The U.S. will probably be the last or one of the last holdouts, to dip into the negative interest rate bucket and as reluctant as the Fed appears to be, the President can’t wait. The Fed realizes that the ability to reduce interest rates is the last arrow in their quiver when it comes to having a viable control that can effect inflation. The President simply sees it as a way to encourage citizens to spend rather than save and to allow interest payments on the national debt to have as little an effect as possible. Citizens spending more money inflate the economy and encourage the stock market, while slowing the rapidly growing national debt provides the same type of economic encouragement. Many countries are already finding themselves much further down the negative interest rate road and it’s a very slippery slope.
Last week, Credit Suisse announced that it will be charging .75% to hold customer cash in their vaults. Even though customers are essentially loaning money to the bank, they are now being made to pay for the “privilege!” For the moment at least, the payment privilege only applies to customers whose deposits amount to more than 2 million Swiss francs (about $2.02 million). Nevertheless, it’s a major development as consumers begin to feel the sting, as more and more central banks join the negative interest rate bandwagon. The International Monetary Fund, which oversees and operates as the banker to central banks, warned that such activities are exposing pensions around the world into potential jeopardy. A failure to achieve minimal returns with historically safe investments is forcing pension managers into riskier opportunities that could potentially be very detrimental.
The process creates a domino effect that could wipe out investors on a number of different fronts. Not only could savings be affected by negative interest rates, but the failure of riskier investments by pension managers could overturn the entire apple cart. Career politicians would not hesitate to swoop in and try to save the retirement funds of their constituents with taxpayer dollars thereby once again placing the American taxpayer on the hook for liabilities they had nothing to do with. And like before, bankers and pension managers will be free to ride off into the sunset, with their bonuses and golden parachutes, while the American taxpayer, pensioner, and bank customer struggle to survive. Many of those hit with all facets of this economic trifecta, may not even have the wherewithal to survive.
The banks are looking out for themselves. No matter what they promise, plan, or intend, the Fed and members of the government are also looking out for themselves. It is now incumbent upon investors to be responsible for their own financial well-being. It’s time to take an earnest and very considerate look at the long history of physical precious metals and their ability to protect assets, families, and legacies. Today’s still low prices are just another advantage for those prepared to take action now. In today’s nanosecond world, it’s easy to believe there’s time to make a correction, but when the first domino falls chances are that the carnage will be swift and all-encompassing. Don’t get caught without a chair when the music stops! Call the precious metal experts at American Bullion, now! Call (800) 653-GOLD (4653).