Jim’s Rant For The Day. 69% Interest.
Two weeks ago I pointed out what a bank run looks like. That was when one woman purchased $50 Million worth of U. S. Silver dollars because she feared her currency and bank could be worthless soon. She bought most of the Silver Eagles in big warehouses and the future newly minted coins for the next six weeks. That is a bank run.
Today we are seeing the Central Bank of Argentina raise their interest rate to 69%. Two weeks ago their government collapsed. Please do not think this has anything to do with their extremely high inflation rate because it doesn’t.
An interest rate is more about trust the bank has that the future looks great and trust that money lent now will be repaid on time (Risk). A rate of 69% means they have no faith in tomorrow, the economy is failing and they do not wish to lend money at all. This is the kiss of death to the economy because without credit there is no commerce or economy. There is no need for the new car lot to open Monday because there can be no buyers.
This is how a country dies. First their “bond market fails” which is banker speech for ”No one will lend money to the government.” That is followed by the government leadership resigning and running for the hills. Then immediately their Central Bank quits by cutting off loans, called “Credit drying up.” That country then withers, starves and dies. Their Central Bank waits for better times and with the backing of other Central Banks goes back into business.
Folks, watch this pattern because it will eat up Europe and then the United States.
How do oil men put out an oil well fire? No, not water but dynamite. They explode it at the fire so all oxygen in the area is immediately consumed from the explosion. They starve the fire by withholding its oxygen.
We are witnessing many countries going into the collapse phase, starving the Central Banks everywhere for its oxygen – new loans on the books. But in large global scale collapses at once there will not be other Central Banks left alive to revive them. Between this and the world learning how evil the Central banks are they too are dying. So hang in there, this is the beginning of the quick end for the global banking system we are witnessing!
P.S. Credit Unions are the only safe bet for surviving banks.