patrick.net

1337irr says

How was gold not backed by force?

You never have to force people to take sound money. Only fake money ever requires laws to ensure it's used. If I can pay you with a worthless paper from the Fed, and you have to take it, why should I ever spend my real money?

Sound a cry to have the Fed mark to market its Balance Sheet.

That way the peasants will have some understanding just how much the elites stole from them.

1337irr says

How was gold not backed by force?

It never was. Gold has been money in every civilization for all of time.

We're in a very temporary time where a bill is considered to have value, and the governments are trying to march us into a future where it's entirely digital.

Even primitive societies accepted gold as having value. There's no society that I know of that didn't, but I would guess there's a few.

This is the ultimate end-game round of Gresham's law. They will force us to accept fiat until they can't, at which time all fiat will be worthless, and we'll have to start using that "barbarous relic" again. By then, we'll probably be living in a world like Kunstler's "The World Made by Hand."

stereotomy says

This is the ultimate end-game round of Gresham's law. They will force us to accept fiat until they can't, at which time all fiat will be worthless, and we'll have to start using that "barbarous relic" again. By then, we'll probably be living in a world like Kunstler's "The World Made by Hand."

Remember, Gold is not the final answer.

There have to be laws requiring salaries and wages to be paid in metal directly, no paper.

Otherwise, like in the 19th and before, the wealthy and banks will have all the physical, and give everybody else banknotes. Then they will SBF the Gold.

"Sorry, your note for 100 ounces of Gold at Richie Rich's First Federal Bank cannot be honored. Perhaps once the FDIC/Courts have processed it, you might get 1 ounce of Gold. "
Have a nice day."

AmericanKulak says

"Sorry, your note for 100 ounces of Gold at Richie Rich's First Federal Bank cannot be honored. Perhaps once the FDIC/Courts have processed it, you might get 1 ounce of Gold. "
Have a nice day."

At that point, one would have little to lose by turning "lead into gold," and I do not mean alchemy.

You’re Living in a World Wrought by the Federal Reserve. Notice Anything Wrong?

https://www.ineteconomics.org/perspectives/blog/youre-living-in-a-world-wrought-by-the-federal-reserve-notice-anything-wrong

AmericanKulak says

There have to be laws requiring salaries and wages to be paid in metal directly, no paper.

Already in the Constitution, just not honored.

AmericanKulak says

Otherwise, like in the 19th and before, the wealthy and banks will have all the physical, and give everybody else banknotes. Then they will SBF the Gold.

Just don't bank there. Gold is worthless if you can't secure storage with people you trust.

NuttBoxer says

AmericanKulak says

There have to be laws requiring salaries and wages to be paid in metal directly, no paper.

Already in the Constitution, just not honored.

AmericanKulak says

Otherwise, like in the 19th and before, the wealthy and banks will have all the physical, and give everybody else banknotes. Then they will SBF the Gold.

Just don't bank there. Gold is worthless if you can't secure storage with people you trust.

As NuttBoxer noted, Legal Tender laws apply only to fiat. Specie is full legal tender as per the US Constitution.

NuttBoxer says

AmericanKulak says

There have to be laws requiring salaries and wages to be paid in metal directly, no paper.

Already in the Constitution, just not honored.

That's not quite correct. A dollar is not defined in the Constitution, however, it is in The Coinage Act of 1792:

https://memory.loc.gov/cgi-bin/ampage?collId=llsl&fileName=001%2Fllsl001.db&recNum=369

Have fun reading.

The Fed Funds rate is around 4.5% starting tomorrow after the Federal Reserve increased it to 0.5%. Powell said he is going to raise the rate to a maximum of around 5.25%.

I got a 7% rate for 30 year mortgage (FHA) when the Fed Funds rate was 5% around Nov 1998, and a 3% rate (Veteran Affairs) back when the Fed Funds Rate was 0.5% in August 2016.

It will be interesting to see how mortgage rates fare by summer 2023. Also I wonder when CPI drops below the Fed Funds rate; I suspect that may occur between June and October 2023.

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Ghaddafi tried to replace fiat with a gold dinar coin.

So they killed him.

https://rudy.substack.com/p/the-name-of-the-game-is-bailout

The Creature from Jekyll Island (1994)

The operation of our monetary system through the Federal Reserve has much in common with professional football. First, there are certain plays that are repeated over and over again with only minor variations to suit the special circumstances. Second, there are definite rules which the players follow with great precision. Third, there is a clear objective to the game which is uppermost in the minds of the players. And fourth, if the spectators are not familiar with that objective and if they do not understand the rules, they will never comprehend what is going on. Which, as far as monetary matters is concerned, is the common state of the vast majority of Americans today.

Let us, therefore, attempt to spell out in plain language what that objective is and how the players expect to achieve it. To demystify the process, we shall present an overview first. After the concepts are clarified, we then shall follow up with actual examples taken from the recent past.

The name of the game is Bailout. As stated previously, the objective of this game is to shift the inevitable losses from the owners of the larger banks to the taxpayers.



Oil! by Upton Sinclair (1926)

Bunny had a talk with Mr. Irving, who told him that it was the Federal Reserve system at work; a device of the big Wall Street banks, a supposed-to-be government board, but really just a committee of bankers, who had the power to create unlimited new paper money in times of crisis. This money was turned over to the big banks, and in turn loaned by them to the big industries whose securities they held and must protect. So, whenever a panic came, the big fellows were saved, while the little fellows went to the wall.

I was reading that section yesterday. Griffin still gives the best explanation of what just happened, because it's been going on for a hundred years.

https://rudy.substack.com/p/true-stories-could-fuel-hesitancy

The Fed-shill apology tour has begun:

The Fed repeatedly warned the bank that it had problems, according to a person familiar with the matter.

[Probably anonymous sources with close ties to U.S. intelligence - RH]

I should note that the above article was written by Jeanna Smialek, who - you’re not going to believe this - has a brand new book out, some fan fiction titled: Limitless: The Federal Reserve Takes on a New Age of Crisis.

One of the most absurd aspects of the Silicon Valley bank failure is that its CEO was a director of the same body in charge of regulating it.

- Bernie ‘I Surrender’ Sanders

[Hey Bernie - take a look at the 2008 NY Fed Board]

It’s not just the NY Times.

Here are the top two Wall Street Journal Fed reporters' latest books:



These people are NOT journalists - they're PUBLICISTS! Who is tough on the Fed in the MSM? No one.
They all LOVE the Fed, otherwise they wouldn't be Fed reporters.
I never see reporters more obsequious and deferential than when they're questioning FOMC members.
The Fed has immense power over all of us, and this is a national disgrace. ...

But it’s not just the mostly abysmal MSM. Where's today's Ron Paul? No one in Congress is seriously challenging the Fed.

A few give it a hard time only because they want the infinite fun coupons directed their way [e.g., poser Liz Warren.] And where are you, Senator Sanders?

Congress is so corrupt they've completely abdicated everything to the Fed.

https://rudy.substack.com/p/its-all-good

But worst of all is Congress, which created this Frankenstein, and could put it on a leash. Congress is now so corrupt that they have completely abdicated everything to a private bank cartel, even allowing failed bank regulator and gazillionaire motivational speaker Janet “Peter Principle'“ Yellen, in some sort of cosmic joke, to be Treasury Secretary.

ad says

Inflation only averaged approximately 2%, even with the Fed Funds rate at 0.25%.

You can't borrow if your credit is trash. Most foreclosure and BK's happened from 2008-2010 along with businesses closings. So credit is basically locked for 4-7 years. Raising interest rates from 2008-2016 would have tanked the already anemic economy and killed businesses that were attempting to invest in the economy. That last statement was a problem. Companies borrowed and did stock buy backs while 5-10% of consumers couldn't even open a credit card. So GDP stalled because half the country couldn't buy that Xbox out of pocket or new kitchen appliances.

Basically it would have crushed the stock market to raise rates. Boomers nearing retirement and social security age. Many leave the country for lower cost of living. So that money doesn't circulate in the US anymore. People can't borrow or simply don't have the income if their credit was good.

We at least have the demographics to fill the Boomer void. Other nations don't. So there's a labor shortage kind of everywhere. Japan is the easiest example. So move to today after recently taking 2 years off basically from 20-22, the world is in a shit spot financially and labor wise. Fewer trained employees, smaller employee pool to choose from and the list goes on. Whomever can actually make products are just going to raise the price.

America's big issue in my estimation is younger generations do things that aren't productive. A youtube video, tiktok, instagram, etc. and monetize it. It produces no value. Then other people consume too much of this shit and sit on their asses doing mindless shit and get nothing done.

If I was 18 I'd be RUNNING to a trades school and take business courses on the side at a local community college for 2 years. At least if you're lower income. STEM fields would be better, but some just don't have the grades or ability for a 4 year degree. Anyone can do plumbing or electric after 2 years of trade school. We need water, shit has to go somewhere and lights need to work. Plus there are multiple other trades we're short in. We're not short of content creators.....

https://rudy.substack.com/p/the-consequences-of-an-unaccountable

For the first 95 years of the Federal Reserve’s existence, they owned NO mortgage-backed securities.
Then, from January 2009 to June 2010, they purchased1 $1.128 TRILLION, a monstrous amount, ostensibly to save the world, or at least save Wall Street bonuses2.

Despite two very feeble attempts at “QT” in 2011 and 2019, by March 2020, the Federal Reserve had actually increased their MBS holdings to $1.366 trillion.

Then they went insane.

By April 2022, the Federal Reserve had monetized an additional $1.374 TRILLION of MBS, bringing their ownership at the peak to $2.74 trillion. Now, after almost a year of alleged “Quantitative Tightening,” they STILL hold almost $2.6 trillion of MBS, and as bank bond expert Randy Woodward suggests, there was no clear reason for them to buy them at all in 2020.




Incredibly, the $1.374 trillion of MBS purchases by the Federal Reserve between March 2020 and April 2022 continued even as the S&P/Case-Shiller U.S. National Home Price Index annual appreciation rate spiked from 4.5% to 20.7%!
They were putting out a fire with gasoline. ...

And all of a sudden inflation goes parabolic and the Fed has to react, for whatever reason, as violently as they did. Here's what you have. Everything that banks own are at a loss. Every bond portfolio in the world is at a loss. And, if you're forced to sell it, like Silicon Valley Bank was forced to sell it, you got a problem. And that's a massive exposure that all banks are sitting on right now.

Patrick says

By April 2022, the Federal Reserve had monetized an additional $1.374 TRILLION of MBS, bringing their ownership at the peak to $2.74 trillion.

Monetize in the case of the Fed means: print or create money out of thin air to purchase MBS that are of questionable (aka overpriced) value.

So what the author is saying is that the Fed has been using its authority as lender of last resort to bail out some of the banks and/or people who bought overpriced MBS, giving the speculators free money as a reward for their reckless gambling. It’s like paying people who bought bitcoin @$60,000 to cover their loses.

But worse than paying the idiots gambling debt off, they are driving up costs and eating the savings of every else!

No wonder the other nations want to stop trading in dollars, the other nations are getting screwed being forced to trade in dollars that keep diminishing in value. They won’t allow that much longer. The only thing pooping up the dollar is probably that other countries are debasing faster than USA due to their own budget deficits.

PeopleUnited says

No wonder the other nations want to stop trading in dollars, the other nations are getting screwed being forced to trade in dollars that keep diminishing in value.

The real problem is other nations are paying for the cost to blow them up. Russia, for example, should never have bought US dollars, they should have always bought gold.

The only reason I can think of nations to "invest" in Treasuries, is that people in power are threatened into doing it, or bribed into doing it.

richwicks says

Russia, for example, should never have bought US dollars, they should have always bought gold.

Yeah, Russia had a lot of US debt holdings, about $120 billion. (source: https://money.cnn.com/2018/07/30/investing/russia-us-debt-treasury/index.html)

How it only has about $67 million (source: https://www.statista.com/statistics/1226054/value-of-united-states-treasury-securities-held-by-russia)

China has been selling off its US debt holdings since around 2015. I think that was just after Obama had visited Vietnam.

But I see the point about holding US debt that has barely a 0% real (or inflation adjusted) return.

So foreign countries like Saudi Arabia, Brazil and Mexico will hold Chinese yuan (in stable assets like Chinese debt) and use that to buy Chinese crap.

No more $150 Chromebook at Walmart after all this goes down. Maybe its price doubles because of the yuan's rise against the US dollar.

And instead of $85 for a large air fryer oven I recently bought, it will cost $150 on Amazon. The fly rod I recently bought on Amazon (and made in China) for $80 will cost double that also.

In a way its going to feel like when I was a young kid in the late 1970's and getting 1 nice present for Christmas (i.e, Colecovision Mister Quarterback), and having to wait until 1986 for an Atari 2600.

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ad says

In a way its going to feel like when I was a young kid in the late 1970's and getting 1 nice present for Christmas (i.e, Colecovision Mister Quarterback), and having to wait until 1986 for an Atari 2600.

I miss those days. TV, stereo,phone, ect every 20 years. I had intelivision.

https://rudy.substack.com/p/noted

Banks were not able to open branches across state lines until 1997.

The whole cabal theory of banks running the government and the world is a relatively new phenomenon.

The Rothschild family got its start when Meyer Rothschild, a Frankfurt moneylender, sent his 5 sons to establish banks in the finance capitals of the time across Europe.

They then cooperated with each other across national boundaries via a fast private postal service. This allowed them to take advantage of news before anyone else knew it. They got rich and powerful enough that they started making national economic policy for several countries.

Misc says

Banks were not able to open branches across state lines until 1997.

The branches of the Federal Reserve? Every NY cartel bank?

"TROUBLE IN THE YIELD CURVE This comes from a close friend and lifelong commodity trader:

“I think a very important thing just happened at the short end of the yield curve. As we discussed several months back, I was waiting to see the one-month T-Bill yield “whip” above the 3-month on out, for the next credit crunch signal.

“Well, we got that whip this past week, and it was a big one, some 160 basis points move, in just a few days, since 4/26/23 4/27/23 (3.9% to 5.6%) as the one-month almost instantly topped the farther out. For this kind of sharp move, so rare in the very short end of the curve, may very well suggest that a “crisis” scramble for emergency credit needs, across the debt reliant industries. That is to say, the whole world economy.

"Pull up the yield curve at https://www.ustreasuryyieldcurve.com/ and walk the chart back to 4/26/23 and 4/27/23 to see it for yourself. The last time you got this kind of inversion (I need to double-check my recollection) the prime rate ended-up at just over 21%, in 1980.”

Look here for a graph of the US 3 month T- note yield less the one month note yield. For the yield curve between the 10 year T-note and 3 month bond, look at this chart."

- Franklin Sanders

https://stockcharts.com/h-sc/ui?s=%24UST3M-%24UST1M&p=D&yr=0&mn=6&dy=0&id=p84944719984&a=1408011036
https://stockcharts.com/h-sc/ui?s=%24YC3MO&p=D&yr=0&mn=9&dy=0&id=p11202159079&a=669054102

NuttBoxer says

The last time you got this kind of inversion (I need to double-check my recollection) the prime rate ended-up at just over 21%, in 1980.”

Good. This means house and car prices will fall now that irresponsible borrowers will be hobbled.

https://rudy.substack.com/p/the-evil-of-the-fed-is-that-it-places

As friend of the show Matt Stoller wrote in 2020: Every Federal Reserve Board Member Is A Multi-Millionaire ...

But Quarles isn’t a mere millionaire:

“Randal Quarles, 62, is worth between $24.7 million and $125 million” (Love those government ranges).

And this was in 2020, so he’s likely worth $40 billion or something today, after all the bailouts from, well, you know, the place he worked until recently. Weird how that works.

But this is what really bugged me about multi-gazillionare nepotism-beneficiary wunderkind Randal Quarles:




What a slap in the face to 90% of America. Screw you, Randal Quarles.
Quarles is so rich it doesn't matter to him if inflation is 2% or 40% or 4000%.

In his first 21 months on the job, Randal K. Quarles, the Federal Reserve’s vice chairman for supervision and regulation, met at least 22 times with partners at his former law firm, Davis Polk & Wardwell, which represents many of the nation’s largest banks.

Those meetings, disclosed in public schedules and other releases, suggest a closeness between America’s most important bank regulator and the industry he watches over. ...

Patrick says

Those meetings, disclosed in public schedules and other releases, suggest a closeness between America’s most important bank regulator and the industry he watches over. ...

TurboTax Timmy had Jamie Dimon's number on speed dial.