The Taming of the Shrew

The Taming of the Shrew is perhaps the most well known comedy ever penned by William Shakespeare, adapted time and again over the years due to the many plot twists and turns that appeal to an increasing sophisticated and demanding audience. So here’s another, Janet Yellen, the present personification of the Federal Reserve, and the protagonist, has tricked the American (and global) population (the Shrew) into believing that they are ‘important’, which is why they go to such great lengths and theatre to do so; when all the while what they are really doing is imposing psychological torments until compliance and obedience become mandatory (financial repression) – the ‘taming’ of the debt serfs if you will. It’s been a long road from Jekyll Island to negative interest rates (NIRP) (it’s coming), however the story remains the same, at least for now.
As process unfolds however, the negative impact(s) of NIRP continue to ripple through economy(s), setting the stage for what will likely be looked back on by historians as the ultimate irony of this comedy – that in fact the Fed is the ‘unwitting shrew’, and tamed by its’ protagonist – Mother Nature. Because at some point, earthly constraints associated with the perversely profound impact of negative rates will become germane on a systemic basis, bring down pension funds and insurance companies alike, and then the larger financialized economy. Thing is, if NIRP is not enough to satisfy the protagonist, not matter who, then what’s going to happen to the de-industrialized West when the decentralization process accelerates, the dollar($) (all fiat currencies) begin to fall on a real basis (against commodities – especially precious metals), and interest rates need to rise?
The answer to this question is – nothing good – if you are a ‘status quo’ beneficiary – right from the oligarchs to the bureaucrats – up and down the line. What’s worse, once the market(s) realize the Fed is actually impotent, with all credibility finally lost (the signal hyperinflation is on the way – think Venezuela), all hell could (should) break loose, with outsized moves in rates (bonds), $, and equities. Of course this does not mean stocks would go down – no – no – no. On the contrary, and if history is a good guide, they will go up – way up. And this is especially true of precious metal shares – and anything else with the word gold in its name. Because hyperinflation is just ‘hidden collapse’, where the price of everything goes through the roof – but everybody is priced out of existence.

This post was published at GoldSeek on 11 July 2016.