We had crash in 08, they started QE and inflated assets all over, which is still going on, but why are there now NEGATIVE interest rates in certain parts of the world?

Is the US going to see negative rates?

Where is all this going and how will this all end? Are we going to have to prepare for next Great Depression?

(http://www.autoadmit.com/thread.php?thread_id=4349130&forum_id=2#38873077)

For real though, a “service economy” is pure flame. It doesn’t feel right because lawyers, old person healthcare, welfare, and pointless military interventions are not “good” things, but they have become increasingly large elements of our GDP. We should judge economic progress by our increases in valuable product. And quite frankly, going into debt to prolong the lives of people who don’t produce anything (the lower class and elderly) will ultimately bankrupt us.

(http://www.autoadmit.com/thread.php?thread_id=4349130&forum_id=2#38873293)

The negative rates are effectively the Bourgousie paying the government to keep their money safe for them against Proletariat bank robbers

(http://www.autoadmit.com/thread.php?thread_id=4349130&forum_id=2#38874138)

For us who are not boomers, from a practical perspective the question is how you preserve your wealth when money is growing increasingly worthless yet prices for many things are increasing due to factors that are not tied to intrinsic economic activity but instead to the behavior of the government (tax increases, healthcare costs, war costs).

One correlation I have been able to draw is the fact that the price of Gold increases or decreases in tandem with the United States debt - this makes sense as our Dollar is the world reserve currency and if it weakens or our government and society weakens it should become less valuable and thus Gold rises in value (in reality, Gold prices stay fixed, the currency unit falls in value). I believe that though digital currency is elegant and has some uses, the real world costs in the terms of energy as well as the use capacity in the global population mean that it will not be accepted as a true store of value though it might be a vital component of future fiduciary media.

Another thing that can preserve wealth is investment in businesses or other assets that have pricing power in an inflationary environment and have comparatively low debt if any to protect in a deflationary environment AND provide an essential, necessary service or product.

Third, there is value in productive real estate assets such as farm and timberland, mineral resources or other assets - with the proviso that it may be hard to relocate with such assets and they are not liquid.

Fourth, artwork that is valuable to other cultures that are doing well - like Chinese artwork is a strong store of value. China for example has a long history of operating under an "alternative monetary" system - through the trade in jade carvings, snuff bottles and other objects of art that command enormously high prices relative to their dimensions and portability. Even though this is fraught with risk, the purchase of this kind of luxury object is also useful.

Now as to what I think might happen? I think that eventually the Euro will lose credibility and it could ignite a global crisis if this happens. It is sort of already starting to happen, but it is just in slow motion. The lack of any type of compensation via interest on risk assets has caused wild speculations and an extreme expansion of debt and credit, with risk being moved around and disguised within the system.

Eventually cash and fiduciary media might get sucked out of the system (like what happened in the Repo market) and global interest rates will spike up during a shock period. Depending on how much rates spike it could provoke a fucking bloodbath in the risk asset markets around the world. If you see short term rates go up to 5%-10% and it will crater valuations in real estate and leveraged loan markets and can trigger default waves on floating rate sensitive loans and a bunch of other really bad ugly shit.

However if you have cash to lend, or leverage on large pools of money you are in great shape because you can take advantage of this situation.

So I think in the short term having Cash and Gold, then being ready to buy assets like high quality equities, businesses and real estate in the medium term might be the "best" course of action when it comes to investments. It also does not hurt to buy alternative value objects like art if it gets really bad because that and gold will be the easiest to flee with.

It is also truly a question of over how long a period will this take place. Some degree of economic recession is bound to happen. It also might be smarter to get our rates to 0% quickly as well in order to prevent the Europeans and the rest of the world from owning our real assets (let alone our debt).

I don't see a SHTF scenario occurring but I do see economic conditions and scarcity issues coming to the forefront due to low rates as well as demographics being damaged - as was/is the case with Japan.

If an inflationary spiral hits, it will be good to have Gold because you can potentially wipe out any debts you have (ideally debts secured by property) if your timing is right, or be covered in case of an extreme event.

I also think that increasing interest rates in this current system helps to stimulate inflation because it causes a more efficient expansion of credit but of course that puts me in the far minority.

(http://www.autoadmit.com/thread.php?thread_id=4349130&forum_id=2#38876426)