So I am a beginner,
and want to understand the most basic stuff.
You found a great place to start. The only way to really understand anything is to start with the fundamentals!
So this is a little journal how I find out more.
(Help or pointers to where to get this understanding in an easy way is of course appreciated
(ok, also the harder ways))
Eg – is the following about right?
The low interest policy of central banks
So when the economy-growth is low, central banks try to help the economy by lowering the interest money gives you in the bank. Then keeping money in the bank is ‘useless’ (gives no interest), immediate consumption is encouraged through that, as well as investing in stocks. Both helps companies / the economy.
Also with low interest rates, loans are very cheap. For private persons to buy goods and for companies to build factories.
Also for states that have a lot of debt – low/no interest policy makes the debt a lot cheaper.
Basically nearly all states worldwide seem to pile up more and more debt?
When there is low interest – or in our case zero interest policy of central bank
then the money flows to whatever gives some interest or preserves value:
stocks
real estate
bonds
gold
bitcoins
(anything else?)
All true! Low interest is the driver of inflation in many ways, as you found out. Central banks can control interest (price of money) because they are able to issue money.
I assume you're pretty young, since ultra-low interest rates haven't really happened much until the Global Financial Crisis 8 years ago. Normally, the interest on 'safe' assets (insured deposits, short term Treasuries, etc.) is somewhat higher, so that gold (and now bitcoin) have been famous for 'earning no interest' and thus loses out as long as the elites can keep the system stable.
Basically when the central banks raise the interest rate again all these prices will plummet?
Depends on how much, and what other conditions occur in the economy. The 'ideal' condition for the elites is that the economy has self-sustaining growth and 2% inflation, so that the central bank can raise interest on 'safe' assets significantly above 0 (to keep gold and bitcoin unappealing -- since if people go to these assets en masse, it reduces the power of the elites) but generally NOT above 2%.
In this scenario, even though 'safe' asset rates are raised, it does not cause asset price drops, since there is enough growth to justify buying risky assets.
The reason they won't raise rates above 2% is that inflation must be higher than the return on 'safe' assets, in order to push savers to take risks by consuming or buying stocks, etc.
But when would the central banks do that?
Only when they have reduced their state-debt?
And I guess they would make it superslowly, to prevent that.
With the current debt levels, it's hard to see central banks raising rates too high without creating instability. And it would take a long time to inflate away the debt at this rate. And yes, they will raise rates it very slowly.
The elites are basically trapped (maybe with a little more freedom today than, say, in 2009, but their basic predicament is largely the same.) They must use all tools at their disposal, including media biases in favor of the establishment and geopolitical maneuvers to maintain what remains of the global debt bubble until a big break comes. (See below.)
Also i am interested in when you think the next crash comes
And if you do anything special
If I knew this I would not be sitting in my office
The current condition of the world is that, all the debt has already been issued, but after 2007-8, no one really believes the debt can be repaid in a real sense. All that the elites can do is to make small adjustments in policy and hope to prevent an implosion for now. If they can hold onto stability until the next big source of growth comes (say, newly productive economies coming on stream and deciding to help support the Western assets,) that would be what they prefer.
Absent that, they can hope for a great war or conflict that changes social and political conditions enough, that the whole system can be reset into a maintainable state, one way or another.
Absent that, and when the system does implode, they will devalue their currency against gold, bitcoin, or some such (explicitly or not, doesn't matter) to regain stability and reset the system with high inflation. This is the real reason for betting on gold or bitcoin.
So, the elites have a few layers of protection, to prevent the problem of 'unpayable debt' from being fully exposed and propagated to the real economy. If that were ever to happen, there would be hell to pay for the public as well as the elites (and especially for the bankers.)
