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Alasdair Macleod: Interest rates are the silent killer
By Alasdair Macleod
GoldMoney, Toronto
Thursday, March 2, 2023
This article is about why interest rates and bond yields are rising and why they will continue to rise, threatening to undermine the entire Western banking system.
Rising bond yields are deferring the prospect of a central bank pivot away from fighting inflation to tackling a widely expected recession. Anyway, these expectations wrongly assume that price inflation will fall in a recession, leading to lower interest rates.
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History tells us that monetary debasement, rising prices, and a slump in business activity go together. Indeed, a slump in economic activity is almost certain, but interest rates will continue to rise, reflecting declining purchasing power for fiat currencies. There is nothing the monetary authorities can do to prevent it, and consequently a cyclical banking crisis, this time including both central and commercial banking systems, is bound to result.
In this article I point out the consequences of not understanding the true role of interest rates, the fallacies surrounding commodity price formation, and why a general glut cannot happen, which according to the Keynesians drives recessions.
Blaming inflation on Russia or other external forces cuts no ice. Our crisis is entirely of our own making. Rising interest rates are our silent killer. ...
... For the remainder of the analysis:
https://www.goldmoney.com/research/interest-rates-the-silent-killer?gmrefcode=gata
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