{"id":56773,"date":"2019-09-14T02:15:52","date_gmt":"2019-09-14T09:15:52","guid":{"rendered":"https:\/\/lenpenzo.com\/blog\/?p=56773"},"modified":"2019-09-17T10:03:07","modified_gmt":"2019-09-17T17:03:07","slug":"black-coffee-14-sep-2019","status":"publish","type":"post","link":"https:\/\/lenpenzo.com\/blog\/id56773-black-coffee-14-sep-2019.html","title":{"rendered":"Black Coffee: The Central Bankers’ Magic Act Continues"},"content":{"rendered":"

\"black<\/a>It’s time to sit back, relax and enjoy a little joe …<\/em><\/p>\n

Welcome to another rousing edition of Black Coffee, your off-beat weekly round-up of what’s been going on in the world of money and personal finance.<\/p>\n

I hope everyone is enjoying their weekend! In the meantime, why don’t we get this show on the road? Then I can start mine …<\/p>\n

The world is full of magic things, patiently waiting for our senses to grow sharper.<\/em><\/p><\/blockquote>\n

— W.B. Yeats<\/strong><\/p>\n

Credits and Debits<\/strong><\/p>\n

Credit:<\/strong><\/span> Egon von Greyerz asks: “What is history’s greatest illusion<\/a>? Is it the Indian Rope Trick, or something performed by Houdini or Copperfield? No; it’s an illusion which is so big that the whole world has fallen for it. Virtually everyone in the Western world, and many in the East, believe in this illusion.” In fact, it’s an obvious<\/strong><\/em> illusion — and yet, as von Greyerz notes, almost nobody<\/strong><\/em> can see what’s really going on.<\/p>\n

Credit:<\/strong><\/span> So what is the illusion that von Greyez is referring to? It’s global “wealth.” And as he sadly points out, the reason very few people can see that it’s an illusion is because nobody wants<\/strong><\/em> to see it — and for good reason: “Virtually all global wealth was never real; just an illusion based on fake money. And as that $250 trillion of global debt<\/a> implodes, so will the assets that were supported by this debt.” Scoff if you wish — but it’s true.<\/p>\n

Credit:<\/strong><\/span> Of course, the central bankers’ are doing their best to convince the populace that — abracadabra! — their currencies still have value. But Bill Holter pulls back the curtain<\/a>, noting cash is worthless now because: 1) negative rates mean lenders must ‘pay’ to lend it, and 2) the currencies are freely-created at zero cost. As a result, “in today’s upside down world, debt is now considered wealth, and savings are a liability.” Ta da!<\/p>\n

Credit:<\/strong><\/span> Holter goes on to say that, “The capital destruction aspect of negative rates poses a huge problem that all<\/strong><\/em> Ponzi schemes ultimately have. Rather than providing more fuel, negative rates essentially shut off the flow of new funds — and everyone knows what happens to Ponzi schemes when they lose new funding.” Uh huh. But in the off chance everyone doesn’t<\/strong><\/em> know what happens, here’s a demonstration:<\/p>\n