Episode 64: Jim Willie, statistical analyst and newsletter writer at GoldenJackass.com, talks to GoldMoney’s Alasdair Macleod about the economy, the impact of a zero interest rate policy, and flaws in economic statistics.
Willie states that the Federal Reserve’s ongoing efforts to debase the US dollar are contributing to a relentless deterioration of the US economy. The Fed is committed to keeping interest rates at zero, and therefore has to continue to intervene in the bond market. As opposed to mainstream economic thought, Willie argues that the extraordinary low interest rates are not stimulating the economy, but rather destroying capital and hindering genuine growth.
When money has a negative real cost, market participants are forced to hedge – for instance, by buying commodities. At the same time the housing market is stuck in decline even though official statistics will have you believe otherwise. Bank inventory of foreclosure homes is not clearing and still sitting at 9-11 million homes. Willie emphasises that economic statistics in the US are distorted and that the US has actually been in recession for the last four years – government unemployment statistics are in his view flawed. He expects the recession to accelerate over the coming months.
This podcast was recorded on 3 November 2012.