Possible Negative Interest Rates, Copper Prices Crashing, Curtailed Consumer Spending, Global Economy Deflating and a Sky High Stock Market....Me Worry? You Bet!

Get ready for negative interest rates in the US

Mises Canada

I predict that the Fed will start charging negative interest rates on bank reserve accounts, which will ripple through the markets and result in negative interest rates on savings at banks. I make this prediction only because it is the logical action of the Keynesian managers of our economy and monetary policy. Our exporters will scream that they can’t sell goods overseas, due to the stronger dollar. So, what is the Fed’s option? Follow the lead of Switzerland and Denmark and impose negative interest rates in order to drive down the foreign exchange rate of the dollar. 

It is the final tool in the war on savings and wealth in order to spur the Keynesian goal of increasing “aggregate demand”. If savers won’t spend their money, the government will take it from them. 

Patrick Barron is a consultant to the banking industry. He teaches Austrian school economics at the University of Iowa and Bank Managemant Simulation for the Graduate School of Banking, University of Wisconsin. Visit his blog. Send him mail.

This Is Exactly How Markets Behave Right Before They Crash

Meanwhile, there are lots of other signs of trouble on the horizon as well. 

For example, the price of copper got absolutely hammered on Wednesday.  As I write this, it has fallen more than 5 percent and it has not been this low in more than five years. 

In financial circles, it is referred to as “Dr. Copper” because it is such a valuable indicator regarding where the global economy is heading next. 

For example, in 2008 the price of copper was close to $4.00 before plummeting to below $1.50 by the end of that year as the global financial system fell apart.Now the price of copper is plunging again, and many analysts are becoming extremely concerned…

3 red flags causing the market to panic

1. Americans are pulling back on spending. Retail sales dropped 0.9% in December, the critical holiday shopping month, compared to November. It was worst monthly plunge since the Polar Vortex halted much business activity last January. Consumer spending drives the U.S. economy, so any major pullback is alarming, especially around Christmas.
2. Keep an eye on copper's dramatic fall: One growing global worry is the steep decline in copper, which is used in many products and is often viewed as good gauge on how China is doing. The price of copper hit its lowest price since 2009 on Wednesday at $2.46. Copper is down nearly 7% this week alone.
3. The global economy looks even worse: Worries are growing that the global economy is deflating. The World Bank slashed its global growth projections this week for 2015 from 3.4% to 3%. The World Bank also cut its expectations for 2016. Plunging oil prices are hurting OPEC nations, while Japan and Europe continue to suffer from deflation.

 DYI