My Responses to “Will Interest Rates Ever Rise Again” & Other Hot Questions with Some Hilarious Results

Wolf Richter on the Keiser Report.

“I saw Willem Dafoe impersonating Wolf on a podcast,” said WOLF STREET commenter QQQBall so aptly earlier today after seeing yours truly on the Keiser Report. This is about the funniest show I’ve ever been in, with Max Keiser at his funniest best. At the same time, we’re tackling big and not so big themes. Enjoy.

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  40 comments for “My Responses to “Will Interest Rates Ever Rise Again” & Other Hot Questions with Some Hilarious Results

  1. GG says:

    I saw this on the Keiser Report. Max is getting to be too much. Jumping around and always bringing up the same memes. I’m not sure it’s worth my time to watch him anymore.
    You did well, Wolf, to stay with him and bring clarity to bear on his zig zags.

  2. Willy2 says:

    – Inflation doesn’t drive rates. If that was the case then US should have risen between the years 2000 and mid 2008. Instead of that rates fell.
    – Rising rates is actually very Deflationary.
    – Falling rates are actually very Inflationary.

    • joe saba says:

      I for one find the continual DEBASEMENT of the FIAT DOLLAR$$$ is real inflation – avg 8.5% since 2000 and over 15% in 2018 due to corporate tax cuts and massive new govt debt

  3. J.M.Keynes says:

    – Robert Prechter ( predicted from 1981 up to 2013 that interest rates would continue to fall.
    – But in mid 2013 Prechter reversed his opinion. From mid 2013 onwards he predicted that rates would started to rise. And I believe Prechter.

    • ANDREI says:

      I used to be a big fan of Prechter, too. But it appears he doesn’t have a crystal ball, either. He wrote “Conquer the crash” almost 20 years ago – and still predicting all the hell will break loose… Tim Knight wrote an excellent piece about the Elliott waves forecasters (calling them “relabelels”). He didn’t refer to EWI but it doesn’t matter. The main idea was that one day they will be right :)

      On another notice, did you check also Prechter’s safewealth advisory project? It feels like the “big ticker item” where EWI is a front-end.

      • J.M.Keynes says:

        – “Conquer the Crash” is still a VERY good book. But he was (way) too early. All what he wrote in that book came to pass. And will come to pass again.
        – Prechter was one those guys who thinks that falling interets rates are deflationary. And that’s wrong. Falling interest rates are actually Inflationary. Because falling rates (from 1981 onwards) helped to INFLATE the credit bubble we are now sitting on all around the world. If rates fall from say 6% down to say 3% then a creditor can double (=inflate) his/her debtload ans still paying the same amount of interest.
        – I don’t put too much faith in the Elliottwave theory either. But Prechter’s predictions/observations are very spot on. Prechter looks at sentiment because it’s a good indicator of where the markets are. And price action is a good sentiment indicator.

        • Bill says:

          If you liked Conquer the Crash you’d love At the Crest. Prechter’s 1995 book was early too, but eerily prescient … everything from foreshadowing 9/11 to deflation to the GFC. A much deeper book loaded with market insight.

        • Andrei says:

          I was not saying it was a bad book. I liked it.

          I was really impressed by Elliott theory, as well. The only problem with it is that it is useless for market timing :) They just “relabel” as Tim Knight put it.

          But EWI was lucky to have built a big forecasting business based on that.

        • Ed says:

          I like Prechter but I believe he uses fear mongering to sell books and subscriptions. He fully understands that the Fed can utilize monetary policy to reflate bubbles but he continues to push the idea that the world will come to an end and it never does.

          In particular, I believe he did accurately predict a decade long depression 2001-2010 starting with the dot com bust through 9/11, multiple wars, the housing bust and great recession. The full effect of this extreme change in sentiment was masked by currency distortions. By 2009, he predicted an extreme change in sentiment again that would lead to a roaring bull market that would be stronger than anyone could imagine.

        • Andrei says:

          to ED:

          My thoughts exactly wrt fear mongering! Like I said, his “safewealth advisory” project seems just that – using EWI as a front-end to get the leads to the funnel.

          Yes, they nailed the bottom in 2009, but they completely failed to predict that it would go that far up. I don’t remember the exact numbers, but I receive EWI club emails since 2007 and they have been saying for many years now that you need to urgently get out.

        • Prechter is right about deflation. What puzzles people is the wealth effect, it takes more dollars to buy the same share of S&P earnings! The bond bull (81 onward) reflects the perverse relationship of supply and demand, more supply resulted in higher bond prices, (and lower yields). The result was the declining purchasing power of USD. PMs held their value. USD Fx is a farce, when the monetary base contracts, the value of the dollar will retreat. Expand the base of any paper security its nominal value goes higher, (it takes more) while its real value falls. Reduce the float its nominal value drops, it becomes more precious. In the GD there was no money and money was worth a great deal.

    • Gunther says:

      If EW would work, why not make money from it and stay quiet?
      This is about selling books, not making money from the market.

      • Andrei says:


        You nailed it!

        While Prechter once won US trading championship, he said himself he didn’t like trading.

        I follow their FX open house regularly and I noticed that the trading setups they advise are quite often based on “imminent” reversals.
        While Prechter hails 3rd waves as a “wonder to behold”.

        You can’t make much on reversals, especially after 5th wave – which quite often extends – in full accordance with the EW theory :)

      • d says:

        EW has issues with disruption events.

        In feel it is not suitable for trading in an instant communication environment with far to many algo driven (almost AI) systems in operation.

        It is still good for “it should go here” as long as you insure against “BUT”.

        • Andrei says:

          I am afraid Prechter wouldn’t agree :)

          First of all, the point that EWI reiterates in their publications is that events/news, etc don’t drive the market. It’s a collective emotion of the crowd that does.

          With regard to the HFT, there is an answer in the club EWI FAQ, that refers to the “Prechter’s Perspective” called book.

          “Is it possible that today’s widespread computerized trading including HFT might cause the market to stray from the Wave Principle? [Prechter] No way, ever.”

  4. Iamafan says:

    Yeah I saw Willem Dafoe at Max Keiser :-)
    Good looks with good brains.

  5. 2banana says:

    The prime rate peaked at 20.5% in August 1981…

    • Robert says:

      Yes, that was the work of the Fed’s “Bad Cop” Paul Volker. The MSM is so owned (not to mention Congress- did you notice how they went seven shades of hysterical at the hint of Trump’s nominating a hard-money guy?) they are universally portrayed as the Good (if occasionally misguided) Fairy, by a MSM that never looks with gimlet eyes at a privately owned operation running the biggest trading desk on Wall Street, with every reason to jerk the economy one way and then the other for they own benefit.

      • nick kelly says:

        It peaked because US inflation was double digits and the US $ was in danger of collapse. Folks were fleeing the US$ for Swiss francs, D Marks, gold and silver. US tourists around the world were asked to pay in local currency. One US couple thrilled the hotel manager in Italy by paying in lira!

        To shore up its own balance sheet the US had to issue bonds denominated in Swiss francs (Carter bonds) No one wanted to lend the US money and get paid back in depreciated dollars.

        This all came about shortly after Nixon took the US off the gold standard. The cost of the war in Vietnam required a tax increase but rather than risk unpopularity the choice was made to print money instead. But soon France noticed this and began redeeming US$ for US- held gold.

        The Fed is like the money manager of a spendthrift movie star.(How odd that this simile has twice been almost literally true. The incumbent was a TV star, while the similarly math– challenged predecessor was a B- movie star)

        While Fed bashing take a look at its predicament.

        • d says:

          “But soon France noticed this and began redeeming US$ for US- held gold. ”

          Should read

          But soon France noticed, saw an opportunity to make a profit if it gamed the system and began redeeming US$ for US- held gold. So leaving Nixon no choice but to close the US gold window thereby crashing the Breton Woods system for everybody.

          Thank you so much france, for the mess we have , to your greedy nationalistic advantage taking then.

          France wanted then, and still wants now, more “revenge” over suez. Always remember that America.

        • nick kelly says:

          ‘Ending policy normalization when the fed funds rate of 2.5% is still historically low and has a nearly $4 trillion balance sheet leaves the Federal Reserve and the economy in a precarious position’

          Economist Victor Li on CNBC site about ‘Fed in trouble’

          He means the Fed has no ammo if a recession hits.

        • nick kelly says:

          I guess I should have added: ‘France was first to notice’

          Since John Law first introduced the paper money disaster to France in the mid- seventeen hundreds, the French have been ‘gold bugs’ and suspicious of paper money.

          But soon everyone around 1978 was bailing on the US$.
          The US public became huge buyers of US$ alternates, including silver. It may have been the Hunt brothers’ plan to issue silver- backed bonds (a clear challenge to the US$) that caused Volcker to declare war.

          When you trail blood you attract a whole bunch of predators, not just the French.

  6. Bankers says:

    Thanks, it has a lot of meaning to update on who is behind the script.

  7. William Smith says:

    So all australia has to do is “coddle” its banksters like canadia is [allegedly] doing and the world will once again be safe? I don’t see how a little backwater like australia could possibly precipitate anything on a global scale. BTW, I live there (outer melbourne) and there is a house near me with two signs from competing realtors on the lawn! I have never seen this before. It has been on the market now for well over 9 months. Another 8 detached dwelling development near me has just “stopped” at what looks like almost completion. It has sat there like that for about 6 months. Some unhappy subcontractors are apparently dumping dirty there now. Many (detached) properties are just quietly being taken off the market after many months of no sale. The apartment market is already well known to be cactus. I’m talking specifically about detached and semi-detached suburban properties (once though to be very safe). In australia, the only way to get out of an underwater loan is to go bankrupt (and the personal bankruptcy rate is rising). I suspect that the banksters are holding a lot of property already, but are thus far wise enough not to flood the market. But a tipping point must occur at some stage. Let’s just have the god-damned crash already and get it all over and done with: I say!

    • Wolf Richter says:

      The financial crisis I twas talking about is Australia’s financial crisis, not a global financial crisis. Max twisted it that way. I am on record saying that Australia is in line for a financial crisis, but that Australia is too small to cause a global issue. The US and China and Japan could do that, but not Australia.

      There is just about always a financial crisis somewhere, currently in Argentina and Turkey. Argentina is already getting a financial bailout package from the IMF.

      That’s what you get with interviews… unless you nail down with precision right up front the limits of what you’re saying (“Australia is in line for a financial crisis but it is not big enough to cause a GLOBAL financial crisis”), it will get twisted.

      • ramAustralia says:

        Are you really sure the insane real-estate bubble collapse is not enough to bring down the world banking system? Plenty of international banks here. Sydney looks like some kind of blend of Blade Runner and Soylent Green. Now has an urban density 4x that of Hong Kong. All that and no manufacturing, very few jobs (other than in construction), and collapsing infrastructure.

        • d says:

          Au banks were not very exposed to “forigen”banks in 2008 and have been pulling back since 08. consequently there is not “LARGE” reciprocal forigen investment, in ANZAC banking.

          Consequently if Au banking does the “pears and custard” thing, it will be mostly internal/National, which is giving camberra a serious case of the “Screaming S 8 9 20’s”

      • nick kelly says:

        It is unusual for Argentina to NOT be in financial crisis. It has had I believe over 15 trips to the IMF.

        (Ah, that dastardly IMF again eh?)

      • d says:

        Which is why some financial commentators are boringly pedantic.

    • d says:

      “BTW, I live there (outer melbourne) and there is a house near me with two signs from competing realtors on the lawn! I have never seen this before.

      Which tells me you have very little long term knowledge or experience of Au real estate.

      What you are seeing, is the beginning of “Open Advertised Competition” between agents, on Multi-listed properties.

      “If you dont list, you dont eat” Old Real Estate Agents Truism.

      When there is nobody listing at Selling/Market prices (a common problem in a market full of unrealistic vendors)

      “Half of something, is better than half of nothing” Old extortionists Truism. Applicable to anybody who is hungry.

      “Something” in this matter, being the original listing agents sales commission , if any agent can find a victim, to close a sale, on the other guys listing.

      For all of some agents careers in Au. All they have had to do, is put up an open home sign, with and auction date, attend 1 or 2 viewing half hours, then sit back and collect the commission cheques.

      The time is now returning, when Agents they will first need to find a buyer, then find a property in the buyers price range, then work to make and close the sale, before they receive a much smaller than previous, irregular commission cheque.

  8. historicus says:

    What ever money you have …that is not invested in the stock market…will end up being lent to the United States Treasury….
    the federal debt will sop up all the excesses…for a while. And that is why rates are staying low.
    BUT….with the Fed and others chanting for more inflation….they unwittingly chant for higher rates…
    for as inflation rises also does the chance for higher interest rates…do the chanters know this?

    • Willy2 says:

      – Inflation doesn’t drive interest rates. If that was the case then we should have seen (US) interest rates rise between 2000 and mid 2008. Long term rates fell in that timeframe instead.
      – The counter balance to inflation is ……….. wages. If wages don’t go up then producres won’t be able to raise prices (too much). And those rising producer prices are the reason for (rising) inflation.

      • Smith says:

        If you know a banker that likes to lose money, please post his business address here for the rest of us. A banker is going to loan you money. A banker does not want to get back money that is worth less than what she/he gave you due to the inflation rate. To create an extreme example to make a point, if I thought the inflation rate was going to be 50% for the next few years, I’d gladly take a loan where I have to pay 5% interest. That would be like printing money. And of course, the bankers don’t like it that way.

  9. Willy2 says:

    – Max Keiser has – from time to time – some weird ideas (to put it friendly) and he acts like a clown. He e.g. thought that the FED would hyperinflate the USD, that as a result crypto currencies would go through the roof (against e.g. the USD). The opposite happened.
    – Sometimes he ahs some interesting guests (like W. Richter) but his shows are more all about himself. #Sad.

  10. Bobber says:

    I don’t see the link to the Keiser report.

    • Wolf Richter says:

      Strange. You don’t see the image of Max and me side-by-side grimacing strangely, with a triangle on it to click on and get the video started? Are you on mobile or laptop/desktop?

      Maybe your browser or ISP is blocking it.

  11. Stephan in NY says:

    Quote from Keiser: “without savers there is no capitalism.”

    My take is we exported our jobs and productivity overseas and now government has figured out how to import wealth back into the country, so they don’t really need the middle class. Witness the $120 billion (8% total) foreign purchases of US residential real estate year ending 3/18 and the $150 billion (10% total) the year before.

  12. Terry says:

    No kidding, you are the green goblin.

  13. Roger_in_Sydney says:

    Max Keiser is not a real person. He’s a dummy controlled by a brilliant ventriloquist called Stacy Herbert.
    Stacy is so good that ‘Max’ is being considered by Donald Trump for the next vacancy on the US Federal Reserve Board.
    His appointment already has the pre-approval of Vladimir Putin, who said: “Max Keiser has the intellectual heft of Ivanka Trump and the policy insight of Mr Magoo. With his appointment, further interference in the affairs of the United States would be completely unnecessary.”

  14. Kasadour says:

    Ooops. I put my comment under wrong topic.

    Wolf Richter, looking good! I enjoyed this very much. Good job. :-))))

Comments are closed.