QE May Be Over, But the Fed’s U.S. Debt Hoard Is About to Soar

  • Anyone betting against the asset markets in the long-term will face an uphill battle.
  • The Alt-financial media continue to swing and miss (by intention?)
  • Another alt-financial non sequitur. If money growth and U.S. Treasury levels (monetary assets) are set to continue spiraling higher, how can anyone conclude that the asset markets will collapse?
  • How can the dollar (and all others) be debased on a wholesale level, yet everything priced against it, especially assets, falls in relation?
  • I submit the current Fed balance sheet growth estimates are still too low and that as time moves forward, they will be revised higher. They can’t dump it all on us at once.

As soon as next year, analysts say the Fed will resume large-scale buying of debt securities — this time just U.S. Treasuries — in amounts that may ultimately exceed its crisis-era purchases. According to an estimate by Wells Fargo & Co., the central bank’s balance sheet will rise past its historic peak as it adds over $2 trillion to its Treasury debt holdings in the next decade.

Of course, it won’t be called QE, which President Donald Trump has urged the Fed to restart. Rather than trying to drive down long-term interest rates to boost growth, the purchases are intended to replace the Fed’s mortgage-bond holdings gradually as they mature and to keep ample reserves in the banking system. But the effect, some say, will nevertheless be largely the same.

“For anybody that has been in the market for the last 10 years, it will feel like QE,” said Priya Misra, global head of rates strategy at TD Securities. “Once again the Fed will be the single largest buyer of Treasuries and (this time) in a non-QE world. This will be a very bullish Treasury-market dynamic.”

QE May Be Over, But the Fed’s U.S. Debt Hoard Is About to Soar – Bloomberg, May 21st

Keep stacking… Income-generating assets

We have talked about this for the past three years; there is no way the Federal Reserve can stop buying U.S. Treasuries ever again.

When asset market prices move higher, there may be less of an immediate need for the Fed to step in to the market, because assets provide collateral for more asset buying, especially U.S. Treasuries. But even when asset prices are high, eventually the Fed must take action to keep interest rates in line. Thus, additional UST purchases will be needed. The reasoning from the authorities may differ depending on the circumstances, but it all means the same thing. The Fed and all the major central banks will keep buying sovereign debt for as long as they want to keep the economy and financial markets moving forward.

All currencies are being debased together, so the results are less obvious. The central banks are all coordinating policy to keep this going for as long as the elites want. Even the PBOC and the Fed are working together to keep the agenda moving forward.  From what I can tell, they all have the power, tools, and ability to keep it going, and the wealthy owners of the assets are excited at these prospects.

Inflationary pressures can be kept in check as the continual debt buildup drains the economy of its buying power. More economic exertion is required to service the outstanding debt and anyone who does not possess income-generating assets will fall further behind.

Owner-occupied real estate will move higher, but the property tax burden and costs of ownership will move up as well. Owner-occupied housing will be a millstone to many current homeowners who are barely hanging on. This is why we see movement in the real estate industry to undermine the power of the broker and its commission structure.

We can look at some of the specific balance sheet holdings, like mortgage backs falling off, and scream calamity, but as long as the Fed continues to add to their UST holdings that is all that matters. Why is this? The U.S. sovereign yield curve must move lower over time and all other debt securities are priced off this yield curve.

May 19th Market Update – Stocks, bonds, gold, silver, oil, bitcoin, ethereum

May 19th Market Update – Stocks, bonds, gold, silver, oil, bitcoin, ethereum

To download the podcast – Right mouse click here

-All three domestic averages viewed with moving averages and what the next moves may be over the next few days into the next few weeks and months.
-As long as bonds perform well, we need to look at the markets from the long side going out to the intermediate term. Daily movement is dependent on the next trade story.
-German, Japanese, and Swiss bond yields go further negative. Swiss 10-year is yielding -0.48%. We firmly stated that the central banks controlled the yield curves and they clearly want sovereign yields to move lower.
-The domestic stock averages continue to outperform the rest of the developed world over the past year, but the European bourses have done better in the short term. If we account for dollar strength, the U.S. is still the winner.
-The next potential market mover, data wise, comes at 2pm, Wednesday, with the FOMC minutes.
As long as the UST 10-year continues to fall, I cannot recommend going short anything (except commods).
-It’s difficult to be bearish on real estate with fading UST yields, though the market looks heavy in aggregate.
-I would normally be neutral on gold here, but silver and platinum are poorly performing. As long as yields fade and the markets remain firm I am not bullish on gold.
Gold COT is severely stretched with spec longs accumulating a large net long. This is bearish for gold. When the impending catastrophe is averted,  the funds will need to sell once again.
-Gold should test the 1259 50-week moving average soon. It can’t stay above the 100-week and 50-day. Poor silver raises that probability. Platinum just got beat up and looks to be testing 800. Poor gold may not hold.
-Bitcoin shows great resilience. I am more bullish short-term on ETH here (somewhat still LTC, XMR, ZEC, BCH, XLM, XRP) as the ETH/BTC ratio is still near multi-year lows.
-Oil looks very top-heavy. A test of 100-day mva soon? That is just below 60.

The internet and the overconfidence bias are a lethal combination

Can we have an army of generals?
The internet has turned us into experts on everything

It seems that as we look things up on the Web, we become convinced that the information remains in our brains. It doesn’t. But we behave as if it does, and we’re not shy about claiming that it’s there.

In my role as a property manager and rehabber for my rentals, I often refer to YouTube when it comes to a number of issues. If I am replacing parts in a Delta kitchen faucet, for instance, I may search out YouTube to determine exactly how to replace the faucet’s gaskets and springs. While this strategy may not work for brain surgeons, does it really matter whether your auto mechanic can change your fan belt from memory or with an assist from a quick laptop search?

I don’t think we can conclude this is some terrible strategy on the surface, but my concern is that we are often unaware of the gaps in our understanding. Because our immediate answers are being filled, we are less inclined to seek out and fill in the holes, which are usually huge. I know firsthand how large these gaps can be when discussing economic and investment matters with others.  While they may have little formal background in the subject, they will act as if they are experts.

In my example of replacing kitchen faucet parts; while this may not seem complicated, it helps to have a comprehensive and tacit understanding of plumbing. Should I repair the faucet or replace it? What type of faucet makes the most sense in a rental versus an owner-occupied property? What type of faucet will take the most wear and tear? I have a good understanding of the house’s plumbing and entire drain/waste system, but is this knowledge needed to repair a faucet? On the surface, the answer is no, but having a mastery of how water and waste work in a plumbing system provides me with many intangibles that most weekend warriors lack. This unquantifiable knowledge gap is often the difference between success and failure in real estate investing.

The same goes with most other specialized endeavors, particularity with respect to money, finance, and economics.

You can search the internet for all the studies that confirm this; people who were asked to use the internet to find or confirm their answers to a series of questions gave, on average, higher ratings of their abilities than those who were asked not to consult the internet. The common results from all these various studies included:

  • An increase in confidence among internet users, not a decrease in confidence among those not allowed to consult the internet.
  • This increase was not due to access to information or even the use of the internet to get the information. It was the act of searching for that information that caused the increase in confidence.
  • They appeared to be conflating public knowledge (the internet) with the personal knowledge (what’s in their heads).
With the internet, everyone is an expert in Economics and Politics

As described by social psychologists David Dunning and Justin Kruger, the cognitive bias of illusory superiority results from an internal illusion in people of low ability and from an external misperception in people of high ability; that is, “the miscalibration of the incompetent stems from an error about the self, whereas the miscalibration of the highly competent stems from an error about others.

Dunning–Kruger effect – Wikipedia

In other words, most people who think they are good at something are actually just confident fools. These people use that same confidence to mask their ignorance and incompetence. According to Dunning and Kruger, the actual experts underestimated their superior abilities by overestimating everyone else’s.

According to Investopedia, in a 2006 study entitled “Behaving Badly,” researcher James Montier found that a whopping 74% of 300 professional fund managers he surveyed believed that they had delivered above-average job performance. The majority of the remaining 26% of those surveyed believed that they were average in their performance. Nearly 100% of those surveyed felt that their performance was average or better. In actuality, of course, only 50% of a sample can be above average. This discrepancy suggests that many of these fund managers displayed an irrationally high level of overconfidence.

The worst part is that this survey was conducted with seasoned investing professionals. Perhaps these people weren’t as knowledgeable as they thought. We have discussed the Dunning Kruger effect in the past. Perhaps this can help answer why there are so many alt-financial “experts” who continually dispense poor advice, while continually making incorrect market predictions.

I used to believe that many of these alt-financial personalities were disinfo agents. But after analyzing many of them, I have to conclude that they are just incompetent. They may be disinfo agents, but not of their doing. Perhaps people much higher up than we are promoting the less-talented.

Truth is, the less we know about a subject, the more we tend to believe ourselves to be experts. It is only once we become experienced in a subject do we start to recognize the breadth and depth we have yet to learn. Stupid amateurs think they know it all.

So, if you are taking the advice of an expert in the alt-financial media, yet  not making money, keep the Dunning-Kruger effect in mind and look elsewhere for answers.

 

Over reliance on social media and the internet leads to poor financial, investment, and trading decisions

Trading and investing used to be a solitary endeavor…
Success in trading and speculating in the internet age requires us to be fiercely independent and free of confirmation bias. Most people will never be able to succeed.

Back in the mid 1990’s, when I set out to really learn to successfully trade and speculate, the internet was just in its infancy. There were no such things as YouTube, Facebook, or Google. Yahoo was the major player and there were very few financial charlatans and even less alt-financial websites like Zero Hedge. I received my masters degree in 1992 and back then I never even heard of the internet, let alone used it.

When I started out trading while working at Nasdaq, I relied on services like Bridge, Bloomberg, and Factset. While these providers dispensed enormous amounts of data, it was up to me to figure it all out. There were no self-proclaimed experts on YouTube or the social media platforms. I learned how to trade by reading books. I mastered the intricacies of the marketplace by direct observation. While traders often shared their opinions and thoughts with their peers, trading and speculating ultimately was thought of as an independent study.

One of the books I studied from over 20 years ago.

In the beginning, most of my research took place during the weekends. I would take the subway to my office and spend full days parsing market and stock information, while at night I would walk to the coffee shop and read books about fundamental and technical analysis. I relied on my own wits and abilities to forge ahead. Since the internet was just getting up to speed, there were few bloggers and showmen on the web to turn to for “help”.

…But not anymore
In the internet age, most alt-financial followers who try to learn to trade end up taking the easy way out by relying on other personalities who are there to exploit.

When I was starting out, there were no disingenuous shills on an ubiquitous media platform like Martin Armstrong, Zero Hedge, KWN, Sovereign Man, Daily Reckoning, Nomi Prins, GATA, Max Keiser, or RT to intentionally confuse, misdirect, and scare people into money-losing outcomes. All these people have something to sell. They exploit their followers and are great at it.

In addition, there are hundreds of self-proclaimed experts who populate YouTube with their trading advice. Unfortunately, most are trying to upsell a service or rely on advertisements. I get it; it is much easier to rely on someone else, because it takes a lot of work and sacrifice to become a good trader or investor. It takes an independent and objective mind and lots of study, and the influences of the internet are just too strong for most people to ignore.

I didn’t have to concern myself with Facebook’s propagation of social proof and confirmation bias. Most of the time, I only shared my findings and trades with 2-3 other people in direct communication and email. I eventually became successful enough to quit my job. That was back in 2001.

Most starting out now will continue to lose money, because they no longer take the time to independently learn the art of trading and speculating. They are too busy relying on other “experts” on the web and YouTube.

Trading is ultimately an individual pursuit and when a person is wrapped up trying to learn some one else’s trading techniques and programs, they end up spending too much time trying to interpret what someone else is saying and miss the opportunity to build their own strategies. We need to adapt to our personalities. Have faith, but understand that trading and investing depends on the person in the mirror; not some charlatan or salesman on the web, regardless of how personable they may be.

Okay, enough said on this. Let’s move on.

Most social media users are poorer because of it

Anyone who says that social media is a net benefit is deluding him or herself; unless, of course, he is one of the few that use it to exploit others.

You’re not going to like this.

Millennials spend more time on social media than older generations: People ages 25-34 spend 141 minutes per day on it, versus 105 for the 35-44 set. And that could be hurting both their finances and mental health.

Indeed, nearly half of millennials (49%) say that their spending habits have been influenced by the photos and experiences their friends share on social media, compared with only about one-third of Americans in general, according to a data survey of more than 1,000 Americans by financial firm Charles Schwab.

The dark reason so many millennials are miserable and broke – MarketWatch, May 14th

What gets me is that people admit to spending about 141 minutes a day on social media. The true numbers on these surveys are probably much higher.

Other surveys have uncovered similar trends: Roughly two in three millennials think that social media has a negative impact on their financial well-being, according to a 2018 survey of more than 2,000 millennials from financial firm Fidelity.

Data released in 2018 by mobile bank firm Varo Money found that 53% of millennials admit to buying something they saw advertised on social media.

And a 2018 survey from Allianz Life shows that more than half of millennials (57%, versus just 28% of Gen Xers and 7% of boomers) say they’ve spent money they hadn’t planned to because of something they saw on social media.

The dark reason so many millennials are miserable and broke – MarketWatch, May 14th

The internet and social media are turning the world into a debt sharecropper plantation. With the web, less effort goes into research, while it encourages adverse financial behavior

According to the article, not only can social media wreak havoc on our finances, it can also hurt our mental health. Younger adults who use social media a lot are at a higher risk of depression, and people who use many different social media sites are at higher risk for anxiety and depression. What’s more, the more time people spend on social media, the more likely it is they feel socially isolated — with people who spend more than two hours swiping through social media sites nearly doubling their risk of feeling socially isolated.

Just look at how the boom/bust cycles in most asset classes are speeding up and have become much more frequent. We may think that having instant access to information creates normal markets, but the advent of the internet has brought irrationality. It has engendered the overconfidence bias in the least talented and reaffirms our confirmation biases. Income and net worth disparities have widened in step with the evolution of the world wide web. This is not a coincidence.

I look at asset markets such as real estate, stocks, cryptos, gold, etc., and have to believe that the internet has played a role in this insanity. For every person that profits, many more lose, because those who profit, profit big.

Most successful, financially-free traders I know live simple lives and do not spend all that much money supporting a lifestyle. Many think that successful traders and investors have to live in expensive houses and drive fancy cars, but my experience has been quite different. I view money as a necessary tool and if I were being pressured to spend to keep up I would be out of business. Successful traders and investors can control their spending, so they can build up an income-generating balance sheet as they get older.

If I were a social media junkie, I would be a lot poorer as the urge to conform is powerful. I know I am not immune to these pitfalls, which is why I deleted my Facebook account in 2013 after I started investing in real estate again. If more people are getting poorer, perhaps they need to turn off social media and break free of its bondage. Social proof leads to perpetual poverty and social media turns most of its users into sharecroppers on a debt plantation.

The Slowdown in U.S. Housing Market Is Helping Landlords Raise Rents

The housing market is clearly slowing…

In research released today; according to Zillow:

  • In April, the median home value fell 0.1% from March, the first time the market has posted a monthly decline in seven years.
  • A more stable metric—year-over-year declines—shows U.S. home values up just 6.1% from last April. That’s below annual growth of 7.5% in April 2018.
  • 16 of the largest 50 metros posted home value declines in April and have had flat or falling home values since January, raising our confidence that they indeed have reached a peak.
In aggregate, the chart looks top-heavy, but…
(Year over year price growth) …When we break down the national market according to three tiers, the bottom third is still performing better than the pricier homes. All segments have posted year over year growth. Changes to the IRC since 2017 have been the primary cause for the widening growth disparity.

While one month does not make a trend, it is important to continue analyzing the ongoing data stream. We have discussed in prior analyses how the residential real estate market is more managed than in the past, specifically with respect to the mortgage market and with tighter zoning and more restrictive building codes. This management distorts the supply/demand dynamic, which results in higher equilibrium prices.

The latest changes to the IRC have placed higher priced homes at a comparative disadvantage to the lower priced segments and these results are clearly established in the chart above. This is one of the reasons why I prefer acquiring investment properties in the bottom half of the market. Another reason why I prefer the lower end of the market is because home builders can no longer profitably build in this segment. They stick to the higher priced areas and this is another reason why high-end value growth is lagging.

Rising transaction costs are too expensive for many home buyers and sellers. Many are just staying in place.

It’s expensive to sell an existing house and then buy another home. For example, if the sold house and the newly purchased home are roughly the same value, the out and in costs can be as high as 10%.

For example; broker commission, transfer & recordation taxes, title search and title insurance, closing charges and fees, and mortgage-related costs can be as high as $50,000 when a homeowner sells a $500,000 house and then buys another $500,000 property. This is why I generally prefer to hold on to properties and leverage them. Selling and buying homes are very expensive and only Realtors, title companies, mortgage bankers, and tax jurisdictions profit from home sales.

Bottom line; government market management from stem to stern and the exorbitant transactions costs are the primary reasons for the continual drop in home sales. Let’s face it; people just do not have that money to spend. 

This is why I have been saying that Realtors should have cause for worry; people are tired of paying all that money and many Realtors are not that talented. I know first hand about the industry as I was a Realtor for several years and an investor since 2001, and have been observing the growing movement to circumvent the real estate agent. While the NAR publicly says it is not worried about Zillow or Redfin, privately it must be very alarmed.

Last week, Redfin announced a pilot program in Boston that allows home buyers to ditch the buyer’s agent and make a direct offer to sellers of Redfin-listed properties. Now the company wants to open up these direct home sales to buyers around the country. Next up will be Virginia, with more states to come this year.

…But a slowing market is helping landlords and long-term investors

The U.S. housing slowdown is turning out to be a gift to apartment landlords. After all, those people who aren’t buying still need somewhere to live.

Data from Zillow released Thursday shows that home-price appreciation continued to slow in April from a year earlier, driven in part by softening West Coast metros like San Jose and Seattle. The company also reported the first nationwide monthly price dip in more than seven years — albeit just 0.1%. At the same time, rent growth accelerated, climbing by 2.6% on an annual basis, after a lull in 2018.

Slowdown in U.S. Housing Market Is Helping Landlords Raise Rents – Bloomberg, May 16th

Rents continue to rise. As fewer people can afford to buy a home, more have been forced to rent

Americans pulled back from home purchases last year after mortgage rates spiked, exposing the underlying affordability problem in the property market. Many people piled into rentals, where landlords were offering concessions after a period of overbuilding higher-end units. That increased demand helped drive up what people were willing to pay for an apartment.

Rents and home values tend to move together over the long-term, said Skylar Olsen, Zillow’s director of economic research. “But, in this case, what we’re seeing is a little different.”

More broadly, the challenge for the U.S. housing market is scarcity. As millennials — one of the largest U.S. generations — reach prime homebuying age, they’re finding that the supply of entry-level houses hasn’t nearly kept pace with their numbers. That could force them to rent for longer as they save up to buy the homes that are available, Olsen said.

As an investor and landlord, I see brisk demand for my rental properties. My last listing (which I placed on Zillow) in suburban Maryland generated about 80 inquiries over a seven-day period. I had it rented in less than 10 days and Zillow’s leads eventually produce a better tenant candidate than what any Realtor can provide. Plus, Zillow is free, so I pay no commission and get a better tenant. I have observed that my rents rise slightly higher than the general rate of inflation. This seems to confirm what Zillow is concluding.

 

Response to an email; Will Social Security go bankrupt?

I am in my late 20’s. I keep reading that Social Security is going bankrupt. Will it be around when people in their 20’s & 30s retire? It seems like a Ponzi scheme.

J – Arizona

This is a good question and a fair observation. Let’s see if we can figure them out.

A background to how Social Security works

According to the Social Security Administration (SSA), benefits are paid through payroll taxes collected from current workers and their employers, and the program’s trust fund currently operates with a surplus of about $2.895 trillion.

The SSA’s latest projection has the combined Social Security (SS) trust funds that pay retirement and disability benefits running out of cash reserves by 2034. But that wouldn’t leave SS bankrupt and unable to pay any benefits. Even if Congress does nothing to shore up the system by 2034, SS will be able to pay out 79 percent of promised benefits until 2090.

The last time SS nearly depleted its reserves was in the early 1980s, when Congress shored up the program by gradually increasing the full retirement age from 65 to 67 and started to tax benefits based on income levels.

Social Security and the federal government; one hand washes the other

Since SS bankruptcy is theoretically highly improbable, Social Security is largely a pay-as-you-go program. This means that today’s workers pay Social Security taxes into the program and money flows back out as monthly income to beneficiaries. As a pay-as-you-go system, Social Security differs from company pensions, which are “pre-funded.” In pre-funded retirement programs, the money is accumulated in advance so that it will be available to be paid out to today’s workers when they retire. The private plans need to be funded in advance to protect employees in case the company enters bankruptcy or goes out of business.

While the SS program effectively helps to finance the federal budget deficit, the Trust’s investments are held in a separate ledger. Since its creation in the 1930s, the Social Security trust fund has never been part of the general fund, so politicians have not been free to spend the money on pet projects.

The way it works: The Internal Revenue Service daily collects payroll taxes paid by workers and their employers. This revenue is immediately invested in interest-bearing U.S. Treasury securities, as required by law, and credited to the Social Security trust fund. Social Security regularly redeems Treasury securities to pay benefits. Meanwhile, the government spends the proceeds raised from the sale of Treasury securities on a wide range of programs and projects. But the federal government is ultimately obligated to repay the money with interest to the Social Security trust fund.

Where some of the SS’s functioning receives its largest source of criticism is when critics view the SS program and the U.S. government as one and the same. In this regard, the U.S. government is spending the money raised by the program’s payroll deductions on general expenses. Thus we can view the program as a revenue generator and one that helps the federal government to balance its cash flow.

So, will Social Security go bankrupt?

Their study of retiree costs found that between January of 2000 and January of 2019, Social Security COLAs increased Social Security benefits by 50 percent, but the costs of goods and services purchased by typical retirees rose more than twice as fast — 100.3 percent.

Senior Citizen’s League – Social Security Benefits Lose 33% of Buying Power Since 2000, May 14th

So, let’s answer your question; will SS be around when people in their 20’s & 30s retire?

Think about this; why would the SS program declare bankruptcy? The most likely outcome of this would be civil unrest. Furthermore, based on our background analysis, the U.S. government effectively uses the SS program to help fund its deficit spending. This deficit spending is used to help fund our tax cuts, subsidies, and social programs. Contributors and beneficiaries all benefit from seeing that the SS program continues intact. We all profit from this ostensible Ponzi scheme.

But, as the population ages and the pool of potential retirees grows, the integrity of the trust fund faces increasing pressure. Thus, the federal government uses two methods; increasing the retirement age and underestimating inflation, to help alleviate the fund’s long-term real liability growth.

Raise the retirement age

According to the National Academy of Social Insurance, Social Security’s full-benefit retirement age is increasing gradually because of legislation passed by Congress in 1983. Traditionally, the full benefit age was 65, and early retirement benefits were first available at age 62, with a permanent reduction to 80 percent of the full benefit amount. Currently, the full benefit age is 66 years and 2 months for people born in 1955, and it will gradually rise to 67 for those born in 1960 or later. Early retirement benefits will continue to be available at age 62, but they will be reduced more. When the full-benefit age reaches 67, benefits taken at age 62 will be reduced to 70 percent of the full benefit and benefits first taken at age 65 will be reduced to 86.7 percent of the full benefit.

Furthermore, there has been continual talk in legislative circles about raising the full retirement age even higher. Perhaps, by the time you are ready to retire, incoming entrants to the work force may be confronted with a full retirement age of 68 or 70.

Continually underestimate inflation growth

According to a study released yesterday by the Senior Citizens League, Social Security benefits have lost 33% of their buying power since 2000.

Their study of retiree costs found that between January of 2000 and January of 2019, Social Security COLAs increased Social Security benefits by 50 percent, but the costs of goods and services purchased by typical retirees rose more than twice as fast — 100.3 percent. Food and medical costs — particularly for fresh fruits and vegetables, and prescription drugs — were among the most rapidly – rising costs over the past year. The study examines the growth since 2000 in price of goods and services that are typical for retired and disabled households and compares them to the growth in Social Security benefits due to annual COLAs.

Since 2000, typical expenses for seniors have risen twice as fast as the yearly cost-of-living adjustment (COLA) to Social Security. This annual raise is supposed to counteract the impact of inflation on Social Security, and while benefits rose 2.8% for 2019 (the highest increase since 2012), it is not enough to compensate for the mounting bills that seniors have to pay. The cost-of-living adjustment is based on increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The bump to benefits was 2.0% in 2018, 0.3% in 2017 and there was no adjustment at all in 2016.

According to the Senior Citizens League study, the average monthly Social Security benefit in 2000 was $816.60 a month, and someone who collected that amount 19 years ago would have $1,226.60 today, thanks to the annual cost-of-living boost. But that still falls short: to retain the same purchasing power as $816 in 2000, the monthly check would need to be $1,634.50.

This puts the 60 million Americans who collect Social Security at risk for a declining standard of living — particularly the more than two thirds who rely on Social Security as their main source of income.

So, will SS ever go bankrupt? The answer is no. So, we can ignore all that sensationalist rhetoric of imminent collapse. The concept of SS is too important to the U.S. economy, but it will die from a thousand cuts. So, we need to pretend it has already gone insolvent, because our future SS benefits will buy even less as the years roll on.

We better hope bitcoin goes to $100k

May 14th Update – Stock averages, bitcoin, gold, tariffs; Externalization of the hierarchy

I have uploaded a May 14th update. Click here to go to the show archives page to listen or you can listen on the link below.

To download the podcast – Right mouse click here

-Don’t fall in love with the downside. Potential Dow targets.
-Thoughts on gold and silver.
-Bitcoin broke out of one huge “f-flag” once it popped over 6k. What we should expect going forward. There is a maturation process as the same coins from two years ago are still the major players.
-My personal thoughts on cryptos.
-Some thoughts about a few emails I received over the past day or so.
-My advice on how to move forward. Satan wears us out in all ways, not just our patience.
-The externalization of the hierarchy. So what if the U.S. was founded by a bunch of Freemasons? Were the masons from 250 years ago a bunch of devil worshipers like today? Perhaps they were, but there were enough true Christians living here to keep the evil contained. That is no longer the case, so Satan is showing us how evil the U.S. always has been. Satan likes it when we obsess about our dark side. He has been conditioning us for decades to accept this and spiritually euthanize us.

Response to a subscriber email; Chaos is part of the plan

I received an email in response to my weekend’s podcast.

Interesting podcast. Here are some observations I came across.

-Netflix is global; importing their satanic agenda worldwide.
-Trump and Kim are all working, along with Putin and Iranian leaders for the same group. They are all showpiece puppets.
-High end real estate here in Canada and Australia have taken a hit. The low end here in Vancouver and Toronto , under 1.5 million is doing o.k. They dropped mortgage rates here, as to not crash the markets.
-The B.O.C has gone from a positive outlook last year to a negative one quickly. No new interest rate hikes.
– Haven’t watched T.V in many years. Don’t find the new shows entertaining. Too much reality shows, satanic sorcery shows, sarcastic cartoons.
– looking at vacation destinations. Can’t believe the hotel prices in the California coast. $200 U.S for a motel 6 in Santa Barbara in July. Crazy.

V – Toronto

Indeed, to the untrained eye, the current state of affairs looks untenable. But, I submit that this is part of the overall agenda.

There are a number of well-learned scholars in the remnant Christian community and truther movement who do a good job analyzing and researching the Illuminati and its sprawling structure of secret societies.  It is a good idea to discuss these matters as it is important to understand how we need to respond to our adversaries. But, one of the primary conclusions many of these researchers make presents me with a non sequitur.

Specifically; These researchers have established that these secret societies and these elites are in control of the governments and central banks, and by extension, all the major economic sectors. Yet, as events unfold, many claim that things are spinning out of control. If we truly want to comprehend this agenda for the new world order, we have to figure that perhaps as this system evolves into an even more satanic one, good people will marvel at its lack of sustainability. But this system is built for a degraded humanity and that population dwarfs the good. Moreover, the degraded portion continues to grow much larger every day.

So, as this agenda unfolds, we observe the people and events surrounding  Donald Trump and Kim Jong-un, the Tariff dilemma, and the ostensible impending catastrophe in the monetary system. Most will conclude that things are about to implode. It is a non sequitur because on one hand, these researchers know the plan for staged chaos and will comprehend that these secret societies control all organs of society, government, and the economy. While on the other hand, observe the chaos and conclude that the elites are losing control.

This plan is well orchestrated and though it is most likely not being carried out consciously by the puppet front men, it is engineered by some guiding force. Perhaps these political and monetary authorities are just carrying out orders, but it does seem highly coincidental that they were all being carried out at the same time.

With respect to the economy and monetary system; most alt-financial researchers employ the gambler’s fallacy to conclude that asset prices will fall, inflation and bond yields will rise, the monetary system will collapse, and the dollar is toast. But it continues to be held together. It just looks flimsy from the outside and I submit that this is just part of its ingenious design. I see a probable scenario where a growing number of “have-nots” will fall further and further behind. This will form the large slave-class of the new world order.

So, I have learned to accept this chaos as part of the plan. From what I have researched since 2003, it is going as scripted. There is only one aspect of this plan that has surprised me; it is taking far longer than I anticipated. The Bible does say that Satan would wear out the patience of the most high. How true….

 

May 11th Market Update – My observations that point to a managed world; Important bitcoin update

I have uploaded a May 11th Market update. Click here to go to the show archives page to listen and to view any supporting links or you can listen on the link below.

To download the podcast – Right mouse click here

-My observations with respect to the stock market. When the markets were falling apart late last year, I took note of certain events. All the authorities were coming together and burying the hatchet.

  • the U.S. Fed drastically altered its monetary policy outlook,
  • the ongoing tariff problems lessened and the prospects for a viable solution brightened,
  • All was quiet on the North Korea front,
  • The ex-Fed monetary authorities (Yellen, Greenspan, Bernanke, etc.) stopped talking down the markets.

-Since the major averages moved back to their former highs, the Fed has been backtracking somewhat, the tariffs dilemma has heated up drastically, and N.K. is testing missiles again.
-This type of timeline of events tells me that there is a scripted agenda that transcends what we are being told. This also tells me that TPTB want markets at a high enough level, so when the agenda moves forward and  things get dicey, they fall from a higher level.
-US Treasury yields fell in time for the Spring real estate selling season. What auspicious timing….
-As long as the U.S. Treasury is pumping out over a trillion dollars a year in new Treasuries, most markets have only one way to go  over the longer term. Up.
-The U.S. markets and the dollar are still the go-to for me.
-Inflation is my only concern and only the U.S. is showing some signs of wage growth. I doubt it will be an issue. If it does become a problem, the elites will sink the financial markets and return yields to a lower level. But there is no need for now.
-Never short companies like TSLA, UBUR, NFLX. They perform important tasks for the new world order and are pushing the envelope for everyone else to follow. The elites can create companies worth hundreds of billions and prop them up – even if they have poor financials.
-Negative yields in Japan and Germany are just a glimpse into the future. The markets are still functioning normally here in the U.S.; yields fell as stocks got hit.
Important cryptocurrency update. How to stay focused when markets move. Don’t make the mistake of trying to find a reason why markets move. The media publish stories that try to make connections. But this is simple and linear. The market and chart action tell the story.
Hindsight bias explained. The alt-financial media is littered with Monday-morning quarterbacks.

Links to topics discussed – 
Global sovereign debt yields
Global stock markets

Modern Monetary Theory (MMT) has been a fact for a decade

Investors and governments pretend MMT doesn’t yet exist

The essential idea of MMT is that governments can fund an extraordinary expansion of programs without harming the economy. [Ray] Dalio says MMT-based proposals could happen, but he also noted there were many different ways to deploy the “printed” funds, with Ocasio-Cortez’s proposals just one possibility.

Dalio commented that some MMT-based proposals advocated by Ocasio-Cortez might make sense. For example, he voiced his support of guaranteed jobs in a recession, but argued that the way this was implemented would be critical.

Ray Dalio says MMT, the controversial theory endorsed by Alexandria Ocasio-Cortez, is a lot closer to happening than you might think – Business Insdier, May 2nd

Cortez has no understanding of MMT. So, why does the media use her? Left/right Shock value?

The developed nations already operate under an MMT framework. This is not a monopoly exclusive to the United States.  Ever since last decade’s manufactured crisis when the central banks stepped in and began buying sovereign debt securities to make up for the government funding shortfall, we effectively have worked with a game plan that operated like MMT.

The only difference between what investors like Dalio and Buffett, as well as Fed Chairman, Powell are talking about are that we have yet to admit that MMT is a reality. For some reason, the topic of MMT is prefaced as a political debate. Do you think Ocasio-Cortez is any type of expert of MMT? Of course, not. The federal government under President Trump already operates under the guise of how MMT is described. I will call it MMF – Modern Monetary Fact.  Trump’s trillion dollar deficits are financed with dollar-based debt that’s bought by the central banks. Whether these printed dollars get spent on defense or housing vouchers is irrelevant. And that’s where the manufactured political debate come in. It’s just another one of the false left/right debates that get the unwashed in a lather.

Under this monetary system, the central banks are the crucial element with MMF in that they provide the needed spending liquidity. I think what Dalio is discussing is that we should get rid of the Central Bank mechanism and have the government directly issue the money. I can’t think of any other reason why he thinks MMT is not yet a reality.

We have already discussed that the concept of MMT has been introduced by the globalists and injected into the discussion for a particular reason. So, I do not exert my energy discussing MMT with others only because the world and the major central banks already operate under the premise of MMT.

The Euro nations operate under MMT. The United States, England, China, Japan, Australia, and Canada, etc, already operate under the framework of MMT. The central banks now buy the sovereign debt and they print the same-denominated issue currency as a result to fund the government deficits. This allows to the governments to spend as they wish with little repercussion of future ramifications. Only a growing inflation problem would end MMF – and with the world sinking in a sea of deflationary red ink, we need to dispel the myth that inflation is coming. There will be no rise in the inflation rate when Joe-Six pack can barely service his debts. How can Mr. Six-pack bid up prices?

If Dalio is correct and he says we are getting rid of the central banks, then I wonder how the globalists will still control the monetary printing. They must come up with another device in which they control it, because the United States Treasury certainly will not print dollars as needed. That would be inflationary as there will be no offsetting debt on the global balance sheet. Do you think any U.S. president will promulgate this type of process? Just look at what happened to JFK. The owners of the central banks left their calling card in Dallas on 11/22/1963.

A new dawn has arrived; Embrace the free money!

This is why I am bullish on the asset markets. Large investors like Buffett and Dalio have made billions off of MMF, but do not want to admit that we employ it. It may rock the boat, so the authorities generate these silly debates and the average person eats it up.

Because of low inflation it seems like we can generate as much debt as we want. As long as we can generate all the debt required to facilitate spending, the asset markets will continue to climb over the long-term.

With low inflation we can have any type of monetary system we choose. It’s clearly evident that the population of the ungodly prefer this one. Everyone can have their own personal bailout without the repercussions of inflation. We can all be lazy and drop out of the work force.

If you ever watched how humanity behaved in the movie, Wall-E, that is the end result of MMF. It’s here already, but it will grow in size and popularity as the kinks of QE are worked out and refined. As inflation expectations continue to fall, MMF will come out of the closet and the people will rejoice.