to the syndicate, which account for 70 % of the banking business. However, these banks are speculative banks. They do not live from credit business, but from investment speculation, credit speculation. In Germany, on the other hand, SME banks are both capital collection points from their clientele and main lenders to their clientele. They live off the difference in interest rates between deposits and loans. With the abolition of interest rates, the main business on which they live is drained. Not only will they no longer be allowed to serve SMEs as they have done in the past, they will also no longer be able to do so because they will no longer be able to do business even with their solid interest differential business at zero interest rates.
The zero interest rate thus shows that the whole system of the euro currency and the world financial system is not only foul, but also harmful to the healthy SMEs’ structures in the nations and evidently nearing its end.

With Lagarde instead of Draghi from the frying pan into the fire

We hoped that the solid President of the Bundesbank, Weidmann, would follow the dubious Draghi and put an end to his irresponsible fiscal policy. In time, however, the financial syndicate vetoed and presented its corruption-stricken servant Lagarde. She has already announced that she would continue to expand government bonds contrary to the law and the statutes and could even think of penalties for personal loans. Therefore, the devil must be followed by the Beelzebub in terms of financial policy, in order to gain more time, so that the world domination of the financial empire can be extended a little further.

Enforced correction by market forces?

If market economy interventions such as breaches of contract and rights, misuse of the monetary system for power purposes, unrestrained credit transfers and debt making as well as abuse of power by the ECB are no longer ended by political reason, then an enforced correction will be imposed by the market forces, which ultimately prevail. The market economy tells us, there cannot be an unrestrained pseudo-blooming like in the past years in the long run, the debts of banks, countries and companies cannot rise forever and even a zero interest rate (elimination of the price system) in the financial system will not work in the long run. The truism of financial science has always been that at some point payday comes, and those who cannot pay on payday lose and perish.
The risks have now become so high – the USA 22 trillion dollars in debt, the EU 2.3 trillion euros in debt, with most major banks tens of times their equity capital – that the downturn now beginning could already lead to a mass collaps of companies, banks and states if the recession that has begun leads to the crash of more than 5% of our economy.2 Collapsing companies, banks or states will also burst the financial bubble, turn the abundance of money into a shortage of money and force normal interest rates in the market instead of zero interest again.
It is actually a pity that this necessary correction and reorganisation did not take place by political reason before, with minor consequential damage, but has to be imposed involuntarily now, by market forces with maximum losses.    •

* Mittelstandsinstitut Niedersachsen (SME Institute Lower Saxony) SMEs = small and medium sized enterprises. See also article by Professor Dr Eberhard Hamer. ‘What exactly is the “Mittelstand”? Its importance for society and economy.’ In Current Concerns, No 14, 25 June 2019

1    for more details see, Perkins, John. Bekenntnisse eines Economic Hit Man, 7th edition 2007, The Confessions of an Economic Hit Man (or the updated The New Confessions of an Economic Hit Man)
2    compare. Hamer, E. Der grosse Crash-Ratgeber. 2017 (The big crash-guide.)

(Translation Current Concerns)