But we’re not borrowing from people who have saved we are borrowing from made up fiat currency. The federal reserve has created so the demand cycle is broken.
@@technozombie789 George Gammon has a great video that shows "fractional reserves" is complete nonsense and banks lend "money" into existence. The example is two banks with $0 of assets and liabilities. They each give each other a loan for $1mil. Now, *POOF* , $2mil of assets and $2mil of liabilities exist. It's all ledger games to #1 track who owes who and #2 obtain power/leverage over others.
@@anaveragehuman2937Yes, exactly. Now take that knowledge and think about how long you would have to work to pay for a house with cash and how a bank can just create money then put it into the market to compete against your real productivity based savings.
Don’t be an idiot, the best time to plant a fruit tree was a 20 years ago, if you’ve not planted a tree the next best time to do it is now, knowledge and skill are more valuable than money so focus on that.
Rate cuts by the feds can lead to lower returns on traditional savings and investments, often fueling inflation and eroding purchasing power. In such an environment, cryptocurrency can be a strong defense. Unlike fiat currencies, many cryptos have limited supply, making them less susceptible to inflation. As rate cuts drive investors to seek alternative stores of value, crypto’s decentralized nature and potential for growth make it an attractive option to preserve wealth and hedge against the negative effects of monetary policy. Thanks to Loraine Souvenir program, i've grasped trading concepts, boosting my earnings through her daily insights.
It's unexpected to come across her name here. She understands every beginner’s intention and fix you to a trading course that matches your capacity, she knows her stuff! Her advice has been invaluable to my trading journey. Definitely worth giving a shot!
It's truly refreshing to see a comment about Loraine Souvenir. I've also had the pleasure of working with her for several months after discovering more about her online. She has a knack for simplifying complex issues, whether it's a market surge or decline. Her approach consistently keeps you ahead of the curve. I'd call her a guru, for sure
The beauty of her approach is her dual focus: while she aggressively pursues profit opportunities, she's equally tenacious about shielding investors from potential pitfalls. It's a balance few can achieve.
Nice to see this here. A lot of folks downplay the role of advisors until they’re burned by their own emotions-no offense. I remember last year, I needed a good boost to help my business stay afloat, so I researched licensed advisors and thankfully came across Loraine. She’s helped grow my reserve, despite inflation, from $152k to nearly a 7-figure sum as of today..Her insights and daily siignals are worth following.
Doesn't make much sense to loan money with negative interest rate. Joe gave the example to loan $100 and get $99 back, but the same $100 of goods now cost $94 so he still wins, but if he kept the $100 in a safe, he would have $1 more than if he loaned it out. I heard in Japan when they had negative interest rate, everyone bought safes to keep money at home.
I am interested in your thoughts on how population decline interfaces with this. As you frequently say “all other things being equal”… for the last 700 years there has been an overall population increase which is IMO a big part of the increase in material wealth; with populations declining (China has a birth rate of roughly 1 right now, birth rates in the west are slightly below replacement rates). So the question is, how will that trend affect wealth creation and thus the value of money?
I think you have answered your own question. Wealth creation is the issue, not population. Lower population will certainly decrease the rate of wealth creation, but the wealth creation rates per person increase as productivity increases.
@@christianlibertarian5488 I would think that there would be, for lack of a better word “turbulence”, in money flow due to collapsing value of assets related to falling population. The average house would lose most of its value when there are more houses than people for instance, and a significant part of the economy is making these things and the cost is highly dependent on economy of scale. If a car manufacturer is only making half as many units due to population reduction the cost per unit would explode because all the design/engineering/marketing costs are forced into half as many units…this would happen across all sectors for all manufactured goods at every step of production. It seems like there would be countervailing trends in both directions.
It’ll probably help keep interest rates low. Countries and the wealthy desperate for growth without population growth. The most xenophobic places will suffer the most.
When I was a poor kid in the 2000's I used to get 5% interest at the bank on my weekly paper-round salary of £15. It was absolutely amazing for saving. I really hope and pray the Bank of England keeps rates at 5%, so that honest every day people can benefit.
It stems from an economic idea that the economy can be guided. By having a steady inflation rate you prevent economic slowdown. These people think deflation is disastrous. The 2% number is mostly arbitrary. This may not make much sense without an explanation, but deflation is really an accounting problem rather than an actual problem.
Because 2% is barely noticable. In fact, if your screen is 2% brighter or dimmer, you'd never notice unless using side by side comparison. Think about destruction of your wealth. This is why the elusive compound interest on your savings in your 20s doesn't amount to a hill of beans when you're 60.
@@privatecitizen4001 no one said anything about private banks. I’m talking about the treasury wanting to keep rates low so they can keep maintenance costs of the debt down. Higher rates will increase cost of course.
@@privatecitizen4001 , sorry you are wrong. The ~$6 trillion injected into the system since 2020 was not created by fractional reserve banking. It was created by the US treasury and its partner the Federal Reserve simply printing currency and sending it directly to the people. When you got your Covid payments, from where did that money come? Did you borrow it? Of course not. The same for all of the checks sent to businesses during this timeframe. Currency was injected directly into the veins of the economy. Fractional reserve banking is out of control but it was most certainly not the problem since 2020.
Heresy Financial could you please make a short playlist summing up everything someone needs to know for you to make your case about your beliefs in economics I would like to be able to show it to people but it is hard to sort out exactly which videos to use. I I would love it if there was such a labeled and succinct playlist big fan thank you like if you agree that he should have a persuasion playlist
The long term interest rates going down have quite big correlation to money system creating money out of thin air, that is my guess for at least last 100 years, the time fiat currencies have been present. This also represents how the money system is constantly tipping over to the bad side, like, go to socialism with negative rates, which will absolutely destroy the economy while there is simply no reason to compete against assets created out of thin air, by your real work and real savings. I personally do not quite agree this system would be the best prioritizing assets over anything else, because the people working and producing in free market, incentivized by good terms, are certainly as important thing as any kind of profit for assets, probably even more important in many cases. You can not force good economy to happen. You must negotiate to get good economy. The people themselves have the constitutional right to freely choose, that is not a right reserved for capital.
Thank God, we have Joe. I tell all my friends to subscribe to you. Some listen, I hope. But I keep trying because the stakes are high....for all of us.
It doesn’t seem like negative interest rates will work for long term (that’s essentially paying someone to borrow your money, can’t work permanently) …so seems like will need to reverse.
The reason I understand why interest rates keep going down is because money is more expensive. There's more debt in the system compared to the west back then. Frances back in the day old people would say I pay 24% interest on my house. Where today 5% interest on a house is enormous because it's either $500,000 home or a 1.5 million dollar home. And there's been multiple sessions of money printing which is divine the money. I wouldn't be surprised the next time they want to rake interest rates the highest number will ever be 4!
Fascinating episode, Joe. So the value of real money, being gold, simply goes up in time, because prosperity makes production continuously cheaper. I never before extrapolated that to declining interest rates, but it fits. And I have long foreseen that if prosperity can continue, then eventually everything becomes essentially free, and likewise interest rates will have to decline to zero, because people simply will not borrow at high rates to buy free stuff. Meanwhile, fiat currency devaluation flips all of that on its head, until collapse, meaning interest rates will have to go higher before collapse, as lenders won't give out currency at rates too cheap today, for devalued currency to get back tomorrow. And so the coming hyperinflation and fiat currency collapse probably means that the meat of this episode will not even be relevant for some decades to come. I expect a decade of high single digit inflation, followed by a decade of double digits, followed by true 50% monthly hyperinfliation, continuously battling in balance with technology making things cheaper and cheaper faster and faster.
John Maynard Keynes wrote a book in 1936 called, "The General Theory of Employment, Interest, and Money." In the book Keynes coins the term "function less investor" to describe a financial class that he believed exploited scarce capital for their own benefit. Keynes's theory was that as capitalism spread, the "functionless investor" class would gradually disappear, which he called the "euthanasia of the rentier". He believed that capital would become so abundant that investment opportunities would become limited, causing the interest rate to fall to zero. Did Keynes predict financialization?
I heard a different message. Prosperity increases with or without money supply or currency manipulation. If the money supply keeps pace with prosperity, there will be no inflation and thus no need to charge high interest rates. If the money supply outpaces prosperity, then inflation will happen. Joe commented that deflation was the norm in the past because prosperity outpaced the production of gold, which was our old-time money supply. I am unsure where you are getting the hyperinflation or prices going to zero message.
@@ReengineeringPolitics Prices going to zero is just the natural consequence of whatever technological advancements are causing the prosperity. For example, the vast majority of people used to work all day for basic sustenance. While now, they work for luxury, if they even work at all. Sustenance labor has almost entirely deflated away. I was extrapolating from Joe's more narrow observation. And the coming hyperinflation based in fiat was not part of Joe's presentation either. I was just pointing out that the reverse of the old deflation will be directly ahead, and its end game will be much more consequential than the periodic short spikes that Joe commented on toward the end. That end game should send the line upward and to the right, off the chart, going parabolic. Because if it does not, then rates too low will simply be arbitraged into a gold price going higher faster. However, I am not entirely sold on the hyperinflation scenario, because the federal govt.still holds more gold than the next three or four largest country reserves combined. So we are still on something of a gold standard, because the strength of the currency is implicit in the massive gold holdings. TLDR, I know, but this stuff gets me thinking.
@@stevenmix3723 "the vast majority of people used to work all day for basic sustenance. While now, they work for luxury" What? Where are you living where people don't work for sustenance? Yes, as things become automated, they become more efficient. Corporate farming and genetic modification have increased crop yields as people migrated from agricultural areas into cities. I just published a video that showed how our productivity has risen from $15k to $68k from 1940 until now. This has not translated to a lower cost of living or requiring less work. Two people must work in 2024 to provide the same lifestyle a single person provided in 1970. Why is that?
I have a long term acquaintance who believes that gold can be absorbed through the skin causing mental illness. He believes to the core of his being that it is true. Every morning he goes out into the world looking for examples and he finds them. He finds them in married couples fighting in a restaurant or his own son sitting in his room caressing a gold bar that he worships and handles more than his own pecker. Mental filters and cognitive dissonance are strange things. I tried reasoning with him once pointing out that correlation and causation are two different things. He seemed to agree, but after a night with his crazy wife and kids he was right back where he started.
Your best video yet, by a mile. Also - question - what are you using for your mic? Really good sound quality but I don’t see any lapels, and given the shot angle, you must be at least 12” away from any mic. I have a Shure MV7 and I basically have to eat the thing to get decent audio out of it
The Fed doesn’t control interest rates. They would like you to think they have control, but they do not. The inverted yield curve illustrates this fact. Economic participants jointly determine interest rates through a market mechanism. The FED follows the 2 treasury rate, just look at the charts.
Great analysis and presentation. I agree Fiat Currency is a huge problem that causes multiple economic distortions and has since the Roosevelt administration tried to circumvent the Gold Standard. A CBDC would make things worse. We cannot return to the Gold Standard, as you have said. What about something like Greenfield-Yeager system that pegs the dollar to a basket of commodities? I am not well versed in this idea, but on the surface it sounds interesting.
One quibble - in a deflationary economy with hard currency, negative interest rates still don't make a lot of sense because - despite lending being economically viable - you're still better off by not lending in that scenario. I suppose there's a risk of theft, but that's generally going to be lower than the risk of borrower default.
That chart means nothing 700 years ago the average person could not borrow money they were serfs or had to journey under somebody, rich lords, kings and such borrowed money. So really we can only look at the last 300 years as the old indentured servant system was removed and people went to America to make their own fates. Let’s face it the system is manipulated all of us normal people have to try and make money inside a stacked poker game. Land used to be collateral now the systems keeps you from actually owning your land (asset) taking away your ability to go around the system…..
Bitcoin is early on in adoption and nations will allow banks to use it as collateral more and more. Gold will still be great, but bitcoin has more use cases.
@@Brandon.80I wish more people would study bitcoin. It’s the obvious answer. Most will learn the hard way or pay the price they deserve including nations and governments
Interest rates are an interesting study. It's well known that if you make mortgage payments biweekly instead of monthly, that you will save quite a bit of money on the overall payback of the loan. Now if you keep dividing the payment interval in half, you'd stand to save even more. Carry this to the extreme: you're making payments every millisecond. You save so much that the interest rate essentially becomes zero. So then what is an interest rate? It's a figment of imagination based on the deception that a month long interval has greater significance than all the milliseconds that expire in that interval. But, we all WANT to collect interest ( money for nothing), so we close our eyes and agree that interest is a valid concept.
Now we know where the Fed gets their 2% target rate for inflation. The growth of the supply of gold is 2%. When they are equal, happiness, when imbalanced, misery.
Sound money in Western countries that are debt based economies is an absolute impossibility for the following reasons : 1) An election cycle of 4 years where political parties make outlandish and expensive programs to win. 2) The acceptance of QE or /and QT to affect the level of economic activity accepting the dual mandate of most Central banks on employment and price stability. 3) The use of fiscal and monetary tools to fight back against the downward slope of the trade cycle. The benefits associated with a recession which is primarily the opportunity of individuals, small businesses and corporations to Deleverage and save for future investment opportunities is often lost when the Fed keeps swimming against the tide!! ❤😮
Having gold as the basis of a currency system does not limit that system to the amount of gold in reserve, because there is still credit available. As a businessman, I can create money for the short term by offering my customers 90 days to pay. What gold does is ensures that the absolute value of the credit remains the same, so that when I do get paid, I have equivalent purchasing power. The fiat currency system is a credit system based upon itself, so absolute value per unit of currency becomes a phantom. And so we cheat one another with it. And things go to hell from there. That's why "Thou shalt not steal" is one of the Ten main principles guiding our existence as a society.
Insightful but you forgot to mention velocity of that money. We don’t inflate volume of money. But supply of money is really controlled by readily available debt issuance of banks. Debt issued out of thin air Circulating the economy.
I follow you regularly, but was lost by this video. I get most of it, but I could not understand the purpose of showing the 700 downward trend. Nor could I understand how this trend can continue now that we are at such a low point. In previous videos, you indicated a 40-year interest rate down cycle followed by a 40-year up cycle starting now.
Interesting topic. Maybe low interest rates coincides with wealth of the world. 500 years ago, none of the serfs had any financial assets. The creditors could charge whatever they wanted, to a desperate populace. "Proverbs 22:7: "The rich rule over the poor, and the borrower is slave to the lender". Now creditors are competing with wealth. But, debt may be the straw that breaks the camel's back.
We have been switching from asset based economics to debt based economics -- which allows wealth transfer via inflation. Greed and ignorance are enabling this.
Could it be that 700 years ago the world started depending on fiat currencies as a system of value? And with a fiat currency, if the controllers of the economy need more money they are free to print more currency without the need for scarce resources to uphold the value of the currency. Show the chart for inflation for the last 700 years and you’ll see the full picture of who interest rates can fall because the money supply is an unlimited ability to increase.
I don’t understand the basic premise. Interest rates have been decreasing because the money supply has expanded slowly than the amount of wealth? If money supply is down there’s less competition among lenders, so interest rates go up. Anyone care to try to reconcile these ideas for me?
I would guess interest rates have steadily declined because of supply and demand.Having a steadily increasing population with enormously increasing growth and investment coupled with a steadily increasing supply of money,both real and imagined,have increased the number of available lenders and borrowers.
So, who is going to pass this expectation on to the credit card companies, especially for their cash advance rates? Looks like they didn't get the memo.
See that chart? We have broken that 40 year downtrend. Which means what? You can get lower than zero but that means we will pay the banks to keep our money. Nothing wrong with that right?
The only way a return to sound money can happen is if the existing unsound money goes away. Let’s be clear: you can’t convert an unsound money to a sound one. Replacing unsound money with sound money is going to mean economic collapse, which means billions of people are going to die. Personally, I take that as a given, no matter what terms you coach it in. When Nixon took the US off the gold standard, due to the US being bankrupt, it touched off globalization. This resulted in a human population explosion. IOW, human population is directly tied to & a consequence of economic growth. The problem: the growth is an unsustainable bubble. When the bubble finally collapses, so too will the human population. Billions ARE going to die. It’s not so much that replacing unsound money with sound money will solve the problem. It’s that sound money will emerge after the existing unsound system collapses.
Remember, that back in those olden times, all the Countries/Empires were regional, with minimal to no interoperability. Even large Empires, like the Romans, didn't really interact with other global regions. Sure, they did some barter trade. But, on a pretty small level Unlike today, where all Country's currencies _do_ interact. Also, the Romans did use fractional reserve banking, of a sorts. They did dilute their precious metals' coinage, towards the end, of their tenure, as a Ruling Governance.
Since the money supply is always increasing a prolonged period of deflation is impossible? So basically I never really need to worry about deflation with the current system.
Could we eventually use some other metal besides gold? That way the slate can be wiped clean and central banks won't have the majority of the money. Besides, other metals are actually useful in technology and don't just look good.
I believe a much simpler story. Rates drop over time because the rich are getting so much richer and the amount of interest they can demand relative to the amount of debt in the economy is constant, adjusted for population. In other words, we have a limited amount of blood the wealthy can suck and only population increases can increase the total blood volume., but as the total debt is growing faster than population, rates must fall to keep the blood flowing to the wealthy.
I dont know if its the end of the trend but going negative breaks the maths. If it were to continue i think it would need an exponential curve, from 1/4% to 1/8% to 1/16% ect. So we dont ever actually hit 0
What if our entire world economy, was in like a a Star wars universe would we want economics to work as it currently does? Keep in mind we are completely overpowered by the other world's we can't challenge them through any type of aggression or war, all we have is trade and negotiation wouldn't that put the entire world as a serfdom to another more powerful world? What would fare trade look like through that lens?
Does having a finite amount of gold make's having the gold standard dangerous long term as mining gold becomes more uncertain overtime as known supply fade away ?
Interest rates have fallen since the renaissance. Some say the dark ages was due to the end of the monetary system of Rome.... and the only reason the renaissance happened was due to credit expansion. Has the credit cycle expanded since then and thus pushed rates down?
Good video. Is this the real reason why Governments massively overreacted to COVID? It allowed an excuse for money printing on a massive scale leading to higher inflation and higher interest rates after years of near zero rates? The virus likely came from a lab too.
Sorry I don't understand, even if there is a deflation of say 5% and we have a negative interest rate of 1%, would I not be better off not lending at all??? I will still have $100 instead of $99 even if the things I buy now cost $95...
So should we reasonably expect rising inflation AND rising interest rates over the next 20-30 years? I know we'll see periods of rate cuts, but is Joe expecting an overall, long-term trajectory for interest rates to be RISING?
Money loaned into existence is a scam. Free money for the lender, effectively. Of course they want free money, but they don't want to go so far as to destroy the scam. Eventually, however, it all must come to an end. The fraud will have played out.
Those interest rate charts look awfully like the 15-year Bitcoin volatility index. Will it break up? Break down? Or go flat for the foreseeable future?
Ok, but they don't want saving. That's why we will have a digital dollar. We will be forced to spend to keep the system up. So the system won't change it will be the same but they will claim it will be better.
Interest rates are the price of money. Money is a claim on human labor. As the amount of human labor needed to create a good or service falls, so too does the price of the claims of that labor in terms of goods and services. Any form of increase of labor will produce this effect, which is part of why the "elites" are so laser focused on importing laborers and creating AI robots. You can thus expect an industrializing economy to have progressively lower interest rates, while a de-industrializing (ie collapsing) economy will have acutely higher interest rates. But technology is sticky. Even if the West is completely destroyed, so long as the people live, they will quickly recover, and those rates will again fall. Don't bet on a 700 year bounce, though we certainly might get a 40 year one.
your argument for negative interest rate is invalid: even in deflation, no one wants to lend $100 to get $99 back after a year because if you don't lend it, you will have your original $100 intact which is better than lending it and hoping to get $99 back.
But we’re not borrowing from people who have saved we are borrowing from made up fiat currency. The federal reserve has created so the demand cycle is broken.
Most people still think that bank loans are derived from people's savings. Even some of the RUclips videos that pop up first in a search get it wrong.
@@technozombie789 so the banks get money to loan from ________?
@@technozombie789 George Gammon has a great video that shows "fractional reserves" is complete nonsense and banks lend "money" into existence.
The example is two banks with $0 of assets and liabilities. They each give each other a loan for $1mil. Now, *POOF* , $2mil of assets and $2mil of liabilities exist.
It's all ledger games to #1 track who owes who and #2 obtain power/leverage over others.
@@anaveragehuman2937Yes, exactly. Now take that knowledge and think about how long you would have to work to pay for a house with cash and how a bank can just create money then put it into the market to compete against your real productivity based savings.
100%
“In other words, they’re delusional”. That delivery was epic. 😂
Dang guess i should have invested about 400 years ago
And people wonder how vampires have so much wealth 😮
Don’t be an idiot, the best time to plant a fruit tree was a 20 years ago, if you’ve not planted a tree the next best time to do it is now, knowledge and skill are more valuable than money so focus on that.
@@WillMac-w1e
This is the best video that ever saw about economy
Rate cuts by the feds can lead to lower returns on traditional savings and investments, often fueling inflation and eroding purchasing power. In such an environment, cryptocurrency can be a strong defense. Unlike fiat currencies, many cryptos have limited supply, making them less susceptible to inflation. As rate cuts drive investors to seek alternative stores of value, crypto’s decentralized nature and potential for growth make it an attractive option to preserve wealth and hedge against the negative effects of monetary policy. Thanks to Loraine Souvenir program, i've grasped trading concepts, boosting my earnings through her daily insights.
I've just looked up her full name on my browser and found her webpage without sweat, very much appreciate this
It's unexpected to come across her name here. She understands every beginner’s intention and fix you to a trading course that matches your capacity, she knows her stuff! Her advice has been invaluable to my trading journey. Definitely worth giving a shot!
It's truly refreshing to see a comment about Loraine Souvenir. I've also had the pleasure of working with her for several months after discovering more about her online. She has a knack for simplifying complex issues, whether it's a market surge or decline. Her approach consistently keeps you ahead of the curve. I'd call her a guru, for sure
The beauty of her approach is her dual focus: while she aggressively pursues profit opportunities, she's equally tenacious about shielding investors from potential pitfalls. It's a balance few can achieve.
Nice to see this here. A lot of folks downplay the role of advisors until they’re burned by their own emotions-no offense. I remember last year, I needed a good boost to help my business stay afloat, so I researched licensed advisors and thankfully came across Loraine. She’s helped grow my reserve, despite inflation, from $152k to nearly a 7-figure sum as of today..Her insights and daily siignals are worth following.
I need to watch this more than once 😵💫
Then you are new on this channel 😅
Doesn't make much sense to loan money with negative interest rate. Joe gave the example to loan $100 and get $99 back, but the same $100 of goods now cost $94 so he still wins, but if he kept the $100 in a safe, he would have $1 more than if he loaned it out. I heard in Japan when they had negative interest rate, everyone bought safes to keep money at home.
ya thats what i picked up too lol
+
It's not the end of falling rates, it's the end of positive rates.
Excellent description of the past and what we can expect in the future. Well done!
Thanks Steve
I am interested in your thoughts on how population decline interfaces with this. As you frequently say “all other things being equal”… for the last 700 years there has been an overall population increase which is IMO a big part of the increase in material wealth; with populations declining (China has a birth rate of roughly 1 right now, birth rates in the west are slightly below replacement rates). So the question is, how will that trend affect wealth creation and thus the value of money?
I think you have answered your own question. Wealth creation is the issue, not population. Lower population will certainly decrease the rate of wealth creation, but the wealth creation rates per person increase as productivity increases.
@@christianlibertarian5488 I would think that there would be, for lack of a better word “turbulence”, in money flow due to collapsing value of assets related to falling population. The average house would lose most of its value when there are more houses than people for instance, and a significant part of the economy is making these things and the cost is highly dependent on economy of scale. If a car manufacturer is only making half as many units due to population reduction the cost per unit would explode because all the design/engineering/marketing costs are forced into half as many units…this would happen across all sectors for all manufactured goods at every step of production. It seems like there would be countervailing trends in both directions.
@@christianlibertarian5488maybe but the biggest factor is the massive printing of fiat currencies!
It’ll probably help keep interest rates low.
Countries and the wealthy desperate for growth without population growth.
The most xenophobic places will suffer the most.
When I was a poor kid in the 2000's I used to get 5% interest at the bank on my weekly paper-round salary of £15.
It was absolutely amazing for saving.
I really hope and pray the Bank of England keeps rates at 5%, so that honest every day people can benefit.
If deflation through productivity and wealth growth is normal, where did the Fed get the idea 2% inflation is ideal?
It stems from an economic idea that the economy can be guided. By having a steady inflation rate you prevent economic slowdown. These people think deflation is disastrous. The 2% number is mostly arbitrary.
This may not make much sense without an explanation, but deflation is really an accounting problem rather than an actual problem.
It's not an idea, it's a scam.
Because 2% is barely noticable. In fact, if your screen is 2% brighter or dimmer, you'd never notice unless using side by side comparison.
Think about destruction of your wealth. This is why the elusive compound interest on your savings in your 20s doesn't amount to a hill of beans when you're 60.
Now show how the dollar has lost its value. Thus, making this trend irrelevant.
One could argue the bay the lower interest rates have caused the dollar to lose its value. Cheap money = government prints more of it
The government does not print money. Banks lend money they don't have at interest. They call it fractional reserve banking and it's a scam.
@@privatecitizen4001 no one said anything about private banks.
I’m talking about the treasury wanting to keep rates low so they can keep maintenance costs of the debt down.
Higher rates will increase cost of course.
@@privatecitizen4001 It is not a scam, it is how a bank works. And the government does print money by way of the Federal Reserve Bank.
@@privatecitizen4001 , sorry you are wrong. The ~$6 trillion injected into the system since 2020 was not created by fractional reserve banking. It was created by the US treasury and its partner the Federal Reserve simply printing currency and sending it directly to the people. When you got your Covid payments, from where did that money come? Did you borrow it? Of course not. The same for all of the checks sent to businesses during this timeframe. Currency was injected directly into the veins of the economy. Fractional reserve banking is out of control but it was most certainly not the problem since 2020.
Heresy Financial could you please make a short playlist summing up everything someone needs to know for you to make your case about your beliefs in economics I would like to be able to show it to people but it is hard to sort out exactly which videos to use. I I would love it if there was such a labeled and succinct playlist big fan thank you like if you agree that he should have a persuasion playlist
"It might be Bitcoin."
ditto
The long term interest rates going down have quite big correlation to money system creating money out of thin air, that is my guess for at least last 100 years, the time fiat currencies have been present. This also represents how the money system is constantly tipping over to the bad side, like, go to socialism with negative rates, which will absolutely destroy the economy while there is simply no reason to compete against assets created out of thin air, by your real work and real savings. I personally do not quite agree this system would be the best prioritizing assets over anything else, because the people working and producing in free market, incentivized by good terms, are certainly as important thing as any kind of profit for assets, probably even more important in many cases. You can not force good economy to happen. You must negotiate to get good economy. The people themselves have the constitutional right to freely choose, that is not a right reserved for capital.
Bitcoin is so obviously the answer to these problems
Thank God, we have Joe. I tell all my friends to subscribe to you. Some listen, I hope. But I keep trying because the stakes are high....for all of us.
Thank you for the support, William 🙏
It doesn’t seem like negative interest rates will work for long term (that’s essentially paying someone to borrow your money, can’t work permanently) …so seems like will need to reverse.
The reason I understand why interest rates keep going down is because money is more expensive. There's more debt in the system compared to the west back then. Frances back in the day old people would say I pay 24% interest on my house. Where today 5% interest on a house is enormous because it's either $500,000 home or a 1.5 million dollar home. And there's been multiple sessions of money printing which is divine the money. I wouldn't be surprised the next time they want to rake interest rates the highest number will ever be 4!
Rates are already falling if you look at bond and cd rates. It wasn't that long ago where I could get 5.5% 1yr CDs now they're down to 4.5%.
The spikes are on the same timeframe as wars, these days we have less wars then centuries ago.
"the great wave" and "secular cycles" are great books related to this topic.
Any cheap places I can buy this from?
Great video!
Fascinating episode, Joe. So the value of real money, being gold, simply goes up in time, because prosperity makes production continuously cheaper. I never before extrapolated that to declining interest rates, but it fits. And I have long foreseen that if prosperity can continue, then eventually everything becomes essentially free, and likewise interest rates will have to decline to zero, because people simply will not borrow at high rates to buy free stuff. Meanwhile, fiat currency devaluation flips all of that on its head, until collapse, meaning interest rates will have to go higher before collapse, as lenders won't give out currency at rates too cheap today, for devalued currency to get back tomorrow. And so the coming hyperinflation and fiat currency collapse probably means that the meat of this episode will not even be relevant for some decades to come. I expect a decade of high single digit inflation, followed by a decade of double digits, followed by true 50% monthly hyperinfliation, continuously battling in balance with technology making things cheaper and cheaper faster and faster.
John Maynard Keynes wrote a book in 1936 called, "The General Theory of Employment, Interest, and Money." In the book Keynes coins the term "function less investor" to describe a financial class that he believed exploited scarce capital for their own benefit. Keynes's theory was that as capitalism spread, the "functionless investor" class would gradually disappear, which he called the "euthanasia of the rentier". He believed that capital would become so abundant that investment opportunities would become limited, causing the interest rate to fall to zero. Did Keynes predict financialization?
I heard a different message. Prosperity increases with or without money supply or currency manipulation. If the money supply keeps pace with prosperity, there will be no inflation and thus no need to charge high interest rates. If the money supply outpaces prosperity, then inflation will happen. Joe commented that deflation was the norm in the past because prosperity outpaced the production of gold, which was our old-time money supply. I am unsure where you are getting the hyperinflation or prices going to zero message.
@@ReengineeringPolitics Prices going to zero is just the natural consequence of whatever technological advancements are causing the prosperity. For example, the vast majority of people used to work all day for basic sustenance. While now, they work for luxury, if they even work at all. Sustenance labor has almost entirely deflated away. I was extrapolating from Joe's more narrow observation. And the coming hyperinflation based in fiat was not part of Joe's presentation either. I was just pointing out that the reverse of the old deflation will be directly ahead, and its end game will be much more consequential than the periodic short spikes that Joe commented on toward the end. That end game should send the line upward and to the right, off the chart, going parabolic. Because if it does not, then rates too low will simply be arbitraged into a gold price going higher faster. However, I am not entirely sold on the hyperinflation scenario, because the federal govt.still holds more gold than the next three or four largest country reserves combined. So we are still on something of a gold standard, because the strength of the currency is implicit in the massive gold holdings. TLDR, I know, but this stuff gets me thinking.
@@stevenmix3723 "the vast majority of people used to work all day for basic sustenance. While now, they work for luxury" What? Where are you living where people don't work for sustenance? Yes, as things become automated, they become more efficient. Corporate farming and genetic modification have increased crop yields as people migrated from agricultural areas into cities. I just published a video that showed how our productivity has risen from $15k to $68k from 1940 until now. This has not translated to a lower cost of living or requiring less work. Two people must work in 2024 to provide the same lifestyle a single person provided in 1970. Why is that?
I have a long term acquaintance who believes that gold can be absorbed through the skin causing mental illness. He believes to the core of his being that it is true. Every morning he goes out into the world looking for examples and he finds them. He finds them in married couples fighting in a restaurant or his own son sitting in his room caressing a gold bar that he worships and handles more than his own pecker. Mental filters and cognitive dissonance are strange things. I tried reasoning with him once pointing out that correlation and causation are two different things. He seemed to agree, but after a night with his crazy wife and kids he was right back where he started.
The trend would have to continue into negative territory as the currency loses value.
Your best video yet, by a mile. Also - question - what are you using for your mic?
Really good sound quality but I don’t see any lapels, and given the shot angle, you must be at least 12” away from any mic.
I have a Shure MV7 and I basically have to eat the thing to get decent audio out of it
The Fed doesn’t control interest rates. They would like you to think they have control, but they do not. The inverted yield curve illustrates this fact. Economic participants jointly determine interest rates through a market mechanism. The FED follows the 2 treasury rate, just look at the charts.
Great analysis and presentation. I agree Fiat Currency is a huge problem that causes multiple economic distortions and has since the Roosevelt administration tried to circumvent the Gold Standard. A CBDC would make things worse. We cannot return to the Gold Standard, as you have said. What about something like Greenfield-Yeager system that pegs the dollar to a basket of commodities? I am not well versed in this idea, but on the surface it sounds interesting.
Thank you for uploading such amazing educational videos for free, God bless you.
One quibble - in a deflationary economy with hard currency, negative interest rates still don't make a lot of sense because - despite lending being economically viable - you're still better off by not lending in that scenario. I suppose there's a risk of theft, but that's generally going to be lower than the risk of borrower default.
So what happens to the economies and interest rates for the next 100, 300, 500 years?
Good morning Mr. Brown I hope your day is going well! it is a beautiful day here in Highlands Ranch Colorado. How about those Kansas City Chiefs?
Govt and Fed find religion? Trying hard not to laugh. Thank you Joe. Good work!
That chart means nothing 700 years ago the average person could not borrow money they were serfs or had to journey under somebody, rich lords, kings and such borrowed money. So really we can only look at the last 300 years as the old indentured servant system was removed and people went to America to make their own fates. Let’s face it the system is manipulated all of us normal people have to try and make money inside a stacked poker game. Land used to be collateral now the systems keeps you from actually owning your land (asset) taking away your ability to go around the system…..
Banks are buying gold not Bitcon, so no money in guessing what the new currency will be backed by.
Bitcoin is early on in adoption and nations will allow banks to use it as collateral more and more. Gold will still be great, but bitcoin has more use cases.
@@Brandon.80I wish more people would study bitcoin. It’s the obvious answer. Most will learn the hard way or pay the price they deserve including nations and governments
@@Brandon.80 Bitcon doesn't have a single use case, that's the whole point. Gold has many uses, silver even more.
Interest rates are an interesting study. It's well known that if you make mortgage payments biweekly instead of monthly, that you will save quite a bit of money on the overall payback of the loan.
Now if you keep dividing the payment interval in half, you'd stand to save even more. Carry this to the extreme: you're making payments every millisecond. You save so much that the interest rate essentially becomes zero. So then what is an interest rate? It's a figment of imagination based on the deception that a month long interval has greater significance than all the milliseconds that expire in that interval.
But, we all WANT to collect interest ( money for nothing), so we close our eyes and agree that interest is a valid concept.
Gold carry trade is on . Borrow cheap dollars buy gold, pay back in devalued dollars 🎉
...until the rug pull
Now we know where the Fed gets their 2% target rate for inflation. The growth of the supply of gold is 2%. When they are equal, happiness, when imbalanced, misery.
Sound money in Western countries that are debt based economies is an absolute impossibility for the following reasons : 1) An election cycle of 4 years where political parties make outlandish and expensive programs to win. 2) The acceptance of QE or /and QT to affect the level of economic activity accepting the dual mandate of most Central banks on employment and price stability. 3) The use of fiscal and monetary tools to fight back against the downward slope of the trade cycle.
The benefits associated with a recession which is primarily the opportunity of individuals, small businesses and corporations to Deleverage and save for future investment opportunities is often lost when the Fed keeps swimming against the tide!! ❤😮
Another banger. Thank you Joe! So informative!
Having gold as the basis of a currency system does not limit that system to the amount of gold in reserve, because there is still credit available. As a businessman, I can create money for the short term by offering my customers 90 days to pay.
What gold does is ensures that the absolute value of the credit remains the same, so that when I do get paid, I have equivalent purchasing power.
The fiat currency system is a credit system based upon itself, so absolute value per unit of currency becomes a phantom. And so we cheat one another with it. And things go to hell from there. That's why "Thou shalt not steal" is one of the Ten main principles guiding our existence as a society.
Insightful but you forgot to mention velocity of that money. We don’t inflate volume of money. But supply of money is really controlled by readily available debt issuance of banks. Debt issued out of thin air Circulating the economy.
Central banks do not control private credit creation
Nicely done.
As always great content
Thanks Joe
Gold Outperformed S & P 500 since 1971
I follow you regularly, but was lost by this video. I get most of it, but I could not understand the purpose of showing the 700 downward trend. Nor could I understand how this trend can continue now that we are at such a low point. In previous videos, you indicated a 40-year interest rate down cycle followed by a 40-year up cycle starting now.
Interesting topic. Maybe low interest rates coincides with wealth of the world. 500 years ago, none of the serfs had any financial assets. The creditors could charge whatever they wanted, to a desperate populace. "Proverbs 22:7: "The rich rule over the poor, and the borrower is slave to the lender". Now creditors are competing with wealth. But, debt may be the straw that breaks the camel's back.
We have been switching from asset based economics to debt based economics -- which allows wealth transfer via inflation. Greed and ignorance are enabling this.
Few minutes in...have seen another video he did saying interest rates will surge.. so weird w Fed
Could it be that 700 years ago the world started depending on fiat currencies as a system of value? And with a fiat currency, if the controllers of the economy need more money they are free to print more currency without the need for scarce resources to uphold the value of the currency. Show the chart for inflation for the last 700 years and you’ll see the full picture of who interest rates can fall because the money supply is an unlimited ability to increase.
I don’t understand the basic premise.
Interest rates have been decreasing because the money supply has expanded slowly than the amount of wealth?
If money supply is down there’s less competition among lenders, so interest rates go up.
Anyone care to try to reconcile these ideas for me?
I would guess interest rates have steadily declined because of supply and demand.Having a steadily increasing population with enormously increasing growth and investment coupled with a steadily increasing supply of money,both real and imagined,have increased the number of available lenders and borrowers.
Thanx baldie Brown.
So, who is going to pass this expectation on to the credit card
companies, especially for their cash advance rates? Looks like
they didn't get the memo.
as lender 700 years ago you did not borow air and papper but gold or silver.. so what money is
The great taking. ‘You will own nothing and be happy’, is likely a deflationary cause. Higher interest rates in the future?
See that chart? We have broken that 40 year downtrend. Which means what? You can get lower than zero but that means we will pay the banks to keep our money. Nothing wrong with that right?
Perfect analysis, bro. That's all what I can say.
Thank you, Tomas
High trust society= low interest rates.
Low trust society like today... Rates going up
The only way a return to sound money can happen is if the existing unsound money goes away. Let’s be clear: you can’t convert an unsound money to a sound one. Replacing unsound money with sound money is going to mean economic collapse, which means billions of people are going to die.
Personally, I take that as a given, no matter what terms you coach it in. When Nixon took the US off the gold standard, due to the US being bankrupt, it touched off globalization. This resulted in a human population explosion. IOW, human population is directly tied to & a consequence of economic growth. The problem: the growth is an unsustainable bubble. When the bubble finally collapses, so too will the human population. Billions ARE going to die.
It’s not so much that replacing unsound money with sound money will solve the problem. It’s that sound money will emerge after the existing unsound system collapses.
Remember, that back in those olden times, all the Countries/Empires were regional, with minimal to no interoperability. Even large Empires, like the Romans, didn't really interact with other global regions. Sure, they did some barter trade. But, on a pretty small level Unlike today, where all Country's currencies _do_ interact.
Also, the Romans did use fractional reserve banking, of a sorts. They did dilute their precious metals' coinage, towards the end, of their tenure, as a Ruling Governance.
They will simply change the rules now (reset the currency)
Wow! This video is really really close to being accurate.
Since the money supply is always increasing a prolonged period of deflation is impossible? So basically I never really need to worry about deflation with the current system.
Interest rates are a premium on trust
Could we eventually use some other metal besides gold? That way the slate can be wiped clean and central banks won't have the majority of the money. Besides, other metals are actually useful in technology and don't just look good.
If the trend is your friend then we go to negative rate 100% chance
I believe a much simpler story. Rates drop over time because the rich are getting so much richer and the amount of interest they can demand relative to the amount of debt in the economy is constant, adjusted for population. In other words, we have a limited amount of blood the wealthy can suck and only population increases can increase the total blood volume., but as the total debt is growing faster than population, rates must fall to keep the blood flowing to the wealthy.
I dont know if its the end of the trend but going negative breaks the maths. If it were to continue i think it would need an exponential curve, from 1/4% to 1/8% to 1/16% ect. So we dont ever actually hit 0
Do you have any book recommendations on gaining a good understanding over economics?
Lyn Alden's "Broken Money" may interest you?
What if our entire world economy, was in like a a Star wars universe would we want economics to work as it currently does? Keep in mind we are completely overpowered by the other world's we can't challenge them through any type of aggression or war, all we have is trade and negotiation wouldn't that put the entire world as a serfdom to another more powerful world? What would fare trade look like through that lens?
Interest rates went down over time but i wonder what tax rates have done? (On everything thats taxed)
It was not that long ago my savings was NOT earning squat!
People had their chance to get rich, but now the window's closed, and the show’s over.
The price of gold to the paying is my way. Make the money tin. Pile it up to making as good as gold. Biblical is in Psalm 128:1&2.
Cost of credit. Hasn't been cost of money for a long time.
Does having a finite amount of gold make's having the gold standard dangerous long term as mining gold becomes more uncertain overtime as known supply fade away ?
Gold will go down now that rate cuts are here , you'lll see.Its a;ways the opposite of what they say.
Interest rates have fallen since the renaissance. Some say the dark ages was due to the end of the monetary system of Rome.... and the only reason the renaissance happened was due to credit expansion.
Has the credit cycle expanded since then and thus pushed rates down?
query : whom were the main people clipping silver coins way back when (this is nothing new)
Good video.
Is this the real reason why Governments massively overreacted to COVID? It allowed an excuse for money printing on a massive scale leading to higher inflation and higher interest rates after years of near zero rates? The virus likely came from a lab too.
Will TLT go up now?
Sorry I don't understand, even if there is a deflation of say 5% and we have a negative interest rate of 1%, would I not be better off not lending at all??? I will still have $100 instead of $99 even if the things I buy now cost $95...
It will be backed by young workers labor hours.
So should we reasonably expect rising inflation AND rising interest rates over the next 20-30 years? I know we'll see periods of rate cuts, but is Joe expecting an overall, long-term trajectory for interest rates to be RISING?
Money loaned into existence is a scam. Free money for the lender, effectively. Of course they want free money, but they don't want to go so far as to destroy the scam.
Eventually, however, it all must come to an end. The fraud will have played out.
Tyrants do as a tyrant does.
Why is there minus period in the 700-year interest rate graph?
Or bitcoin, eh?
Those interest rate charts look awfully like the 15-year Bitcoin volatility index.
Will it break up? Break down? Or go flat for the foreseeable future?
Ok, but they don't want saving. That's why we will have a digital dollar. We will be forced to spend to keep the system up. So the system won't change it will be the same but they will claim it will be better.
So you think this
Will take 40 years again?
Interest rates are the price of money. Money is a claim on human labor. As the amount of human labor needed to create a good or service falls, so too does the price of the claims of that labor in terms of goods and services. Any form of increase of labor will produce this effect, which is part of why the "elites" are so laser focused on importing laborers and creating AI robots.
You can thus expect an industrializing economy to have progressively lower interest rates, while a de-industrializing (ie collapsing) economy will have acutely higher interest rates. But technology is sticky. Even if the West is completely destroyed, so long as the people live, they will quickly recover, and those rates will again fall. Don't bet on a 700 year bounce, though we certainly might get a 40 year one.
Why are credit card interest rates so insanely high?
b/c money is worth less ... printing machine go brrrrrr
yup. more money = worth less (devaluation)
And today's value is Worthless lol
your argument for negative interest rate is invalid: even in deflation, no one wants to lend $100 to get $99 back after a year because if you don't lend it, you will have your original $100 intact which is better than lending it and hoping to get $99 back.
Video for high school students
If you can’t explain it simply…. You don’t understand it yourself