I have uploaded a new show podcast for February 28, 2018. Click here to go to the show archives page to listen or you can listen on the link below. I have included links to relevant articles and media on the Show Archives page. The latest show is on the top of the page.
-A study of last decade’s housing debacle. Home sales fell, then came the prices, then came stocks. The whole process went on for almost three years before the bottom fell out.
-Charts demonstrating what happened last decade looks to be unfolding this decade. Many investors are heavily levered.
-Besides impacting expensive real estate, the tax cuts are contributing to problems with global dollar funding. Rising yields are creating a growing sundry list of problems.
-The latest real estate sales numbers look ominous. Prices are still running up, but this won’t last.
-Some ideas on what to do and how to prepare for the upcoming crises. This upcoming bust can present opportunity.
-The Fed is looking in the rear view mirror when planning the future. Again, all intentional. It is being obtuse with respect to prior policy
-QE can never end. We are too far gone and QE needs to be carried out as long as this monetary system remains intact. Just because we will have another bust does not mean this monetary system will collapse. It just means more centralization. Only a global war will wipe the slate clean.
-I have always stated that the ECB can never stop their QE program. This contemplation of winding down their program is folly. Martin Armstrong agrees.
-The sovereign debt of the developed world is like a pool of water. As long as there are major central banks siphoning off the extra water global yields can stay low. If the ECB stopped then the US Fed would have to step in. There are no mutually exclusive markets anymore.
-AJ is at it once again with his disingenuous, globalist-controlled, dog-and-pony show. YouTube must let AJ continue his show as he is too valuable and controlled by the globalists. He makes the patriot movement look embarrassing; done by design.
I received a couple emails asking how negative interest rates would effect the average person and the economy. This is always an interesting topic as most of the research is, of course, theoretical and unproven. However, we can look around the globe to find some test cases in which we may be able to obtain some answers.
I have come across some research and articles with respect to Denmark and its ongoing experiment with negative interest rates. The results, while not easily transferable to other nations, provide a glimpse into what many here may see if the US Fed or other national central bank decides to institute a policy of below-zero interest rates. Denmark’s situation is unique as their central bank is pegging its krone to the euro. As a result, the Danish central bank, Danmarks Nationalbank, has been forced to suppress their short-term lending rate to below 0% since 2012 in order to overcome its relative strength.
Economic busts & negative interest rates can bring opportunity
While most in the alt- and patriot-media have concentrated on the gloom and potential catastrophe that negative rates may bring (e.g. savers bereft of interest income), I see an opportunity to enhance our personal balance sheets. Indeed, any minus interest rate program that was promulgated from any dire economic circumstances that precipitated it could have some appealing benefits. If you own assets you may feel a lot wealthier.
Danes have another reason to be happy: they’re richer than ever before.
After more than half a decade of negative interest rates, rising property values in Denmark have left the average family with net assets of 1.9 million kroner ($314,000), according to the latest report on household wealth.
“Right now, net assets are at a record-high level,” said Tore Stramer, an economist at Nykredit in Copenhagen. “So the good news of the day is that the average family has never been richer.”
That is an astounding amount of wealth and the situation in Denmark is certainly unique, since their economy is performing well as the krone is being artificially suppressed to keep it in equilibrium with the euro. This is basically giving Denmark a free ticket for the time being. Regardless, even with a poorly performing economy that may be the catalyst for minus rates here domestically, it is difficult to see how asset prices would not be supported.
Mortgage rates at 1.5%
Another upshot for Danish citizens, they can lock in a 30-year mortgage at 1.50%.
Half a decade after rates first went negative in Denmark, the country is continuing to test records in ultra-low borrowing costs.
The latest example is in Denmark’s $470 billion mortgage-backed covered-bond market, the world’s biggest. Interest rates are now so low that Danish households can lock in to mortgage rates of 1.5 percent for 30 years. By comparison, the government of the U.S. pays a 2.75 percent coupon on its benchmark 30-year bond.
If you live in Denmark you have good reason to be happy
Here is some research from the UN, which indicates that the Danish are the second most happy people on earth. Yes, I do not necessarily subscribe to these subjective measures, but it is easy to imagine why the Danish are happy. They have a strong economy and massive personal wealth; gratis negative rates.
Danes are on course to spend at the fastest pace in 12 years after more than half a decade of negative interest rates.
The nation that has dominated the UN’s world happiness rankings since they were created in 2012 is growing more optimistic, according to a gauge of consumer confidence published on Tuesday. The index reached its highest level since July last year, according to Statistics Denmark.
Americans may not be happy, but imagine if they don’t take advantage of negative rates during the next bust
OK. I know most of us do not live in Denmark and those working in the crowded and expensive areas of the US do not seem happy. I live in Fairfax County, Virginia, and Fairfax has the second highest median household income in the United States. Bordering Loudoun County has the highest in the nation. The amount of wealth in the Greater DC area is staggering and yet people here seem miserable. Life around here is not really easy for many people and they live here to make money. Nevertheless, even if the US experiences an economic downturn in the future I am sure the USFed will once again begin to discuss the idea of below-zero rates.
So, imagine a scenario with a blown-out economy and negative rates and not being able to gain advantage from it? I wouldn’t be happy. The booms and busts are engineered, but if we know how it’s done then we can make the correct financial and investment decisions. Anyone with this insight earlier in the decade was able to invest in most income-producing sectors and profit. While this cycle may have topped out there will come another one after the next bust. The Fed will have no choice but to lower rates to historically low levels once again.
Unfortunately and by definition, most will be caught offside. Worse, most in the patriot movement will not know how to spot the opportunity and will be caught in the undertow. The result is that a regime of negative rates in the US will further divide the wealthy and working poor.
The US Fed will eventually have to contemplate negative rates. Be prepared to take advantage of it
The US has never dealt with minus interest rates, but the time may soon come when we have no choice, but to carry on that experiment. While the circumstances that will lead up to the the US Fed instituting some sort of negative rate regime will surely be dreadful, the upshot is that the cost of capital will be much lower. Thus, anyone not in much debt and owning income producing assets will probably be a lot better off than their neighbors and may indeed feel wealthier.
While the USFed may be raising rates and that may bring severe economic dislocations in the intermediate term, we need to remain mindful that the Fed is attempting to raise rates as high as possible, if only to have ammunition for the next recession. I am sure it is not far off; we have gone on for almost a decade now without negative GDP growth. I can imagine how asset prices could be decimated in any downturn, but if we are aware of how monetary policy works we can capitalize on any price drops, especially if the Fed drops rates back to zero and below.
Be careful of what the Patriot and alt-media espouse. We need to move forward and be able to make money in any environment. I think it may be wise to set ourselves up to have the flexibility to prosper with negative interest rates.
I have uploaded a market update podcast for February 25, 2018. Click here to go to the show archives page to listen or you can listen on the link below. I have included links to relevant articles and media on the Show Archives page. The latest show is on the top of the page.
-The yield curve continues to compress, with short rates rising faster than longer dated yields.
-Bonds received a bid on Friday; not so much from that investors think inflation is running low or they think the Fed may raise slower than feared, but because two Fed presidents came out and said they view QE as a viable tool that will probably be used in the next downturn.
-Stocks are responding as is QE4 is in the cards.
-It took 2-3 years of Fed fund increases last decade for it to fall apart. It may take that long this time as well; though I doubt they will need more than a year or two. This decade’s over-speculation dwarfs last decade’s malfeasance.
-Non-bank conforming mortgage underwriting is much larger this decade than last decade. banks can’t make money at low interest rates, even with government backing. Underwriting is getting sloppy. The government still insures at least 70% of all mortgage underwriting.
-Cryptocurrency analysis. A monero hard fork is coming. Bitcoin may have only 21 million total to be ever issued, but with all these hard forks in the past and upcoming the supply of bitcoin derivatives may by virtually open-ended.
-Gold market analysis
-Thoughts about how the patriot movement has changed over the past 25 years. Today’s globalist shills and change agents in the patriot media represent little of what existed a couple decades ago. The current manufactured patriot movement is only externalizing the hierarchy.
-The globalists know what we are saying. Through the NSA, they run Google and the ISPs and can gauge our sentiment. Thus, they need to figure out a more crafty way to impoverish us the next time around.
I have uploaded a market update podcast for February 22, 2018. Click here to go to the show archives page to listen or you can listen on the link below. I have included links to relevant articles and media on the Show Archives page. The latest show is on the top of the page.
-I pay careful attention to the key monetary policy puppets and drown out all the other noise. I only listen to the current and ex Fed Chairs and the current Treasury Secretary. There are only a few, so what they say is of paramount importance. They pronounced last decade’s manufactured calamity in advance and they just pronounced this decade’s upcoming catastrophe.
-The Fed is contemplating raising rates four times this year. Too much too late.
-Every major war has had economic hardship as a major catalyst. Fed policy caused the Great Depression and the resulting WW II. The next few years will provide the groundwork for the upcoming global conflict.
-A manufactured currency war in the making? Even though Steve Mnuchin’s weak dollar comments were scripted and subsequently retracted, the ECB is fuming over his comments.
-Oil and Gold are rising, but the rising cost of capital is hurting the XOP and GDX.
-If gold is to hit prime time, silver and platinum need to show more strength.
-Short-term rates caused last decade’s manufactured real estate crisis. Long-term rates will cause this decade’s manufactured real estate crisis. Higher deficit spending worldwide on social programs, coupled with restrictive monetary policy will hit the average person hard. There is no such thing as a free lunch.
I have uploaded a new show podcast for February 21, 2018. Click here to go to the show archives page to listen or you can listen on the link below. I have included links to relevant articles and media on the Show Archives page. The latest show is on the top of the page.
-We live in a manufactured society. The markets are all manufactured. The political debate and the news are manufactured. The patriot media are manufactured; controlled from the top.
-As we get closer to war, fiscal profligacy and corruption will continue to grow and expand as the mad dash to extract as much wealth reaches its last gasp. The elite politicians are now being told war is coming. This isn’t stupidity and greed; this is survival.
-Imagine how the patriot media would be if William Cooper were still alive.
-Imagine how the world would have turned out if JFK, Jr. was not assassinated and he won the Senate seat that went to Hillary Clinton.
-I don’t disagree with much of the economic commentary in the alt-media. Our conclusions differ as this busted out system will be maintained until the global force majeure (WW III).
-The globalists have been conditioning us to accept a global nuclear war for at least 50 years.
-Our current financial system will be propped up until war. It has provided the elite of the secret societies the means to consolidate and control all the world’s wealth. It will provide them the means to control the upcoming systemic collapse.
I have uploaded a new weekend markets update podcast for February 10, 2018. Click here to go to the show archives page to listen or you can listen on the link below. I have included links to relevant articles and media on the Show Archives page. The latest show is on the top of the page.
-The Fed spanked equities on purpose. The clues were there; we talked about them. Did they send in the plunge protection team late Friday afternoon?
-Large money and mainstream media are still complacent.
-The German 10-year bund yields, the benchmark for the EU is rising above multi-year resistance. If this continues the dollar may rally against the euro.
-More people are on to the Fed, so it needs to tread carefully. Shows like this one only help to uncover their modus operandi. If things collapse the Fed will get the blame.
-The dollar held up. If the dollar fell further the pain would have been much worse.
-The US 10-year note futures speculative short position is very stretched. Any positive word out of the Fed will send the dollar and 10-year higher.
-I recommend gold as an asset shield, but I do not choose gold or silver during any market sell-off. Gold and silver prices do not have a high positive correlation to market turmoil. Gold is better than silver.
-Mainstream media is blaming the VIX and other volatility-based securities and derivatives as the reason for the sharp oscillations. Is this right?
– The US Fed sent out their puppets to talk down the markets and they allowed the Dow to drop 666 points last week. This announced to their operatives that their test was a go.
-The US Fed chose an auspicious time to snap the markets. Retail participation has increased tremendously and it had been one of the most overbought markets in history.
-Low cost of capital lowers prices. More producers supply more product to the market place and the supply curve shifts out to the right. If you ever wonder why there are so many fast food places open, it’s their low cost of capital that allows them to stay open.
-The United States is a very bitcoin-friendly nation. The Anglo-American nation states are bitcoin supportive, which conflates with my theories that bitcoin was a creation of Anglo-American intelligence. This is why Russia and China are clamping down hard on the cryptos.
-Beware of the crypto shilling. It was just like the gold shilling earlier this decade.
-The Russian firm, Kaspersky Labs, claims that Bitcoin was created by US intelligence as a “dollar 2.0”
-Based on my research, bitcoin is a grand experiment and it should have a good future.
I have uploaded a new show podcast for February 8, 2018. Click here to go to the show archives page to listen or you can listen on the link below. I have included links to relevant articles and media on the Show Archives page. The latest show is on the top of the page.
-The policies and precedents that started the equity and real estate bubbles go back almost 40 years.
-A recap of Bushonomics and its legacy. Peacetime deficit spending generates Treasuries that can be used for collateral. It creates asset inflation.
-The US government and USFed work to create asset inflation; it’s an open conspiracy.
-Defined contribution plans were established in 1981, the last year the Dow was at 1,000. This created a permanent upward repricing of equities. Trump’s tax legislation pumps equities.
-The Taxpayer Relief Act of 1997 drastically changed the tax code for residential real estate. It was phased in during 1998. Notice how house prices took off that year and never looked back.
-Every time the government subsidizes an industry (e.g. Education, medical, housing) the benefits are arbitraged into the market and only result in higher permanent repricing.
-Dow has the largest one day drop. Was it by chance? The Dow drops by 666 on Friday.
-Janet Yellen questions bubbles. Greenspan says the markets are all in bubbles. Mnuchin flip flops on the dollar.
-The confirmation bias and backfire effect are lethal in trading and investing. We need to remain objetive.
-The gamblers fallacy is another lethal error. Many people over the past week have lost big in the market turmoil. They fell victim to the gamblers fallacy.
Mr. Makow published an edited version of my article for his regular readers, but also published a subsequent version. I wanted to provide my blog readers with the more detailed, subsequent version of this article.
First, we had Bonesman and US Treasury Secretary, Steve Mnuchin talking down the US dollar. Then we had Alan Greenspan, the former USFed Chair who deftly guided last decade’s well-scripted collapse, talking of asset bubbles. Now, we can add Janet Yellen to the lengthening list of puppets who are carrying out their scripted talking points to accelerate this growing manufactured “crisis” timeline.
According to Bloomberg;
Outgoing Federal Reserve Chair Janet Yellen said U.S. stocks and commercial real estate prices are elevated but stopped short of saying those markets are in a bubble.
Commercial real estate prices are now “quite high relative to rents,” Yellen said. “Now, is that a bubble or is it too high? And there it’s very hard to tell. But it is a source of some concern that asset valuations are so high.”
“Well, I don’t want to say too high. But I do want to say high,” Yellen said on CBS’s “Sunday Morning” in an interview recorded Friday as she prepared to leave the central bank. “Price-earnings ratios are near the high end of their historical ranges.”
Recall what I have been saying for the past several weeks; the US government and the US Fed desperately need to establish another aggressive round of quantitative easing. The US Treasury will issue more than $1 trillion in new Treasuries in 2018 and there is not enough global demand to soak up all this new issuance.
This is where the genesis of the upcoming manufactured crisis appears. As the US Fed raises rates it is damaging the dollar in the foreign exchange markets. This is driving up Treasury yields. This, in turn is beginning to severely impact ALL asset markets.
Mortgage rates in the US are now at about 4.5%. House prices cannot afford rising rates. My concern is that the private equity firms that invested in single family rentals will have to unload en masse to cough up cash for their leveraged positions. Anyone with cash and unleveraged assets will be able to come in and buy up residential properties very cheaply. The process will happen fast, but the damage will linger for years.
I have been saying for the past couple weeks that nothing will be safe in this upcoming manufactured crisis. Friday’s price and market action was a quick lesson for those looking for safe havens in this upcoming manufactured calamity. The Fed will come in as our hero, but the blood needs to flow.
Everything sold off on Friday. Gold sold off and silver got destroyed. The miners fell hard. Oil producers got laid waste. Stocks were manhandled. Bonds of all kinds were pummeled. the crypto market was destroyed. Once I saw Yellen’s interview this morning, I sold all my trading positions in my cryptocurrency portfolios.
I already warned my readers and subscribers two weeks ago to sell all stocks. I had been holding stocks on a short-term basis, but after Mr. Mnuchin talked down the dollar, I liquidated all my equities.
What makes this upcoming crisis unprecedented is that bonds will not get the usual support, unlike the previous “crises.” It will be the bond sell-off that will provide the catalyst for the Fed to appear with the solution.
Politics don’t matter here. If you are caught up supporting Trump or Hillary, I feel sorry for you. You are looking in the wrong direction. If you have been a Martin Armstrong fan, good luck to you. he has not been genuine. He is compromised and his advice has been costly.
Cash is the only asset we can count on right now. Do not speculate in currencies. There are no free markets and the whims of the central bankers can lay waste to your balance sheet. Stick to the currencies you commonly transact with.
Recall a couple weeks ago when I pointed out that Ray Dalio of Bridgewater was joking that those in cash will get burned. I told you he was completely wrong.
I have saved myself so much money and grief over the past month or two, by staying disciplined and focused. I am trying to relay to you what is soon to come. I always stated that as long as US Treasuries and the US dollar remained firm the leveraged buyout of the world we discussed would continue. Unfortunately, we are looking at the next phase of the globalist’s plan. Please understand what is coming. It transcends politics and the stuffed shirts that Naomi Prins talks about. This is about something much bigger.