Really Real Negative Rates

A couple of months back I told you about our economy in a state of real negative interest rates in which a dollar invested in treaury bonds yields a negative rate of return with inflation.

For the past few years, as I have pointed out to you, technical analysts have observed yield inversions, where short-term rates (the over-leveraged demand on credit that is now illiquid) exceed long term, indicating the high probability of a recessionary trend, that we are now experiencing, largely due to over-leveraging of capital and the resulting low-to-no growth.

When the music stops, and the allowable 1/30 leverage ratio must be paid by the "system," no one wants to be stuck with the toxic-waste (the bad debt) it produces, which has now been devolved to the taxpayer with a regressive tax code by public authority (state capitalism, not state socialism).

The deflationary trend, the over-leveraging, has produced a T-Bill rate so low, with liquidity taken out of circulation and parked in treasuries, deflating the economy into a credit crunch, that, with inflation, buying treasuries is at a loss (really real negative rates, and so the treasury has now issued policy to pay interest and to issue a three-year bill). However, because the loss is a deflation of real assets (the real economy), the capital will move back in (liquidity) to buy the deflated assets to resell at a profit (the Warren Buffet-tyle investing). It is a thorough fit of the Hamiltonian model of administrative finance and model of power. It is a highly predictable, 200 year old model of political economy. The rich get richer, everyone else gets poorer in a (cyclical) dependancy model of power.

The Sabilization Act is more a place to dump the toxic debt, not provide liquidity. Available liquidity will be solely determined by the price and volume of deflated assets to be bought and resold. The Act is just an extension of the leverage scheme.

The People are dependant on the elitist determination of liquidity of a consolidated capital. The only legitimate self-determination that obtains in this model is at the very upper echelon of the power structure. Hardly the legitimate model of "We The People," of us all being in this thing together.

No. What we have here is a false legitimacy of pluralism in operation. It is inimical to a stable, peaceful and prosperous society. The Stabilization Act is in support of this outmoded model of political economy that is verifiably, time and again, not in the self-interest of "We The People" and the legitimacy of self-determination.

The model needs to be junked for genuine pluralistic processes.