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Joseph Salerno

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The Blessing of Cash


Starting today, the Royal Bank of Scotland will become the first bank in the U.K. to impose a negative interest rate on depositors. The negative rate will apply only to corporate customers, including mutual fund managers and pension funds, holding deposits of certain foreign currencies including euros. This means that RBS—in which the U.K. government still maintains a majority ownership stake since its 2008 bailout—will actually charge these customers to “borrow” their deposits. A few weeks ago, RBS notified more than one million small-business customers that they could also be charged for deposits if the Bank of England lowered the target interest rate, which now stands at .25%, into negative territory. Experts are warning that the latest move by RBS would “set alarm bells ringing” among small businesses and ordinary customers. The stage is set for a glorious and long overdue old-fashioned bank run if the BOE ventures to push rates into negative territory. 

Meanwhile in the eurozone, since the ECB rate cut the interest rate in March to minus 0.4%, banks have paid a total of about 2.64 billion euros to keep their funds on deposit at the eurozone’s 19 central banks. With European central bankers threatening further rate cuts, private financial institutions are exploring the feasibility of circumventing the charges by converting central bank electronic deposit credits into cash and storing it in nonbank facilities. The German insurance company Munich Re is reportedly already storing tens of millions of euros at “a manageable cost,” and Commerzbank, Germany’s second  biggest lender, is considering a similar option.

Of course any significant movement to convert bank reserves into cash would undermine the goal of central-bank rate cutting, because the cost of holding bank reserves in cold hard cash would not respond to a change in interest rates, short circuiting central bank efforts to stimulate further bank lending. More significant, if the movement to convert deposits into cash spreads to the nonbank public, it would bring down the fractional-reserve banking system in short order.
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Foreign Aid is a Real Joke


Jane Bussman
is a British comedienne who moved to Los Angeles in the late 1990s. She wrote for a number of TV shows, including South Park, for a while.  She then drifted into celebrity journalism interviewing  the likes of Anna Nicole Smith, Britney Spears, and Aston Kutcher. 

She eventually chucked it all and sought to cleanse her soul by traveling to Africa to “find a country that had a really bad problem with genocide and just help out.” And this is where her story stops short of dreary cliche and gets really interesting. She found out that almost everything that she had heard about the war in Uganda was a lie fabricated by Western governments and their lapdog establishment media. She also discovered that Western aid was not helping Africa but was destabilizing it by prolonging wars and propping up corrupt governments.
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