patrick.net

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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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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.

HeadSet says

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.

Timothy Geithner didn't even bother to file taxes for several years.

May have posted this before.

Patrick says

I thought the Titanic sinking was testing in production...

Let's see... Saudi and Russia just agreed to extend their production cuts until the end of the year. This pushed up oil prices.

Does anybody else think that the Fed will bite at the higher "inflation rate" and hike interest rates again???

Misc says

Does anybody else think that the Fed will bite at the higher "inflation rate" and hike interest rates again???

I certainly hope so.

https://notthebee.com/article/costco-is-rapidly-selling-out-of-gold-bars-in-other-news-costco-apparently-now-sells-gold-bars

Costco is rapidly selling out of gold bars. In other news, Costco apparently sells gold bars.

Patrick says

look at zero interest rate policy (ZIRP) and quantitative easing from 2009 to 2016 with total debt to GDP ratio rising from about 60% in early 2009 to 105% by Obama admin's final year (it was 107% in February 2020)

and yet supposedly inflation was no more than 2% a year according to government reported statistics

granted housing crashed and the stock market dropped about 55% so it was going to take more than a 3 years to recover

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His father Ron Paul also tried. I admire their tenacity.