Free Money Friday – Japan Goes Negative and “Saves” Asia (for now)

More free money?

No, the BOJ did not increase stimulus this morning.  What they did is join Switzerland, Denmark and Sweden in the negative reserve club after dropping their rate from 0.1% to -0.1% this morning.  Excess reserves are, simply, the bank reserves deposited in the Central Banks by their members in EXCESS of the reserve requirement set by the Central Banks.  Usually, they are paid a deposit rate for these ultra-safe, ultra-liquid funds so what the negative reserve rates are TRYING to accomplish is to get the banks to do something else with the TRILLIONS of Dollars the Central Banks have handed out over the past 7 years.  

Hopefully that something will be lending money to the bottom 99% (the Top 1% already get all they need), who can use it to refinance debt or actually build things – rather than the endlesss, non-productive, financial engineering that the Top 1% has been using all the free money for in the past 7 years – stagnating the Global Economy while increasing the wealth gap substantially.  

The problem with Corporations (also legal citizens of the Top 1%, thanks to the Supreme Court) is that they use the low-interest debt to buy other companies and then downsize production so they can raise prices and increase margins.  This lowers the amount of available jobs and raises costs to the consumers.  They also use cheap money to buy back their own stock, which does nothing at all to grow the business (or the economy) but makes their earnings per share LOOK better, which tricks the sheeple to BUYBUYBUY at higher multiples (something we've been warning our Members away from all of last year).  

All the money that's been created going to the Top 1% and put to no particular good use has led to the VELOCITY of that money dropping precipitously – down almost 50% from where we were before the crash.  So the Fed and their fellow Central Banksters can print all the money they want but, if they don't get it into the hands of people who will actually spend it on things that GROW the economy – it's all a big waste of time.  

Negative reserve rates don't happen by…
continue reading