0.0% interest rate – The supressed financial crisis returns

by Prof Eberhard Hamer

When playing the blame game, it is important not to have the black man at the end – in the large monetary poker, it is essential now not to remain seated on devalued money when the Euro monetary system collapses.
Nobody currently is betraying the markets more than the Italo-clique around the Goldman Sachs gambler Draghi. Under the Statute of the ECB, the Executive Board has to guarantee the solidarity with the Euro-currency, which means not to extend the currency more than productivity, hence to keep monetary value and goods value balanced. The ECB does exactly the opposite:

  • It has expanded money supply uncontrolled; which is with respect to the quantity of goods a multiplication, thus creating an enormous potential of inflation currently only artificially dammed up.
  • The ECB actually is neither allowed to finance the growing state debt nor the gambler’s banks – both done by the Draghi-clique for already one year by 60 and in the future even 80 billion euros monthly with growing indebtness, but without economic success. 1.74 trillion euros aid money is distributed and remaining as debt and went down like a lead balloon.
  • By its zero interest rate, the ECB has de-enriched savers and institutional buyer annually by more than 34 billion euros, betrayed and driven into existence difficulties. Instead, they should have met their obligation to maintain the interest rate as a reliable market price for sound money.

Now we see the avenged for not tackling the root cause of the Euro crisis after 2008, but by a continued wrong track – with the help of Merkel’s comprehensive guarantee for all European countries (ESM) – with a rising debt of bankrupt states and gamblers banks. This takes place on the cost of Germany. The fallacy of unrestrained money expansion has to the same extend multiplied the problems so that we now face a much stronger need for correction than in 2008.
Like the Sorcerer’s Apprentice, the ECB now has no way back without a currency bang. They cannot increase the interest rate by a mere single percent without leading to an state bankruptcy of the over-indebted southern European countries – they had to pay back their towering debt piles at higher interest rates taking on even more debts at even higher interest rates – which is impossible.
Draghi and his troupe, who are subservient to the US finance syndicate, cannot even raise interest rates in Europe without FED approval, because then the Euro currency would give a higher profitability for speculators than the dollar which in turn would lead to massive dollar outflows from the US to Europe. Consequently, the ailing and heavily indebted US dollar empire would become insolvent.
Normally, an unrestrained multiplication of money and over-liquidity leads to inflation. This, however, is prevented by Bank speculators who are instructed by the ECB by not investing the money in the real economy but almost exclusively in debt hungry bankrupt states such as Greece. This in turn is no risk for the banks because the bankrupt states are backed by the ESM and Germany itself.
Since the ECB is pumping 60 to 80 billion euros monthly in public, debt there is no longer a financing of economic growth, but only an unproductive redistribution of debt:

  • With financial guarantee assistance of solid states, the unsound southern European states can proceed to finance bloated state apparatus and social systems by ECB-euros.
  • The gamblers banks do not need to consolidate, but still stoke up stock exchanges and speculation on  free ECB money.
  • Even former economical countries now have enough money to invite the world’s poor as permanent social guests and to carry the social burden permanently that nobody can pay after the end of the ECB’s monetary flood.

What alternatives does the ECB have now?

The ECB cannot increase interest rates for the above-mentioned reasons without risking government and bank bankruptcies.
But it cannot stop the money flooding either without causing sovereign defaults – especially due to missing follow-up financing by the state in the already bankrupt southern European countries.
If the ECB would introduce negative interest rates, this would only lead to an acceleration of the state-debt-game and bank speculations.
The ECB has exceeded the point of no return and now can literally go no way back without a Euro-crash.

What would otherwise be possible?

The FED’s unrestrained dollars proliferation operation has worked in the same manner as the ECB; financing US government debt and other bubbles such as the real estate, derivatives, and others. In case of bursting of one of these bubbles, a burst of the Dollar and hence of the Euro would collapse the complete western currency House of Cards. Then we are going to have a global economic crisis, which is much more severe than in the 30s.
It also could be that the Draghi clique is even preparing a currency correction: The push for abolition of cash could be preparing the Euro currency reform. Indeed, if cash is abolished and then there would be only a digital currency in the computers of banks, companies and private accounts, a devaluation or a total currency reform would be possible in seconds by the click of a mouse without the need to coin or print new money.
This would also be a new redistribution: the monetary values would be destroyed and the property values would still be present. The states will then take draconian actions to avoid shrinking their expenses and trying to grab the property values of its citizens, allegedly for reasons of justice, but in reality only, because they would want to avoid draconian austerity measures they could not bear politically.
Therefore we should understand the zero interest rates of the ECB as the last shot of a sinking warship and as an indication that it is high time for us to act (exit money and move into property values).     •
(Translation Current Concerns)