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Negative Interest Rates: Chemotherapy for Indebted Nations (Video)

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In an interview on the Keiser Report, author, investment banker, and credit analyst Chris Whalen talked about negative interest rates, calling them “chemotherapy for indebted nations.”

Whalen noted that more than half the world today is in negative rate territory. He said that after years of high, “risk-free” returns, now it’s time to give the money back. Of course, this has ramifications that should give us all pause:

The way I put it is a negative rate environment implies liquidation. It means we’re not building any more. It means we’re just going to consume all of the capital that’s left and then we’ll be done.”

Whalen went on to talk about the world of debt we now live in:

Debt has become the global currency. Money doesn’t matter anymore. We have all of these worthless promises. And the only thing that keeps the system together is the tendency of people to continue to use dollars, yen, whatever it is, as the daily means of exchange. It’s not a store of value.”

What does historically store value, even in the midst of negative interest rates and global debt?

Gold and silver.

Highlights from the interview:

“The Japanese are drowning in debt. They’re doing it very slowly. All of the hedge fund managers betting on their demise don’t understand this will go on for decades. But they will consume all of their savings and they will slowly become a non-investment area…It’s a slow motion default in substantive terms and moral terms, but it’s not going to happen tomorrow.”

“More than half the world today is in negative interest rate territory. The central bankers claim this is helping us. It’s like chemotherapy for heavily indebted nations.”

“If you think about it, from World War II on we were on very high, risk-free returns. Now we have to give the money back. That’s what it comes down to.”

“Savers, retirees, they’re all threatened now because that whole structure that we used to rely on for planning on the future doesn’t matter in a negative interest rate environment.”

“I think we’re kind of in a crisis of ideas and leadership in a sense that the political class, much like in the 1920s or earlier, have kind of given up. They don’t know what to do.”

“The way I put it is a negative rate environment implies liquidation. It means we’re not building any more. It means we’re just going to consume all of the capital that’s left and then we’ll be done.”

“Debt has become the global currency. Money doesn’t matter anymore. We have all of these worthless promises. And the only thing that keeps the system together is the tendency of people to continue to use dollars, yen, whatever it is, as the daily means of exchange. It’s not a store of value.”

Historically, silver does store value. Download SchiffGold’s Free Report: The Powerful Case For Silver

“Negative interest rates take income out of the system. They take income from savers. They take income from anyone who wants to own a financial asset – insurance, whatever it is. All of those things are threatened.”

“Economists live in a fantasy world. They think that theoretical concepts like negative numbers are valid for discussion of the real world, and they’re not. Negative numbers are not real numbers. They are derivatives. So when you start considering them for policy there are all kinds of bizarre things that can happen, as we’ve seen today.”

“We’re being held hostage by global central bankers.”

“I think the bull market you’ve seen in commercial real estate in the US…was largely due to the Fed. It was also due to tax credits that were put in place after 9/11.”

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