Negative interest rates are a first step toward what economist Ludwig von Mises once described as a “crack-up boom,” a flight to hard assets. The demand for bank deposits plummets. People pull their money out of the system in large numbers by either withdrawing cash or buying “hard assets.” Yet for the former, it appears the European Central Bank (ECB) already found a solution. The ECB suggested this solution en passant, mere months after the ECB lowered interest rates to negative for... »
What the ECB Didn’t Tell When They Lowered Interest Rates to Negative
April 25 2016
Olav Dirkmaat
How Shale Oil Will Trigger the Next Recession
April 18 2016
The enormous decline in oil prices have made many headlines over the past year. The Dutch central bank (DNB) argues that lower oil prices are a ‘tax cut’ for businesses and good for economic growth. But is this true? In this article, I will look at the entire shale oil industry and show why the Dutch central bank's assumptions are wrong. When the next recession hits, we will be talking about subprime oil-loans, instead of subprime mortgages. The American shale oil crisis will take the
... »Olav Dirkmaat
These Are the Consequences of the Panama Papers
April 11 2016
Once upon a time there was a liberal vision for Europe. A free trade zone, with free movement of goods, services, people and capital, a single currency (fixed exchange rates), and fiscal competition between jurisdictions. Besides public pressure to limit the free movement of people within the
... »Olav Dirkmaat
Why Draghi's Negative Interest Rates Will Not Work (You'll Read This Almost Nowhere Else)
April 5 2016
What a mystery. Mario Draghi lowers interest rates again, this time to minus 0.4%. And banks are still not lending out their excess reserves, even though they have to pay interest on excess reserves at the ECB. Credit growth has been lacklustering. What is going on? And why will Draghi’s loose monetary policy not even achieve the goals of Draghi himself?
... »Olav Dirkmaat
