Repo market madness; the differences between 2007 and 2019, and why the current fallout is contained

The differences between last decade and now
Prior to the establishment of QE in 2008-09, the Fed was essentially powerless to mitigate the circumstances that led up to the real estate collapse of last decade. Mortgage lenders were borrowing in the short-term markets and when that dried up, they had nowhere else to turn.

Hi Chris!

I found you not long ago, which I’m very happy about! From the little I’ve read on your website, I pretty much agree with everything so far.

I’m really curious have you read, Gary Gorton’s paper called – “E.coli, repo madness and the financial crisis?” Would be great to hear your thoughts about it. Last time we had a repo crisis was August 2007 with bigger market correction not happening until march 2008 due to the flaws of the financial system and how it’s build?

What’s different now in your opinion or could we be there again, same inflection point. Thank you in advance.

Happy new years to you and your family, wish you a prosperous new year with lots of good health 🙂

Tammy

Fed assets totaled $4.166 trillion in the December 25 week, up $28.5 billion from the prior week. Since the Fed ended its balance sheet unwinding effective August 1, the balance sheet has increased by $386.5 billion.

I am familiar with Mr. Gorton’s research, though I only read a synopsis of his research paper. His work was cited on the National Bureau of Economic Research’s website, and this summary is useful for those wishing to read more. From what I can tell, his research conflates with our prior analysis, and helps to explain how a run on the markets can occur when there are no viable avenues of liquidity injections, such as QE.

Last decade’s collapses were manufactured

The Fed’s willful ignorance last decade was obvious to many in real time, but here is where most in the alt-media get it wrong. The elites knew that the growing nation-state fiscal deficits were about to overtake the world’s ability to finance them… Thus, the elites, working through their central banks, needed to bring about the conditions necessary that would allow their monetary system to sustain itself. Hence, the only answer I can come away with is that the elites manufactured last decade’s catastrophes.

We can invest with more confidence when we see the world as a game of Tetris

This brings me to the reason of this discussion. Prior to the collapses of the collateralized mortgage market in 2007-08, there were no central bank programs in place to ameliorate the potential fall out. As liquidity dried up in the overnight lending markets, the Fed was not able to purchase treasuries en masse, as it has been able to do this time around in 2019.

Moreover, the Fed, led by Ben Bernanke since early 2006, steadfastly refused to lower the Fed funds rate to help with the nascent deteriorating lending market circumstances. As recently as early 2007, the Fed Chair publicly stated that the housing market was not in trouble, and at the time, I observed what I thought to be willful ignorance on the part of the Fed. As short term rates rose, the yield curve flattened and thus, many types of the mortgages that had fueled the rampant speculation were no longer advantageous in keeping mortgage payments low.

This brings me to one of my blog’s major theses, and this is an important point to comprehend. Based on my observations from last decade, the only conclusion I can draw is that the collapses were manufactured and purposely amplified through antithetical monetary policy.

With the passage of the TRA of 1997, and beginning in 1998, homeowners were entitled to large capital gains exclusions on owner-occupied real estate. Novice homeowners began to speculate and flip their own residences and Home Depot stock took off.  Compounding the formation of the real estate bubble was the excessively dovish Fed policy in the wake of 9/11. What seemed odd to me at the time was how the Fed kept rates at historic lows until 2004. The Fed then reversed course and raised continually for almost three years. By then, it had planted the seeds of the market’s destruction.

Job well done.

The Fed’s willful ignorance last decade was obvious to many in real time, but here is where most in the alt-media get it wrong. The elites knew that the growing nation-state fiscal deficits were about to overtake the world’s ability to finance them, under normal circumstances. The world’s net savings rate and balance sheet were no longer adequate to fund the borrowing needs of the global governments. Thus, the elites, working through their central banks, needed to bring about the conditions necessary that would allow their monetary system to sustain itself. Hence, the only answer I can come away with is that the elites manufactured last decade’s catastrophes. Under normal circumstances, global investors never would have accepted concepts such as QE and negative interest rates, but if the population were scared thoroughly enough, they would accept these programs… and more. I say, job well done!

Of course, the elites needed an expert insider to collapse it all and rebuild it. This is why Ben Bernanke was chosen as Fed Chair in early 2006. He was hired to engineer the collapse and oversee the drastic transformation of the central bank’s role in controlling the economy for the elites. Only a person of Ben Bernanke’s caliber could handle the task. There are too many coincidences here.

My biggest concern for 2020

I am observing that commodity inflation is beginning to pick up somewhat on the margin. Gold has begun to move higher and I am concerned we could see another run. If commodity inflation picks up on a sustained basis, and if the measured price index numbers rise more than the Fed’s published targets, the elites may have to engineer another deflationary correction to keep this system in control.

Why? The primary objective of the elites is to keep the nation-states in business with them and their central banks in control of the whole process. As of now, the elevated asset markets provide a lot of investable collateral for investors to buy sovereign debt, but if the published inflation and price index data rise too high, they may tank it all, so they can introduce even more programs.

This subscriber gets it; The Alt-media manufacture fear with flawed logic, which only misleads and impoverishes

Note: Although the writers in the alt-media will claim victory when any collapse occurs, they will never be able to advise properly. Their biases handicap their ability to provide sound advice. When a crisis finally does appear, they will use that as validation of their prior flawed “research,” and many will believe them. The alt-media writers are often the most difficult to convince otherwise, because they believe that since they believe they found the secrets of existence, they believe they are correct. That is a recipe for disaster, especially to those who listen to them.

Dear Chris,

It’s interesting to find someone who also believes that the entire Alternative News sector is infiltrated by elitist disinformation and fear mongering.

I feel these elites have no choice but to keep the current dollar based system going and the only reason they create the mini-crises is to prevent all out hyperinflation due to their QE-To-Infinity program. Fear-mongering via alt-news is also being used to keep hyperinflation from triggering as the fear-programming is all deflation-collapse related.

My questions regarding Anthony’s article and your comments :

Anthony Migchels: Return to Gold Standard Spells Disaster

1) Anthony assumes that the elites have all the physical gold in the world and so the time is ripe to trigger an epic deflationary bust using a gold standard where the masses will go broke and elites will benefit hugely. Is this assumption correct? What I am aware of is that the bullion banks have been suppressing gold prices to prevent a run on gold.

But the masses in India have been buying close to 900 MT per year in physical gold over many decades, and why is Anthony not acknowledging this fact? How can the elites trigger a Gold standard when most of the gold has been leaked away (to the masses) during price suppression of past many decades? Is Anthony also one of those Fear Mongering apparatus of the elites?

2) Your comment about ‘Force majeure’ : Do you feel that the current religious divide and protests all over the world are a percussion to the catalyst of force majeure that you are referring to? war ? if not kinetic war, maybe civil / religious war? Example we have a major Hindu-Muslim divide and protest all over India past 15 days. The current govt is ready to go to war with Pakistan (Chinese controlled Pakistan)

3) Do you feel that cash is king right now? will central banks loose control of the system? Are we in deflation?

Thanks and Regards,
S

Let’s address this subscriber’s comments and questions.

The talk of collapse has become a religion
The talk of collapse has become very profitable to the alt-media. Meanwhile, the personal lives of many of its followers have already collapsed.

The above mentioned article was dated October 10th, which coincides with the madness in the repo-market, and as we can see, the writer was careful to emphasize those problems. The author also says “…major Central Banks are saying that we will need a Gold Standard after a reset.” Really? I didn’t know that; that’s news to me.

From what I can see, it was written to be used exclusivity as fear-based click bait, and the editors just pulled the news of the day to conjure up the desired outcome. Virtually all alt-media website moderators and writers employ these tactics to maximize page views, which is why I no longer write for third-party sites. Most of my articles were heavily edited by less knowledgeable people who had predetermined objectives. Truth and reality often take a back seat to clicks and feeding the ignorant target audience. Moreover, these writers bank on you not delving into the past to check their  stopped-clock analysis.

Gold shill non sequiturs
Gold promoter logic is loaded with flaws, but it does appeal to some

With respect to gold, this subscriber raises a great point. The gold shills who pound the table for a gold standard, will often mention that the elites are hoarding all the gold. But they will forget to say that there are thousands of tons of the shiny stuff owned by at least 500-600 million people worldwide outside the system. GATA and ZeroHedge will often document the failed Indian government measures to deter gold hoarding by its citizens, but will disregard simple logic. Here is the irony; gold hoarding by private citizens makes it more difficult for the elites to go to a gold standard.

Going to a gold standard would reverse this trend as wages couldn’t be inflated away and the asset values of the wealthy would fall. Notice the divergence of wealth since 1995 (the advent of the mainline internet). As Jeff Bezos said, the web is a confirmation-bias machine

Until the elites get all that private gold, they cannot transform the system into a monopolistic gold standard, so how are they going to get that gold? The elites’ whole monetary system was built by their families, spans generations, and was designed to continually extract the world’s wealth into their hands FOREVER. These banking elite worked for generations to get the globe to go to fiat, so they could continue to turn the people into wage slaves. Going to a gold standard jeopardizes all they have been hoping to achieve.

If we went to a Godly set of fair weights and measures then humans could begin to receive a fair wage for their labor as gold-backed money couldn’t be inflated away. I submit that a regime of negative interest rates, where money vanishes, would be a better fit for the end-time economic regime. As long as officially-measured inflation remains low, this system will be well supported and interest rates can continue to fall over time.

My thesis behind assets prices and QE

You all know how income-generating asset prices respond to low inflation and low interest rates, ceteris paribus. This deductive line of reasoning provided the logic behind my thesis from early in the decade as I called for rising asset prices (income-generating assets). As long as the central banks labored to keep the nation-states in business, we would be foolish to fight this trend.

With respect to holding cash; as asset prices rise, the opportunity costs of holding cash diminish. This is straightforward logic; the higher prices rise, the more likely we will experience a correction. Thus, we are to increase our cash positions as asset prices rise. I do, and currently cash and liquid assets comprise about 20% of my net worth. I have stopped buying real estate in this cycle, since it is no longer the bargain it was six to eight years ago and is very overweight in my total portfolio (currently 70%, which was 50% four years ago due to rising prices). I would rather hold cash instead, but if I currently owned no real estate, I would still look to buy as the math behind many properties still makes sense.

In terms of assets to hold, I have always recommended income-generating assets (you young folk will appreciate this as you get older). We hold our best income-generating performers in all asset classes (e.g. stocks, bonds, businesses, real estate) and sell the weaker ones as prices rise. When we experience a correction, we add to our existing holdings with our under-leveraged positions and existing cash on hand. Our goal is to only use debt to finance the acquisition of income-generating assets and not for personal consumption.

Forget the talk from the likes of Martin Armstrong regarding cycles between public and private assets. He has been wrong for many years, so relying on his flawed and refuted theories would be unwise.

Viability of the current system with low inflation

The subscriber contemplates that the elites need to continue using the current U.S. dollar-based system for now. I agree, as it is actually still viable. As long as the central banks all work in concert, this new world order system can sustain itself. It all hinges on keeping measurable Inflation low and I say TPTB can achieve this for the indefinite future. There are three items that help keep inflationary growth from running out of control;

  • Manufactured crises,
  • Debt servicing that continues to exert an ever greater burden on the economy over time due to central bank balance sheet growth, and
  • Open-borders immigration, labor, and trade

I also contemplate the concept of centrally-planned personal over-indebtedness, specifically through student loan debt servicing. The elites planned the student loan structure early last decade and codified it into federal and state law. Thus, this “crisis” was in the making for years. The globalists knew that if the Millennial and Gen-Z populations were not encumbered with this debt millstone, they would be free to bid up the prices of many items related to family formation. Debt slavery can be very deflationary.

The elites would get the blame if they crashed the system

Here was my comment to the above referenced article, which was posted by the site moderator (scroll down to read);

I read the article and it really is just another gold shill article. It does a terrible disservice to those who embrace it. I never invest and predict future events based on a remote outlier event. The author takes stuff out of context.

I just ask one question; Why would the globalists move to a gold-backed currency? They would intentionally destroy the economy and world system for decades AND GET THE BLAME. They would create such chaos that they wouldn’t be able to control. The NWO is being implemented while the people continue to underestimate it.

They can keep this current system all the way to war. War will provide the force majeure to move to the next step. Based on the status of the ChiCom and Russian military, we are at least several years away.

The elites will never arbitrarily move to another system. There needs to be a catalyst. War always has been that catalyst and war will be once again. The elites are very predictable.

The globalists want to change but need a force majeure. The pain from changing the monetary regime is too great for the world at this point and only an exogenous type of catastrophe (exoplanet crashes and destroys the world, global conflict, etc.) qualifies as the catalyst.

With my comments in mind, let’s address the concept of a “force majeure” overturning the current system. In the past, the elites always used war and its fallout as an excuse to recreate currencies and monetary systems. I do not see any difference in the future. However, if you are a student of eschatology, you can come up with other ideas that may also suffice.

Did the desired monetary system already arrive?

War has been used in the past, not to reset the system, but to transfer it into private hands. Since the advent of the Federal Reserve, the Synagogue of Satan has used war to fulfill the primary objective of the elites; establish a private central bank in every nation. I say, job well done.

Manufactured crisis; Perhaps we are nearing the final phases of the desired NWO monetary system rollout, while the alt-media chase their tails

This is an observation; The repercussions of WW I and WW II did not truly bring about new monetary systems. Sure, after WW I, there were problems with the German mark and German hyperinflation, which led to Hitler’s ascendance to power, as well as the fall of the British pound’s global dominance, but there were no global resets. Moreover, as a result of WW II, the elites may have instituted the Bretton Woods agreement, but what really changed for those on the street? Business went on as usual and there was no global reset. Dollars were dollars and the national currency regimes effectively went on as before.

War has been used in the past, not to reset the system, but to transfer it into private hands. Since the advent of the Federal Reserve, the Synagogue of Satan has used war to fulfill the primary objective of the elites; establish a private central bank in every nation. I say, job well done.

What I am trying to say is that if there was no global force majeure from the prior two global wars, imagine how bad a future force majeure will have to be; it will have to be without precedent. Despite all the changes to this current system, it ostensibly has been the same to the man on the street for generations. Regardless, the changes in aggregate over the past 100 years may have been mind-blowing, but they were so subtle, slow, and sinister that we hardly notice what has been achieved.

This system is now completely unrecognizable to a person from 100 years ago, and perhaps, the elites have already achieved their dream of their promulgating the end-time monetary system. Perhaps we are in it now. Imagine that. All the while, the alt-media are chasing their tails. Now, that’s funny. Most of the alt-media followers are as cognitively impaired as their lost brethren and both have lost their ability of reason, so they have no one to blame for their troubles, but themselves.

Over ten years ago, the central banks chose this route of QE and ever lower structural interest rates, and from what I can tell, it is still going strong. The Repo market crisis is quickly becoming a distant memory, and is only the latest in a sundry list of manufactured crises that have allowed the elites to use their central banks to gobble up the world and extract the wealth of labor.

Response to a subscriber; My observations of the alt-financial media since 2000

Given enough time, anyone can claim victory. Stopped clock analysts can never offer the best advice

Here is a sobering observation; many of the alt-financial forecasters who claimed they were correct in predicting 2008’s collapse had been predicting one all last decade. Moreover, virtually all of them have been calling for another one ever since.

My conclusion; those forecasters who employ basic logic fallacies and refuse to acknowledge the conspiracy for a global financial dictatorship must be heavily discounted. The reasons why my research has been more accurate than most others are five-fold;

  • I have formal economic and financial training that goes back to 1985,
  • I am extremely careful to avoid employing logic fallacies (e.g arguing from incredulity, gambler’s fallacy, ad hominems, and subjective sentiment),
  • I am politically agnostic,
  • I acknowledge the active promotion of the conspiracy for a global financial dictatorship, according to the Bible, and as a result,
  • I have to conclude that the elites are in control of their own system and all the confusion and tension is manufactured, so that the desired result (e.g. QE and centralized control) can be achieved.
Those who cannot recognize the common logic fallacies will be easily parted from their money

After canvassing the wreckage of last decade’s carnage and parsing the analysis of those who ostensibly claimed to be right, I was disappointed to see that most were stopped clocks who had based their conclusions on logic flaws such as the argument from incredulity. Unfortunately, just because we cannot imagine how all this debt can be serviced doesn’t mean things have to collapse.

Indeed, before last decade’s manufactured crisis, the central banking mechanisms were not in place to handle nation-state overindebtedness. But since 2008, a whole new paradigm has successfully emerged with respect to the handling of the ballooning deficit spending. However, the alt-financial media refuse to recognize this reality, and have been employing the same flawed logic all decade to predict another collapse.

Any long-term reader and listener of my work knows that I have been relaying these conclusions going back to early 2013, when I determined that this new system from late 2008 onward was viable, durable, and one that the global investor had accepted as legitimate.

Given these thoughts, I present a subscriber’s comments to my previous article;

[With respect to another alt-financial market forecaster] I felt that I did benefit from the website I subscribed to by listening to them before the market crashed, but it seems like since then the predictions have been wrong. I also noticed that the writers are now very conservative in making any recommendations whereas up until before they were more confident. Sort of a broken clock is right twice a day syndrome.

The writers now admit they don’t know what’s going on.
When I was asking about a blog post dealing with alt-financial media issues, I was essentially asking if you already detailed the flaws of the advice/predictions from the alt-financial media. However, your advice of studying is duly noted and I have started that self study over the last few years! I guess when I was saying if I had your insight, I meant your knowledge. I prefer to know things for myself as much as feasible.

While the website and specific writer I did subscribe to was educated from a very good university, their degree was not in finance or economics(although they are good at math). I made some money on gold, but that’s about it.

Where would be a good place to start educating one’s self in logic? I took an introductory course in college. Since then, not much else….

Name withheld

Okay, although I think I addressed most of this subscriber’s concerns in this article’s preface, I do have some final thoughts regarding the need to build upon our abilities to think logically. Specifically, we need to develop a grasp of the logic process necessary to help formulate investment strategies and make life choices. I would also say we need to continually develop our logic “sniffers,” so that we can recognize when a person’s argument is logically flawed, psychologically manipulative, and disingenuous.

“CRITICAL THINKING IS a desire to seek, patience to doubt, fondness to meditate, slowness to assert, readiness to consider, carefulness to dispose and set in order; and hatred for every kind of imposture.” – Francis Bacon (1605)

Most people have lost their ability to reason properly

Too many people are taken advantage of because of their lack of critical thinking, logic and deductive reasoning. These same people are raising children without these same skills, creating a whole new generation of clueless people. Since we live in a post-absolute truth world, it is more incumbent than ever to recognize how we are being duped. Whether it’s from government, our employers, customers, or alt-financial market forecasters, we need to determine if simple presuppositions and conclusions are proper and follow a logical path.

However, valid logic does not always guarantee truth or a sound argument. This is where it gets a little dicey. Valid logic is when the structure of logic is correct in the way of syntax and semantics rather than truth. Truth comes from deductive reasoning of said logic.

Successfully investing using rational discourse and logic

If I were to start out learning logical thought, I would begin with comprehending the syntax basics. Thus, I would seek books that explained the basic logic concepts and definitions as well as illustrated the common forms of logic fallacies.

Perhaps, I would take a look at these books below.

Logically Fallacious: The Ultimate Collection of Over 300 Logical Fallacies (Academic Edition)

Being Logical: A Guide to Good Thinking

There are many more similar books available to buy on Amazon, and a lot of this subject matter also can be found piecemeal on the internet. Since I am a remnant Christian, I often contemplate the many airtight logical arguments contained in the New Testament, and would recommend all Christians to read the New Testament in light of its discourse in logic and to how to avoid becoming a dupe.

Our process and transformation into becoming a master of logical thought doesn’t take place overnight. The best part of this is that we can all benefit with just a little training. For example, the more we know about how to spot the common logic fallacies, the less likely we will fall victim to disingenuous arguments. Since the vast majority of humanity have lost their ability to argue and reason deductively and inductively, they are easily parted with their money. Anyone who cannot contemplate logically will make poor life choices and will easily fall prey to modern marketers.

A subscriber asks: Can I point a person in the right direction?

A cognitively impaired, distracted, and amoral populace is easier to exploit

“The few who understand the system will either be so interested in its profits or be so dependent upon its favours that there will be no opposition from that class, while on the other hand, the great body of people, mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests.”

The Rothschild brothers of London writing to associates in New York, 1863

The alt-financial media claim to know so much about the Rothschilds and the Federal Reserve, yet they cannot seem to profit from a system they insist they understand. Perhaps they really are not that skilled. Perhaps they are designed to mislead. You may think that the writers in the alt-financial media have stumbled upon some sort of secret, but it seems their followers have only stumbled into a trap.

Gold price per oz., log-scale. Gold Anti-Trust Action Committee (GATA) has been talking of an impending global “reset” since its founding. Based on this chart, all I see are higher gold prices over the longer-term.
Nasdaq Composite since its inception (log-scale). Why doesn’t GATA think there will be a global reset based on the Nasdaq performance?
S&P 500 index, log-scale; The S&P has performed better than gold since the U.S. shut the international gold window in 1971. Why isn’t GATA warning of a global reset based on the S&P 500 performance? Perhaps GATA is as biased as the rest of the media it criticizes.
What’s the real objective of the “mainstream” alt-media?

A subscriber asks;

…I’d like to know if you can point me in the direction of a podcast or blog post of yours that details the issues regarding the alt-financial media. I too have been waiting for “the next recession” since 2010 and feel like if I had your insight, I could have avoided bad financial and career moves based on predictions that went from “I think next year will be the year” to “we know a recession is coming, we just don’t know when.”

One thing that I have noticed is that the majority of those making these predictions do not have formal training in economics or finance. I find your blog to be refreshing. Count me as a new fan.

P

The alt-financial media may complain about the current world order and its financial system, but if the alt-media truly comprehended this system’s design and intent correctly, they could have helped to empower their followers, and not impoverish and frustrate them.

Ask yourself these questions;

  • Why are the alt-financial media outlets incapable of making the correct predictions and dispensing prudent advice?
  • If someone had a thorough comprehension of this monetary system, would he be more likely to magnanimously toil away for the alt-finance media sites, or would he concentrate on profiting from the system?
  • Is the poor predictive capacity of the alt-financial media due to stupidity, willful ignorance and the backfire effect, or could it be something more sinister?
  • Could it be that the mainline alt-media outlets are controlled and designed to impoverish potential resistance to the new world order?
  • I contemplate the antithetical advice of ZeroHedge and Alex Jones.  Would it be more prudent for readers to avoid these disingenuous news outlets?
  • Since many alt-financial personalities sell services or products, how objective are they and should we heavily discount their advice?
Getting hooked on alt-finance “news” can be as damaging to your finances as an addiction to drugs

With these questions in mind, I think we can develop some sobering conclusions. I scan the alt-financial media daily as a normal routine, but I would rarely rely on anything they dispense as I grew tired of the crash-and-burn narrative years ago. Look at that email I received; that person lamented over his career moves in light of the alt-finance influence. I honestly find that extremely heartbreaking as well as an affront, which is why I developed my blog in the first place, since I gain nothing in this world from maintaining this site.

Here’s the bottom line; if you do not have a thorough understanding of economics and the financial markets, I implore you to stay away from this alt-finance poison. I have observed over the years that people who dream of collapse can actually become addicted to this stuff, much like a junkie gets hooked on heroin.

An easily solvable crisis that can be exploited to dupe the simple

The exploitation of the latest round of repo madness illustrates my point. While the repo market problem had the potential to be a huge deal, I repeatedly told my subscribers that the Fed could easily rectify that problem; and it essentially has. Just ask U.S. shareholders what they think.

Unfortunately, it’s clear to me that I certainly cannot recommend anyone in the alt-financial realm. Many of the analysts are either lacking in skill, copywriting for a fee, selling services, or are unwittingly promoted by the alt-media gatekeepers to mislead the reader. Even the alt-financial shills begin to believe their own disingenuous arguments. At least with the mainstream business media, the writers and analysts are experienced and educationally accredited. In other words, I would recommend mainstream business over the alt-realm.

My one overriding piece of advice; take an interest in learning economic and financial theory, so you can parse the good data from the noise.  Learn to rely more on yourself and less on others. Endeavor to acquire a rudimentary understanding of logic and mathematics. This skill set can carry you a long way.

There really in no single podcast or source that we can rely on. Even if you agree with what I discuss, I do not provide enough information for you to make all your investment and financial choices. What I do provide you is a framework from which you can begin to redirect your mindset. We need to first overcome our hardwired biases and fears before we can proceed with our life. Everyone’s circumstances are different, but the younger you are, the more aggressive you need to be with your choices. The alt-media will only provide you with affirmation of your worst fears, so you never go out and build your life. If you cannot unplug from this poison, your best hope will be collapse or the second coming. I hope this helps.

December 20th Update – Hopes vs. reality; A monetary system designed for the new world order

To download the podcast – Right mouse click here

-The alt-financial dreams of collapse face a harsh reality. This monetary system is increasingly empowering the ruling class in a similar fashion to the way the ruling Hindu Brahmin class has been.
-80% of the Indian population does not matter and it has been that way for 5,000 years. Christianity in the West has been replaced by new-age doctrine that closely resembles air-brushed Hinduism. A similar societal structure based on debt slavery is being established in the West and the ruling elite are using their monetary system to achieve their goals.
-The NWO elites have been force-feeding us new-age Hindu ideas for 60 years for a reason. They are telling us we are the useless bottom class. Individual rights and personal freedoms don’t matter anymore. Most people see nothing wrong with exploiting others for personal gain.
-The repo market is already being viewed in the rear-view mirror as the Fed quickly ramps up permanent operations.
-We only need about $60 billion a month in longer-dated QE to keep this system moving forward for years.
-It doesn’t matter how large the alt-financial media have become; those with the assets rule. Those without the assets mean nothing to the world. The poor class are like the laborers or outcasts in the Hindu society. Most of the alt-finance followers fall into these categories.
-The alt-finance crowd are similar to the alt-Christian crowd. Both are looking for a divine intervention and expect imminent collapse. Both have been sorely disappointed and impoverished.
-Nationalist movements, populism, Brexit, trade tensions, geopolitical frictions, repo-market madness, impeachment diversions all serve one function; They all provide excuses for the central banks to empower the ruling class. I think of the Movie, Elysium.
-Our investment and trade decisions need to be keyed off of Fed and central bank policy changes.

December 19th Market Update – A couple observations that merit attention

To download the podcast, right mouse click here

-I am currently paying attention to the rising longer-dated US Treasury yields. Bond prices are resting on intermediate support.
-Asset markets continue to rise in the wake of the overall QE actions, loose monetary policy, and lessening trade tensions.
-On the margin, inflation is rising higher on some measures. Many are chalking it up to a better economy, but it may be partly attributable to rising longer-dated yields.

Movement along the yield curve is less a result of economic prospects and more of changes to Fed policy

-Higher bond yields can act as a supply shock to producers. Eventually, the Fed will have to begin to emphasize longer-dated purchases.
-I notice that commodities are beginning to rise slightly. We can say that it’s because of lessening trade tensions and brighter economic prospects, but I think it’s also due to rising longer-dated UST yields.
-If longer yields rise too much and the yield curve further steepens, the Fed will have to once again shift some of the QE to the longer end.

Empower yourself by studying Economics and financial market basics

Gaining knowledge helps to overcome the disingenuous analysis

Note: You do not need a formal background in Economics to empower yourself. Most of those dispensing advice are disingenuous or worse, since they have hidden objectives. Often, they will make their analysis unnecessarily complicated, so they can pose as our experts.

Hi Chris,
I’m new to your stuff, but as someone who got caught up in the gold bug/Zerohedge/Armstrong media for many years, I’m grateful to hear your views!

Question, with all this hidden inflation and all-time-low interest rates, am I best to spend $4000 a month paying off my mortgage (personal home) as fast as possible, or $1000 a month on a mortgage and investing $3000 in stocks and other investment property?

I am very conservative, so am naturally leaning towards the ‘pay off the house’ approach, but I don’t want to look back and think it was a silly move.

FYI – I’m 32, wife is 29, one child (10 months), we live on 50 acres in rural New Zealand. Property was $500k NZD, mortgage remaining is $200k. I run a website earning USD but as I’m in the alt-health space.

Cheers, A

PS – do you have any books, blogs, podcasts etc that you would recommend for a young family trying to position ourselves as best as can be?

Here was my response (edited for grammar):

Hi A,
Thanks for the email.

If I were in your position, age, and circumstances, I would start by paying down your owner-occupied mortgage by about 1k extra a month. With 200k outstanding, you can pay that off in about 7-9 years. It is not wasted money and paying down your house will help the balance sheet.  Amortization has a way of really building equity. Of course, if the rate is low then I would concentrate on higher rate debt first. It is not a silly move to pay down owner occupied debt.

Not all loans are created the same. If you are younger, sometimes it pays to be more aggressive.

My real estate investment debt runs at about a 6% rate (down from 7.5% from a year ago), but my owner-occupied mortgage is 3.75% for 30 years. I work the investment side and pay what I owe on my owner-occupied mortgage, which is about 50% LTV right now. Our situations are different, but if you and your wife are risk-preferred like I have been, you may prefer to do what I do and defer paying down owner-occ. loans in lieu of using investment debt.

If you choose to buy an investment property, I would dedicate the rest to the pay down on that loan or purchase. That will give you equity you can tap into sooner as you pay down the loan. I would try to separate your house equity from your investment end. I use LLCs to help this separation and borrow via my LLCs.

At these prices I am not a big fan of stocks, though they may continue to run up for awhile more. I prefer taking control of my investments, and if you are hoping to empower yourself by taking control of your financial life, I would try to be a little more active than building a stock portfolio. Though stocks can be very profitable, I made much more money speculating in real estate. But do the numbers first before investing.

I don’t really have any particular podcasts and such that I would recommend. Some say similar things to what I say, but they also go off into other directions with which I may not agree.

My advice; read as much as you can in the business publications (mainstream over alt-financial). I read hours a day and though most of it may not be useful at first, it helps me to learn and come up with ideas as time goes on. I would learn Economics and Finance basics as much as possible. This makes reading all this stuff easier, plus it makes it simpler for you to separate the garbage from facts. The alt-media is a terrible place to get advice. The more you know the better your future choices will be.

Take an interest in the financial world. Learn to think correctly about money to avoid the obvious, but common mistakes. At your age, investing is great, because you have the time. But don’t squander your most valuable asset; time. Looking back over the past 20 years, it was only five or six big money (investment) decisions that made all the others pale in comparison. So, wait for the obvious opportunities and have the ability to jump at the chance. But this takes lots of learning and reading in the mean time, and either cash on hand or investment equity.

Chris

December 15th Update – Repo market madness; a symptom of the disease that continues to fester and what I recommend

To download the podcast – Right mouse click here

-An analysis of the timeline for the global financial dictatorship. What the globalists still need to do before they pull the plug. Gun confiscation is a must before the elites crash it all.
-A number of subscribers ask me to comment on Martin Armstrong’s analysis about the repo market madness. Joel Skousen also is saying that the repo market will lead to catastrophe. Is he right?
Is ZeroHedge right?
-Why and how the repo market blew up. What’s next for the Fed?
-Why the banks are not lending.
-Recall last month’s CNBC’s discussion of the Fed nationalization of the overnight lending market
-Recall Bernanke’s Wile E Coyote moment comments. Trump’s trillion dollar deficits pushed that time frame forward. Will Powell, the gentile outsider take the blame?
-As the nation-state governments and their central banks get more desperate to bridge the funding gaps, they may begin to pay less attention to the repercussions of their actions and just let the asset markets go out of control.
The mainstream is trying to divert investor attention away from the Fed policy actions.

China’s growth outlook overtakes the Fed trajectory as the second biggest concern after U.S.-China trade issues

Source: Bloomberg survey of 57 fund managers, strategists and traders

-What I recommend from here on out. As asset prices move higher, the opportunity costs of holding cash fall. I have been spotting the beginnings of some reckless speculation in my areas of investment.

December 12th Markets Update – The Fed to buy “Coupons”; Those who say the markets are rigged, fixed, or cyclical cannot be trusted

To download the podcast – Right mouse click here 

-These markets are not rigged nor fixed. The price performances of the major asset classes are a direct manifestation and result of the significant changes to the monetary and fiscal policies over the past decade.
-Those who correctly interpreted these dynamics have profited with confidence. Those who couldn’t comprehend the economics behind these changes made the worst investment decisions and dispensed the poorest advice.
-Jerome Powell’s press conference yesterday offered a very revealing clue as to the future direction of the asset markets. One comment overshadowed all others. I took note.
-Powell stated that the Fed will probably begin purchasing coupon-bearing Treasuries soon; these are longer-dated notes, over a year in duration at issuance. We have been discussing for a while that this needs to be as QE can never end and that the assets on the Fed’s balance sheet must climb, so that rates can move lower and that the Federal government can stay in business.
-Those who keep saying the markets are fixed or rigged do not understand intermediate economic theory and should not be dispensing their garbage advice.
-Gold couldn’t stay higher today and fell sharply. The COT is still extremely overbought; more than last week’s COT.
-Real estate in the U.S. is still attractive. The areas that I have been recommending to my readers (former industrial and Rust Belt cities are on tap for the best returns in 2020.)
-One reader asked me about Spokane, WA real estate last month, which I recommended, and it was listed as a hot spot for 2020. The hottest housing markets of 2020 are far from the coasts
-The Dow and S&P 500 put in new all-time highs. Most of the bullishness came from Powell’s comment yesterday that the Fed will start buying coupon securities again.
-Building the first million is the toughest. After that, it gets easier; as long you do not listen to the people pushing the ideas of fixed and rigged markets, or peddling the cycle trash.

Response to a subscriber: KGB-trained Putin equates Communism with Christianity

A message to Vladimir Putin; There is nothing Christian regarding Communism nor the present Russian regime
Soviet Communism; Any form of government that kills 60 million of its citizens to consolidate its power cannot be trusted and certainly is not Christian

Note: These types of comments from Russia’s Putin should serve as a warning to those who still see him as some sort of champion who wishes to overturn the new world order. I strongly suggest to avoid any outlet that refers to the pro-Russia narrative. Shill outlets like Russia Insider, RT, and ZeroHedge have another agenda and that is not to spread the truth. They were established to mislead the West and spread its pro-Soviet propaganda. Moreover, their advice will impoverish their readers. My suggestion; do the opposite of what these propaganda charlatans advise.

This email is in response to a subscriber who forwarded me a link to an RT article from last year. I found it quite sobering and wanted to share the story with my readers.

Putin: The leopard doesn’t change its spots

Russian President Vladimir Putin has likened communism to Christianity and Vladimir Lenin’s mausoleum in Moscow’s Red Square to the veneration of the relics of saints.

“Maybe I’ll say something that someone might dislike, but that’s the way I see it,” Putin said in an interview for the documentary Valaam, an excerpt of which was broadcast on Russia 1. “First of all, faith has always accompanied us, becoming stronger every time our country, our people, have been through hard times.

“There were those years of militant atheism when priests were eradicated, churches destroyed, but at the same time a new religion was being created. Communist ideology is very similar to Christianity, in fact: freedom, equality, brotherhood, justice – everything is laid out in the Holy Scripture, it’s all there. And the code of the builder of communism? This is sublimation, it’s just such a primitive excerpt from the Bible, nothing new was invented.”

Putin went further by comparing the Communists’ attitude to the Bolshevik leader Lenin to the veneration of saints in Christianity. “Look, Lenin was put in a mausoleum. How is this different from the relics of saints for Orthodox Christians and just for Christians? When they say that there’s no such tradition in Christianity, well, how come, go to Athos and take a look, there are relics of the saints there, and we have holy relics here,” Putin concluded.

After Lenin died in 1924, his body was embalmed and put on display in a mausoleum in Red Square, Moscow. The cult of Lenin was part of Soviet ideology. The public debate about the possibility of giving Lenin’s remains a proper burial began during the early days of Perestroika in the 1980s.

Putin’s words were music to the ears of Communist Party members. “I think these words of the president very effectively and reasonably smooth out the acute angles around the theme of the mausoleum,” Deputy Chairman of the State Duma Ivan Melnikov said on Sunday, as cited by Interfax.

Putin: Communist ideology similar to Christianity, Lenin’s body like saintly relics, RT.com

Vladimir Putin can claim that Communism is Christian, because his government no longer eradicates its priests and destroys its churches, but after killing 60 million of its own citizens, it no longer has to kill and destroy. Three generations of those raised under Soviet Communist rule were brainwashed and punished into submission. That residue exists today; very few dare to speak out against the current Russian dictator, Vladimir Putin.

There is nothing Christian about Socialism and Communism

Christians were instructed to give freely to other fellow Christians and to help those who spread the Gospel to the unwashed and unsaved. Jesus and the apostles told us to withdraw from those who refused to listen to this message and not to give to those who clearly refused to act in a Christian manner. Jesus didn’t instruct his apostles to open charities and give to everyone. He didn’t recommend that governments force taxes on the citizenry to fund benefits for everyone. Jesus told us that if a man refused to work, he shouldn’t eat.

Never forget this one important point; there is nothing Christian regarding Socialism and Communism.

With socialism, your punishing tax burden funds social largesse and most of these programs have nothing to do with promoting Christian ideals. I think of welfare programs that encourage birth out of wedlock, fornication, laziness, and its recipients to remain unmarried. I think of the promotion of abortion as well as the antichrist programming in the public schools. I think of the promotion of new world order ideals, such as homosexuality. I don’t think Jesus wished to advance the concept of an overbearing police state that tracked the actions of its citizenry.

Now, imagine you decided you didn’t wish to give to the government programs that promoted the NWO agenda. Imagine if you withheld paying a portion of your taxes, because you contested war based on your Christian principals. In most nations, including the U.S., you would lose your assets and would be jailed. In many nations you would be killed. There is nothing voluntary about socialism and with communism, avoiding its power would definitely result in death.

Is Communism remotely close to Christianity? Absolutely not, but in Russia’s case, maybe Communism resembles the ideals of the compromised state-sponsored side of the Russian Orthodox Church.

Despite what the pro-Soviet propaganda says, the United States is the only country left that has a modicum of freedom of speech. We may be banished on social media and treated like a pariah by our friends and family by saying things that are not P.C., but the last time I checked, I can still say whatever I want, as long as I do not threaten harm or libel others. Try to do this in Russia and see what happens.