Vice Chairman of the Federal Reserve, Janet Yellen suggested keeping interest rates close to zero until as late as 2015, but what are the costs? Our guest, economist Mike Norman, suggests that when the fed buys bonds and engages in quantitate easing (above and beyond just rate targeting), it is simply chaining the composition of private balance sheets. He says that a dollar is effectively the same as a bond, except that the later comes with duration and yield.

By manipulating the yield curve, and pushing interest rates negative in real terms, the federal reserve is distorting the space time continuum, and making it profitable for individuals and businesses to make investment decisions that may not seem so intelligent if the world is still around in the future. Ironically, the suppression of interest rates, if it goes far enough, could make the destruction of the future profitable, and so actualize the very thing that it’s policies reward.

  1. Suppression of interest rates guarantees regular savings lose purchasing power over time. If metals also stay flat price wise, sometime in the future the price will adjust higher to reflect the devaluation of the dollar. Perhaps that is what has been happening since the 1970’s when Nixon took the dollar off the gold standard. The problem is metal values do not rise in a straight line with inflation. Also, did metals go up too fast to front run inflation? Any thoughts?

  2. Okay, at least he’s against more QE. I have to give him fair credit for at least being sane about one thing.

    But this mentality of the Banking Cartel robbing from savers with ZIRP policy is okay with him just shows what a dick he really is.

  3. They have made impractical for the common family to save in a traditional sense… Problem is the majority of people will still pile there surplus funds into “savings” account or into paper market rather than convert into precious metals… Most people I speak with do not look at precious metals as an option to store wealth… They feel it is a product purchase instead of a deposit or conversion into a true safe asset… They do not realize or believe if need be they can convert there precious metals to spendable fiat easily if something comes up…

  4. Yes Danno PM’s can easily be converted to spendable fiat. From my experience however is sometimes you end up with less buying power. I bought silver when it was 40 an ounce, my cash saved now has more spending power then my silver and my silver is negative in value so far. I also bought when silver was 20 an ounce and that silver appreciated in spending power by 33%. I think what scares people is loss of value, since no one can be guaranteed that when they need to sell their precious metal, it would have retained fiat value. In the long term, I do not see how metals could be a bad bet. Not in this debt environment at least.

  5. I understand completely about the scare of loosing… I have bought in the 20’s up to the 40’s with the intention that this will be a long term plan… Every plan can and usually to some degree does change… No one knows what a year or 5 or 10 years from now will hold but we still plan… If something comes up and you have to pull some oz’s to pay for something that came up then that’s what you must do… I don’t count how many dollars I have in metals, I just try to buy on the lows and grow the number of oz’s in my holding… Just think of how much fiat would have been lost if it had been in the market in years past… You always run the risk of loosing… You just have to minimize potential for loss and retain the piece of mind of knowing you are as in control of your holdings as you can be… For me that is metals… For some it may not be…

  6. @Danno

    I know! I’ve told everyone and they say that I’m just a guy who’s just trying to make quick bucks, what do you want me to do with that gold and silver, etc. People don’t know what inflation is.

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