US Fed was naive? World Economic Forum whitewashes last decade’s economic crisis

The true intention of the US Fed can never be revealed

I came across an article this morning from the World Economic Forum (WEF) titled, Two myths about the 2008 financial crisis, debunked, and wanted to mention a few comments with respect to their conclusions.

To better understand the WEF we should take a look at its Leadership and Governance webpage, including its Board of Trustee members. They include, David M. Rubenstein,  Co-Founder and Co-Executive Chairman, Carlyle Group; Christine Lagarde, Managing Director, International Monetary Fund (IMF); Mark Carney, Governor, Bank of England; Al Gore, former US Vice President; Jack Ma, Executive Chairman, Alibaba Group; Queen of Jordan; and Marc R. Benioff, Chairman and Chief Executive Officer,

As anyone who is familiar with my blog and analysis, one of my overriding determinations is that the boom/bust cycles are cultivated and allowed to grow until the bust. It is the cycle that allows the insiders to sell high, buy low, and scoop up the world’s assets and consolidate their wealth. These cycles are produced with malice and intent and powered with the fuel of central bank monetary policy. Of course, these central banks are privately owned and do the dirty work for their owners.

Over the last decade, research by many economists, including us, arrived at a broadly shared narrative of the 2008-2009 financial crisis… [T]he fundamental cause of the crisis was the deflation of the housing bubble, starting in early 2007. For several years until then, home prices in the United States rose dramatically, fueled by massive borrowing by homebuyers and banks’ investments in mortgages and mortgage-backed securities. As the housing bubble burst, both borrowers and bankers suffered.

Two myths about the 2008 financial crisis, debunked (WEF, October 1st)

Indeed, the writers state the obvious about the genesis of last decade’s bust. The “deflating” housing market was the primary cause of all the problems last decade.  In explaining its analysis of why so many people and parties could be so careless in allowing it to happen the writers discount moral hazard of the lending banks as the cause and place the blame squarely on the failure of the policymakers (US Fed and government officials) and all the other parties involved to not recognize the warning signs caused by their blind trust in the strength of the housing market.

It is surely the case that the banks, along with rating agencies, mortgage underwriters, investment banks, and others, engaged in unsavory practices. But the moral hazard view misses the central point: as we document in our book, households, banks, rating agencies, investors, and policymakers all believed in the housing market, and all failed to see the risks.

Two myths about the 2008 financial crisis, debunked (WEF, October 1st)

While the article claims the IMF was almost alone in predicting the crash, the writers say the US Fed totally underestimated the impending calamity and fallout from a deflating bubble.

Several institutions, including Bear Stearns, had to be rescued earlier that year. The Lehman failure did precipitate a fast and furious run that was hard to stop once it started. But its occurrence was a growing possibility for months. It did not come out of the blue.

One reason it may have felt that way is that, as late as August 2008, the Fed expected only a small slowdown of the US economy should home prices continue falling. The crisis was a surprise to investors and policymakers because they gravely underestimated the risks building up in the financial system. Lehman was a heart attack, but the patient was already terminally ill.

Two myths about the 2008 financial crisis, debunked (WEF, October 1st)

It wasn’t a surprise to those who understood the agenda.

The true intentions of the US Fed and its reason for existing

How can the US Fed be so obtuse? How could they have been so misguided in their determination that a deflating bubble never deflates as intended? Why did they not reign in speculative loan underwriting years earlier? I have the answers.

The US Fed’s main role is to help facilitate, amplify, and accentuate the boom/bust cycles. We discussed how Ben Bernanke and Alan Greenspan in 2005 stated that while the US Fed did not cause the growing housing bubble they were going to continue raising short term rates until it deflated.

Job well done!

The Fed maintains relaxed policy for much longer than it should. It does this to create the boom that turns into the bust. It’s done with intent, not by ignorance.

Of course, US Fed monetary policy was key in causing last decade’s housing bubble. There are three reasons I can think of off the top of my head;

First, in the wake of 9/11 the US Fed lowered the Fed funds rate to a 40-year low of just under 1% and it remained accommodative long after it should have removed its dovish policy objective.

Second, the US Fed completely misread the tax changes incorporated into the IRC as a result of the 1997 Taxpayer Relief Act (phased in for 1998). The cap gains exclusions to owner-occupied real estate created wild speculation by the average homeowner that remains in place today.

Third, the Fed could have easily instructed its member banks to reign in lending and tighten underwriting criteria. It chose to do nothing.

The WEF says crises can be anticipated, but the US Fed differs

In order for the elites to continue using the central banking concept to corner the world’s wealth they need to condition us to believe that the boom/bust cycles cannot be anticipated and that they are just a product of human behavior. Only the true globalists tell us otherwise, because they can appear to be wise. However, they have no monetary policy power yet.

But I submit they know far in advance and depend on us not spotting the inconsistencies. These elites use the media to help talk up asset markets and get us to be on the wrong side when things either turn up or turn down.

The second misconception is that the crisis could not be anticipated. This argument is most popular with policymakers who acknowledge that they failed to see what was coming. As Timothy Geithner, President Barack Obama’s Treasury Secretary, put it in his memoir, “Financial crises can’t be reliably anticipated or preempted.” Likewise, Hank Paulson, Geithner’s predecessor under President George W. Bush, recently said, “my strong belief is that these crises are unpredictable in terms of cause or timing or the severity when they hit.”

One version of this view holds that the Lehman failure resulted from an unpredictable run, with investors rushing all at once to withdraw short-term financing from the banks. “This crisis involved a 21st century electronic panic by institutions,” as former Federal Reserve Chairman Ben Bernanke put it. In other words, “it was an old-fashioned run in new clothes.”

The evidence does not support this view. Our book shows that deflating asset bubbles, particularly in housing markets, pose a serious danger to the financial system. When highly leveraged banks and other institutions face the abyss of massive losses, the probability of a panic rises sharply. In this respect, the 2008 crisis looked very much like all the others.

Two myths about the 2008 financial crisis, debunked (WEF, October 1st)

The next bust is being carefully planned

Keep in mind that with the advent of the internet and access to immediate news and analysis it is getting much more difficult for the central banks to make obvious mistakes. But, the agenda to consolidate the global wealth must continue. This is why there are so many diversions and red-herrings that keep most readers, even those in the alt-media, flat-footed and expecting collapse around every corner. It will happen, but in due time. We see the signs, so let’s take action. The US Fed and Treasury officials will certainly not warn us in time, nor is it their obligation to tell us.

Government intervention; How Champions of the Poor Become Tyrants

I wanted to pass along an article I read earlier today titled, How Champions of the Poor Become Tyrants.

I thought the author’s conclusions about socialism and government market intervention were congruent with what we discussed previously. The author, a professor of Economics, discusses the problems (e.g. restricted supply and economic loss) caused by government intervention.  I was particularly intrigued with his conclusion that the very programs, designed to help the poor, actually work to drive a further divide between the classes.

Since the charismatic champion of the poor is not going to raise taxes on the poor… he or she must raise taxes on the rich or inflate. If taxes are raised on moguls and magnates, they will flee the country. Understanding this, the charismatic champion of the poor opts for inflation. To do this, the money supply is increased, which occurs when the champion of the poor directs the nation’s central bank to print new money to buy new Treasury bonds. With each period’s economic losses being pyramided on top of previous periods’, the money supply expands at a geometric pace. This causes the nation’s currency to devalue at an increasing rate.

The moguls and magnates that own commercial, rental, and personal property benefit from the inflation. As the rents they collect grow geometrically in inflation, the real value of their loan principle falls. In a few periods of sufficiently high inflation, inflated rents can be used to pay off loan principle or the equity inflation created can be leveraged to acquire more property.

The policies that are intended to help the poor — rent control, price ceilings, and the minimum wage — harms the poor, destroys the middle class, widens wealth and income gaps, extinguishes innovation and entrepreneurship, and turns champions of the poor into tyrants.

How Champions of the Poor Become Tyrants – Hal W. Snarr (

What’s the future of socialism? How can we benefit?

There are many who observe the markets of a socialist economy (The US is socialist now) and wonder how it can last. Many may even think it will collapse under its own weight sooner rather than later. But this is the type of logic I conjure up when I fly on a commercial jet plane and wonder how it can stay aloft in flight. I always get to my destination.

An amoral people choose to have an amoral economy.  They may pretend to scoff and excoriate the monetary printing press, but they were begging for it during the last crisis. Increasingly, they are becoming reliant on it for their daily needs. As long as the people are content with inflationary printing things can continue for a while. They will hope the authorities can continue to manage interest rates and manipulate the markets. College graduates under 40 have been taught to embrace the concepts of government intervention and social programs.

The author’s observation; those who buy inflation-resistant, income-generating assets do the best over time. While there are some who think that doing well at the expense of others may be cruel, we need to understand that the social programs are supported by the vast majority of the population and that when we buy income-generating assets and build businesses we are just trying to survive. It’s nearly impossible to expand our minds and grow spiritually when we worry continually about paying the bills. In a socialist economy, those who are dependent on a job and government benefits will always end up on the losing end. This premise works, by definition, but this well-known secret seems to elude the unwashed masses.

One more thought; so what if socialism collapsed? What type of economy would replace it? The only answer to this problem when an unprincipled populace is affected; more and more government control. The end result of socialism is complete government control over every aspect of our lives. This is why I am so adamant about hitting this one point home; those who acquire income-generating assets and develop ways to make money through ingenuity will always end up doing much better than the rest of the sheep who believe the propaganda of socialism.

You and I cannot change these societal and government trends, so we need to move forward and do the best we can with what we have.

September 29th Update – Overcoming biases to better our lives; Nobel Prize-winning economists talk about how stupid we are

I have uploaded a podcast for September 29, 2018. Click here to go to the show archives page to listen and look at the relevant links or you can listen on the link below. You can also right mouse click here to download the podcast.

-We all have confirmation biases. How we deal with them separates us from everyone else
-Those with strong beliefs have the most powerful biases. Try rationally discussing the global economy with someone convinced collapse is around the corner.
-I spend little time analyzing what many of the proffered “experts” in the financial media are talking about.  The whole financial industry is one big conflict of interest and they all talk their book of business and agenda.
-The globalists know what we are thinking and with the internet algorithms know why we think this way.
-The globalists know that virtually all people do not know why they have their beliefs.
-The globalists develop different types of controlled media to indulge us.
-Nobel prize winning economists talk about how stupid we are. They work for the dark side. At least they tell us in their books.
-10-year treasury yields may have topped out for the short-term future as the COT report is the most lopsided in history; the large speculators are the most short ever.
-Gold has firm support near 1200 as the commercials added to their long positions and the large specs added to their historically large net short position. Silver is helping as it saw a nice lift to end the week.
-Oil rising as interest rates rise. Most of the marginal producers are out of business from the last downturn and the survivors with strong balance sheets are making a lot of money. I have been long the XOP for a few months now.

An analysis of the Japanese asset price bubble and its similarities to today’s asset-driven economy

I have uploaded a podcast for September 25, 2018. Click here to go to the show archives page to listen and look at the relevant links or you can listen on the link below. You can also right mouse click here to download the podcast.

-I worked at Mitsui Trust Company from 1990-1993 and witnessed the results of the bursting of the Japanese asset price bubble in real time. My observations from that experience.
-The arrogance of the Japanese corporations and their officers during their bubble years and the arrogance of today’s wealthy are similar. They became drunk and complacent.
-Many of those who promote and write about government intervention in the market place are in their 30s-40s and were products of their educational environment. They were indoctrinated with macroeconomic textbooks that promoted government intervention.
-Japanese land prices rose for the first time in 27 years as an influx of foreign tourists boosted demand for hotel properties and shops
-Japanese mortgage rates near historic lows (about .9%) yet prices continued to fade.
-I am seeing similarities with Japan and what has happened in the US over the past few years. The Japanese asset bubble was characterized by rapid acceleration of asset prices and overheated economic activity, as well as an uncontrolled money supply and credit expansion. More specifically, over-confidence and speculation regarding asset and stock prices were closely associated with excessive monetary easing policy at the time.
-My concern is that the next time housing and stock prices fall low interest rates won’t be able to right the ship.
-Egged on by extremely low rates, US companies have piled on a record-setting $6.3 trillion of debt
-DC-based sandwich chain declares bankruptcy and closes all stores over owner’s ties to Trump.
-Why I chose real estate rentals as a business. These are the same reasons why we should choose our future endeavors.

September 23rd Update – Dovish Fed policy as inflation and asset prices rise; Asset bubbles transcend asset classes; Economics and trading books I read and recommend

I have uploaded a podcast for September 23, 2018. Click here to go to the show archives page to listen and look at the relevant links or you can listen on the link below. You can also right mouse click here to download the podcast.

-Will the 10-year UST be allowed to run up in yield? As the Fed tightens the longer-end of the curve needs to move higher.
-Asset prices and inflation moving higher as the Fed maintains its dovish policy.
-Asset bubbles always act and end the same way, regardless of asset class
–Mortgage yield APRs pushing 5%.
–Home builders hit new lows for the year after handful of downgrades
–This chart shows the haves and have-nots of the housing market, and it’s getting worse
-XRP (Ripple Holdings crypto) hodlers setting up for disappointment? Shills out there pumping once again as XRP is a centrally-managed coin and what company would use it?
-Social and deficit spending raises asset prices, especially real estate, by definition. All that debt becomes monetary equivalents and collateral that can be used to buy assets, while the debt creates deflationary forces.
-Some books I recommend; I have been studying behavioral economics as the globalists have used this science against us. They know us better than we know ourselves. This is why I recommend learning more about this field of study. Perhaps we can learn more about why we make particular choices.
-Intermediate Macroeconomcis textbooks from 20-30 years ago provide a good framework of the study. Newer macroeconomic theories promote government intervention, socialism, social justice, and income redistribution.
-Alex Jones has been going on epic profanity-laced rants. He has thrown the patriots under the bus. The job has been accomplished.

September 20th Update – Ordo ab chao; Anticipate and act; Will gold perk up? Platinum has; the globalist puppets predicted bonds would unwind; mortgage rates near 5%

I have uploaded a podcast for September 20, 2018. Click here to go to the show archives page to listen and look at the relevant links or you can listen on the link below. You can also right mouse click here to download the podcast.

-Order out of chaos; Those who run the planet create the chaos and conflicts to further their agenda. They operate behind the scenes, so few people see it as being all manufactured and intentional.
-Most following alt-right and alt-financial media do not see the careful planning of the chaos and the left/right conflict. Of course, the top of the alt-right pyramid is completely controlled.
-The compromised churches have brainwashed many to think the end is soon and that the rapture is imminent. Why plan for the future? The ones worried about being left behind will be financially left behind. All by design as any potential opposition will be neutered.
-The Synagogue uses emotion to whip up the contrived sides against one another while the next phase of the NWO agenda pushes forward with little resistance. Few of the people who think they know what is going on are looking in the right direction.
-Despite rising bond yields, a fading dollar, higher inflation, and a bullish COT report, gold is struggling. Don’t look for silver to save the day. However, platinum may be telling us better days are coming.
-Mortgage rates at some banks approaching 5%, the highest in 6-7 years. Eventually, everything the ex-Fed chairs said earlier this year will hit. It takes time and gives the elite time to adjust and anticipate.
-The average household is the wealthiest ever. But those supporting Trump have been left behind, while his adversaries have benefited the most. Remember that Trump was a liberal democrat until he spotted an opportunity to take advantage of an under-served demographic; the naive flag-waving crowd (NIFWICs).
-The globalists want us to be good global citizens, but when it comes to war they want us to be patriots.

September 18th Update; A discussion of listener emails and a review of the long-term agenda

I have uploaded a podcast for September 18, 2018. Click here to go to the show archives page to listen and look at the relevant links or you can listen on the link below. You can also right mouse click here to download the podcast.

-Perhaps a hidden objective of the implementation of MERS and the defacto nationalization of the MBS industry is to create a national real estate title registration system.
-Government confiscation of real estate is difficult under the current local government title registration system. A national registry would solve many of these issues and make taking your house as easy as taking a bank account.
-10-year US Treasury moves above 3%. the US Fed mouthpieces warned us and they warned the insiders to make hay while the sun shines.
-In a post global-conflict world we would have to pledge allegiance to the NWO and renounce our religious beliefs and long-held admiration of the constitution.
-It is nice to possess the confirmation bias that says the Synagogue of Satan globalists are losing control.. This would imply that we have more control over our lives. The alt-financial media and alt-right personalities try to tell us this very idea, because they get a bigger following. It is depressing to contemplate that this ostensible chaos is by intent and means we have less control over our lives. Unfortunately, I have to conclude that this chaos is just for show. It is convincing, isn’t it?
-The United States will be the Nazi Germany of WWIII
-The media has been conditioning us for decades to accept the inevitability of a global nuclear war. They have conditioned us to think of the constitution and nationalism on par with child molesting, white supremacy, racism, and all sorts of evil.
-The China/American trade tensions go back to its genesis; Kissinger’s visits to China in 1971. This coincided with Nixon’s shutting of the gold window. China was chosen to be the manufacturing base and the US’s military was chosen to be the NWO sledge hammer. Thus, the US dollar has to be the reserve currency. We cannot have one without the other.
-The current tariff war goes back to the 1970s, when the bilateral trade deficits that started under the Carter regime began to balloon. The globalists knew this outcome was inevitable, which was their intention. It goes back almost 50 years.
A visibly drunk Alex Jones was comparing himself and President Trump to Godly figures, while denigrating the left and the Bushes.

Markets Update – Why the management of the yield curve is so important and what the next several years hold; is silver ready to take another leg down?

I have uploaded a podcast for September 16, 2018. Click here to go to the show archives page to listen and look at the relevant links or you can listen on the link below. You can also right mouse click here to download the podcast.

-Why the suppression of the yield curve is the most important objective for now.
-Further comments on the mortgage market and the US Treasury yield curve
-A quick analysis on the current monetary system and the objective of the elites.
-A top-down look at the lifespan of our fiat monetary system and what the next several years hold
-What we need to stay focused on for our personal financial lives
-Gold and 10-year UST COT analysis
-I think silver is ready to take another leg down this week. Gold COT is bullish, but silver performing poorly.
-The US Fed is way behind its tightening campaign. The Fed has been slow to unwind its balance sheet. The dovishness continues to support asset prices.

The alt-financial media got it wrong; MERS and the MBS market were designed to help the globalists suppress long-term bond yields

I have uploaded a podcast for September 15, 2018. Click here to go to the show archives page to listen and look at the relevant links or you can listen on the link below. You can also right mouse click here to download the podcast.

-The concept of the mortgage-backed security (MBS) goes back to the late 1970s with its invention. Lewis Ranieri is often referred to as the “father of the mortgage-backed security.” He rose to become Vice Chairman at Salomon Brothers in the late 80s.
-The MBS got a big boost when it received favorable tax treatment under the 1986 TRA, with the REMIC getting tax-exemption status. By the end of 1986 the MBS market was worth $150 billion.
-The Bloomberg terminals became important MBS price discovery sources around this time.
-Mortgage underwriting was very subjective at the time, with many banks and officers having wide discretion. Moreover, banks generally kept the loans on their books. This created problems with pricing models. In addition, in the late 80s-mid 90s, as interest rates fell MBS prepayments became a problem and MBS prices fell hard. This is counterintuitive as bond prices would normally rise.
-The globalists took note as MBSs perform best in a stable-interest rate environment – the current market dynamic we have experienced over the past decade. The first 30 years of the MBS market proved to be a valuable learning experience for the globalists.
Mortgage Electronic Registration Systems, Inc. (MERS) was not established to undermine the concept of ownership of title as the alt-financial media claims. MERS was founded by Fannie Mae, Freddie Mac, Ginnie Mae, and the Mortgage Bankers Association, to help standardize the MBS market and to create a pool of liquidity in the trillions.
-Just like with the US Fed, nobody can seem to figure out who owns MERSCORP, operator of MERS. The judges even make errors when identifying parties in a lawsuit.
-Imagine how high mortgage rates would be if we did not have the federally-backed MBS sector and the MERS registry. Either rates would be low and there would be no credit available or rates would be high and asset prices would have collapsed. We cannot have both, unless there is marxist government control.
-By expanding this pool of mortgage funding liquidity the globalists were able to keep mortgage rates lower than they otherwise would be able to. The real estate sector provides the largest asset class of collateral. In order for the globalists to control long-term yields it was necessary for them to control the mortgage market.
-The manufactured crisis of 2008 provided the excuse to nationalize the mortgage market. The GSEs, the mortgage banking industry, the underwriting and appraisal process were all nationalized and federalized. Thus, the process became objective and standardized.
-As debt levels became more onerous, it became necessary for the major markets (e.g. Treasury and residential mortgage) to be actively managed by the government and the US Fed. With respect to the mortgages, the standardized MBS market and its accompanying MERS recordation system provided the needed tools to tame this multi-trillion dollar sector.
-Masonic federal judges were picked to hear the cases against MERS. Notice that virtually all the court proceeding either were in favor of MERS or were undecided.
-This system is now deeply entrenched and is marxist in nature. We go into debt, but the entire market runs by government dictate.
-Welcome to the New World Order

The secret societies are running the show and we have no say; thoughts on the US dollar and REITs

I have uploaded a podcast for September 13, 2018. Click here to go to the show archives page to listen and look at the relevant links or you can listen on the link below. You can also right mouse click here to download the podcast.

Watch VP Pence (Mr. Christian conservative) blatantly give the masonic handshake during a Trump news conference.
-Discussion of 9/12 Joel Skousen interview with Jeff Rense. (right mouse link to download interview)
-All parties in the political spectrum, even the heads of the patriot movement, are part of the Synagogue of Satan. They wouldn’t be there unless they gave their secret oath.
-I never had any illusions about Trump looking out for us. There are many people who should have known better and are surprised that Trump hasn’t lived up to any of his promises.
-The secret societies control Australia;
Question; why would Australia’s military conduct joint military war games with China?
Answer; to give China much needed intelligence and military strategy. The globalists want China to strike the west and want Australia to fold in the upcoming global conflict.
-Separate yourself from a world that is populated with virtue signalers.
-I do not recommend owning residential REITs, but understand why. Dividend yields are approaching that of US Treasuries. Single-family REITs yield about 1.6%. We have the management of the yield curve by the US Treasury and GSEs to thank.
-The managers of the REITs are the only ones making a lot of money from them.
-I still believe US housing provides much better yields and cap rates. One rental property can provide the owner a wealth of tax benefits and income offsets, higher appreciation potential, and better payouts than any REIT.
-Even REITs like SKT have poor payouts when their stressed portfolio is considered. Its 5.9% yield cannot overcome the continual loss of NAV. I prefer PSA as the debt slaves in the US have a lot of useless junk to store.
-The petrodollar myth; As we predicted, the US has just become the world’s largest oil producer. If Texas were a nation it would be the 3rd largest producer of oil. 
-The oil output of the US will continue to expand and will continue to grow faster than Russia.
-The globalists are expanding the oil extraction technology and output potential of the US as war approaches.