Central Banks Drive Negative Interest Rates and Undermine Economies

capital and banksAre the central banks destroying capitalism in an attempt to save it with negative interest rates? That was the question that Max Keiser addressed during his recent Keiser Report broadcast on the RT network, which provides an alternative perspective on major global events.

 

Keiser’s featured guest, Erik Voorhees, bitcoin entrepreneur and CEO of ShapeShift.io, weighed in on the role that cryptocurrencies can play in improving the financial system.

The central banks are manipulating the fabric of price-time by reversing the flow of time via negative interest rates. As a result, the global financial system no longer possesses the productive capacity to generate enough income to sustain current asset value, Keiser observed during the first half of the broadcast. And when “tomorrow” cannot be paid, the current financial regime will fail.

“You can’t have capitalism without capital,” Keiser said.

“Central banks are removing capital. “It’s like the Vietnam war; ‘we’re going to destroy the village to save the village.’”

The efforts by central banks around the world to pump capital into the financial system has delivered these zero and negative interest rates, Keiser observed:

“The interest rate curve is the equivalent clock. When you have zero or negative interest rates, you are going back in time. You are trying to buy time.”

Stacy Herbert, Keiser’s co-host, noted that the central banks in effect are destroying moral and temporal structure of money.

Central banks worse than terrorists

fedKeiser went as far as to say the central banks are worse than terrorists because of their actions.
One ramification of negative interest rates is that people are forced into austerity measures. Such austerity is currently happening in several countries. “This is a hostile act by the government against the people,” Keiser said. “The government has declared war on anyone who is not a Goldman Sachs partner with negative interest rates. This is the ‘shot heard around the world.’”

Voorhees, whom Kaiser introduced as an early bitcoin adopter, talked about the expansion of Bitcoin blockchain technology. He noted that some “experts” who doubted the lasting power of bitcoin are now recognizing the benefits of blockchain technology.

Voorhees and Kaiser agreed that hearing people offer praise for blockchain technology after they previously dissed bitcoin fail to understand that the blockchain requires a cryptocurrency.

Voorhees said some people have dismissed bitcoin because they mistakenly think a currency needs government backing. He and Keiser agreed that blockchain technology has ramifications beyond bitcoin.

Former bitcoin skeptics can’t help but recognize that more large companies are making use of blockchain technologies. IBM will introduce a currency using blockchain technologies. “People are realizing that having an immutable ledger that can’t be rewritten… is extremely valuable,” Voorhees said.

Skeptics can’t discount Bitcoin’s growth

Former Bitcoin skeptics can’t help but recognize that more large companies are making use of blockchain technologies. IBM will introduce a currency using blockchain technologies. “People are realizing that having an immutable ledger that can’t be rewritten… is extremely valuable,” Voorhees said.

Because bitcoin continues to grow, former bitcoin skeptics are saying it’s the blockchain driving growth.

“It’s a way for them to sort of sidestep the issue and get back in the tent,”

Voorhees said. What these people fail to understand is the blockchain needs a crypto currency built into it to provide the incentive structure.

You cannot divorce bitcoin from the blockchain, both men agreed. “It’s a foolish statement,” said Keiser. He also noted that the 14th million bitcoin was mined this past week.

ShapeShift brings new capabilities

Voorhees spent some time explaining his described ShapeShift.io, which quickly exchanges cryptocurrencies. He described it as a new piece of infrastructure.

“It is how digital currency exchange should work. From start to finish, you can change currencies in under ten seconds, no account required.”

ShapeShift.io holds an inventory of each altcoin / cryptocurrency it exchanges. Voorhees compared it to Travelex, a service at the airport that allows people to exchange different currencies.

Noting that Voorhees was an early skeptic of alternate cyrptocurrencies, Voorhees said he has changed his position.

“I realize a lot of these digital currencies do special things. Some do things bitcoin doesn’t do.”

Any coin that does something useful can find a niche. Those currencies that are clones of each other don’t serve a role. “A lot of these will fail, that is the point of experimentation.”

In discussing the impact that bitcoin pricing has had on the bitcoin market, Voorhees observed that the pricing situation has impacted the level of bitcoin mining. Both he and Keiser agreed that when a commodity’s price falls, there is less money available for activities like mining.

In this regard, bitcoin is no different from gold. Voorhees said the price of oil and gold affects the amount of mining for these commodities.

“When the price goes up it’s easier to fund mining. Gold miners shutting down due to gold price,” Keiser said.

“It’s a self-correcting mechanism,” Voorhees added.

Keiser and Voorhees agreed that bitcoin is not a panacea for freedom. Instead, it has pros and cons, depending on how people use it. Voorhees said bitcoin could be either a “tool for liberation or surveillance.” In this way, he said, it is similar to the Internet.

As governments become increasingly repressive, the general learning curve for encryption technology will become faster, Keiser said.

View the full Keiser Report below. Images from Shutterstock.