Leithner Letter Nos. 196-199
26 March 2016 - 26 June 2016

… There cannot be any question of abolishing interest by any institutions, laws, or devices of bank manipulation. He who wants to “abolish” interest will have to induce people to value an apple available in a hundred years no less than a present apple. What can be abolished by laws and decrees is merely the right of the capitalists to receive interest. But such decrees would bring about capital consumption and would very soon throw man-kind back into the original state of natural poverty.

Ludwig von Mises
Human Action (1949)

The recent annual report from the BIS – the Bank for International Settlements – says it best. … The BIS emphatically avers that there are substantial medium term costs of “persistent ultra-low interest rates.” Such rates, they claim, “sap banks’ interest margins … cause pervasive mispricing in financial markets … threaten the solvency of insurance companies and pension funds … and as a result test technical, economic, legal and even political boundaries.” Greece is not specifically mentioned, nor the roller coaster ride of Chinese equity markets, nor the rising illiquidity of global high yield bond markets, nor the … well, a reader should get the point. Low interest rates may not cure a fever – they may in fact raise a patient's temperature to life threatening status.

Bill Gross
Say a Little Prayer (30 July 2015)

A Negative Assessment of Confidence, Optimism and Positive Thinking
(Part I and Part II)

Does one’s state of mind affect one’s physical and mental health? Holy Scripture is clear: “A [joyous] heart is good medicine,” says Proverbs (17:22) in the Complete Jewish Bible, “but low spirits sap one’s strength.” Psychologists concur: contentment, gratitude and joy can help to improve health and lengthen life. People who count their blessings tend, among other things, to lead rich social lives. A good quantity, quality and variety of friendships and social activities (“support networks”), in turn, help to combat and mitigate the mental depression which can also trigger, exacerbate and perhaps even cause many physical ailments. On many levels, individual and social, it’s better to be joyful and grateful rather than disgruntled and resentful.

To read Part I of the full Newsletter (PDF), click here; to read Part II, click here.

Chris Leithner


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