Writing at his website and home of "a return on gold, paid in gold," Keith Weiner continues. Each successive month and week, Weiner puts in more-plain English, the current and coming consequences of an irredeemable currency--that is, a debt backed by debt.
>The interest rate is the single most important price in the economy, because every other price and every investment and every enterprise depends on it. And the central banks have created a system which has driven it down to zero and beyond.
The interest rate is the expression, in the market, of a universal in the human condition. Time itself (we will revisit this idea in a future essay).
When interest sinks below zero, it means that the return to be earned on capital is negative. It means all savers are doomed to slowly lose their capital. It means any other better opportunities have, for one reason or another, gone away. No one would lend at -2% if he could get +3% obviously. So the market being moribund at -2% means the marginal enterprise sees no better opportunity. They are willing to borrow only if the rate is that or lower.
Read from the beginning of the article at https://monetary-metals.com/liquidating-civilization-report-22-apr-2018/
>As an aside, this is a good way to think of the dynamics of a falling interest rate. There is little demand for credit, other than on a downtick in interest rates.
By the time it gets to the terminal phase, where businesses are borrowing at -2%, the marginal business is not able to bid higher than that. It does not want credit, except when the price is -2%. A business will always seek to borrow at lower than its return on capital (or else there’s no point). A bid of -2% means the business wants credit to finance wealth-destroying activities.
There is no mechanism to deprive one particular wealth-destroying enterprise of capital, when large numbers of them are losing. There is not one bad company showing losses on its financial statements, slowly running out of cash. There is a whole economy full of them—showing profits! If something is profitable, businesses will scale it up until it no longer is.