"We Track the Financial Collapse For You, so You'll Thrive and Profit, In Spite of It... "

Fortunes will soon be made (and saved). Subscribe for free now. Get our vital, dispatches on gold, silver and sound-money delivered to your email inbox daily.

This field is for validation purposes and should be left unchanged.

Safeguard your financial future. Get our crucial, daily updates.

"We Track the Financial Collapse For You,
so You'll Thrive and Profit, In Spite of It... "

Fortunes will soon be made (and saved). Subscribe for free now. Get our vital, dispatches on gold, silver and sound-money delivered to your email inbox daily.

This field is for validation purposes and should be left unchanged.

Spiking Australian Interest Rates Are A Glimpse Of The Global Future

Australia has been in the news lately over its aggressive response to the pandemic. 

But the bigger Down Under story might end up being interest rates. It seems that Australia’s central bank (RBA) had, like the Fed and ECB, been pegging short-term government note yields at extremely low levels, thus creating the illusion that local financial markets were tranquil and well-managed and not at all prone to sudden collapse.

With inflation soaring, however, it became harder to manage the country’s increasingly unruly yield curve, and finally, the RBA just gave up and let the market decide how expensive short-term money should be. Here’s what happened:

Australian interest rates

Two very important points here. First, the current surge in price inflation is global, which means every central bank is wrestling with the same financial market instability that just defeated the RBA. So expect similar dilemmas to pop up elsewhere. The next chart, for instance, shows expectations for India’s short-term interest rates.

Australian interest rates
Second, the new two-year Australian yield of 0.7% seems high compared to the RBA’s previous target, but is minuscule compared to the ~ 5% cost-of-living increases now the norm in most countries. For readers who have forgotten the point of interest rates, they exist to generate a positive real return for lenders. So the expected free-market two-year yield in a 5% inflation world be maybe eight times as high as Australia’s current rate.

Which means the recent action was just an appetizer in a long, tempestuous feast of central bank capitulations followed by spiking rates followed by frenzied back-of-the-envelope calculations of what soaring borrowing costs will do to government deficits. (For the US version, multiply $30 trillion by .06 to arrive at a backbreaking annual government interest cost of $1.8 trillion.)

This will be followed by desperate attempts to force rates back down, which only causes inflation to spike further, and so on.

We’re much closer to this than most people realize.

——————————–

US$0.25 Gold Stock Set to Deliver Massive Gains

Gold & copper are rising! And smart investors are loading up on a tiny mining firm trading undiscovered by Wall St below 25 cents a share. Led by an incredible team of mining professionals, this upstart firm is already hitting high-grade gold-copper with every turn of the drill. It’s one of those rare opportunities where the next drill hole could send the company’s shares upward by several-fold.

More details here…

5 thoughts on "Spiking Australian Interest Rates Are A Glimpse Of The Global Future"

Leave a Reply

Your email address will not be published. Required fields are marked *


Zero Fees Gold IRA

Contact Us

Send Us Your Video Links

Send us a message.
We value your feedback,
questions and advice.



Cut through the clutter and mainstream media noise. Get free, concise dispatches on vital news, videos and opinions. Delivered to Your email inbox daily. You’ll never miss a critical story, guaranteed.

This field is for validation purposes and should be left unchanged.