“Two Purple Hearts – Leningrad and Siberia. Youngest man to be decorated by the president. You robbed the Federal Reserve Depository. Life sentence, New York Maximum Security Penitentiary. I’m ready to kick your ass out of the world, war hero.” – Escape From New York
Elon bought a coffee company and then made it a cryptocurrency. Yup, StarbuX®.
I’m a bit under the weather (sniffles). The good news is that some of the memetic content/graphs I found on the Internet about the current economy probably speak mostly for themselves. So, comments may be shorter than usual. I guess I’ll offer you this shorter post and an IOU for a longer one sometime in the future when I sober up get better.
First off – the dollar and gold used to have (depending on the era) a very similar volatility – at one point dollars were gold. What if the dollar was more volatile than gold, for the first time in 45 years??
Normally, longer term bond and notes have higher interest rates than shorter ones. The reason is uncertainty – if I was going to borrow money for thirty years, there’s more risk of crazy things happening, like Civil Wars or George Lucas selling Star Wars™ to Disney© in a thirty-year time span than in a three month time span. But when things get uncertain, that ration flips. If you look below, note that even a small inversion is a strong, strong signal of an impending recession. Well.
How bad has Biden been? Median mortgage payments (average selling price and current interest rates) are higher than Hunter Biden at a Burning Man®.
Homeowners aren’t the only ones paying huge interest payments. Here’s what’s happening on the national debt:
But it didn’t have to be that way. If someone remotely intelligent was in charge at Treasury, it wouldn’t be an issue at all. Don’t know where this snip came from, but it’s spot on:
Janet should be managing a grade school lunch kitchen. How deep does the rot run in the Banking Industrial Complex? O’Keefe tells us tons with one of his people hacks:
Thankfully the Fed™ has infinite money to lend. Or, at least the balance sheet shows that. In this case, this shows the economy as needing three times as much cash injected into the system as in 2008 to prop it all up and keep everything from draining into the abyss. In this case, the big vertical line represents the Silicon Valley Bank© failure.
That happened because Silicon Valley Bank™ had a lot of low interest, long term assets. Let’s just say I’m happy with my 4% mortgage right now, since I actually lose money by paying it back, since I can get 5%+ from banks. Silicon Valley Bank© had lots of crappy, long positions, and exploded.
When that happened, I wrote (link above) that I really expected that the vibrations would shake the system into a bigger failure by that October – this stuff takes a while to propagate. Instead, the Fed pulled a very cunning move: it printed buttloads of cash, allowed the banks to deposit the crap they had with the Fed™ and then the Fed™ took the losses. Of course, since they haven’t sold the crap the banks gave them, those are “realized” yet, so those losses are like a girlfriend so ugly you make her hide in the closet when your friends come over.
In addition to that, the Fed© has also lost at least $161 billion, according to the Fed©. Total? A trillion? Who knows? It’s not like anyone’s counting.
Back in the Before Time, the Fed™ never bought the debt of the United States. Why would they? They debt of the United States was to Ma and Pa Citizen, central banks all around the world, and, (oddly) to the United States when it spent the Social Security funds on Popcorn, PEZ™, Pantyhose, and Pachyderm Rides. Yup, the United States would spend the Social Security cash, and then write itself an IOU and put it (seriously!) into a filing cabinet in D.C.
Can you imagine a job that’s more futile? It’s like I wrote myself an IOU for stealing money from my kid’s college fund to buy beer, and then made my kid file the IOU, knowing full well that the file would experience “surprise combustion” in the backyard fire pit when I sobered up.
You really should be concerned. Unless you want to send me your cash so I can send you an IOU.
I promise I won’t blow it on Popcorn, PEZ™, Pantyhose, and Pachyderm Rides. Thankfully, people are waking up to the scam:
The international financial mess we are in are a long line of counterparty dominos. The hard, hard math says that someday, somebody (some counterparty) won’t be able fulfil the promises they’ve made (make their payments). They will be the first domino to fall, messing up the balance sheet of their counterparty, who becomes the next domino, and away it goes….
As of mid-March, Japan has (probably) become the “first domino”. Japan is the largest holder of US Treasuries after China, (who is currently selling THEIR US Treasuries as fast as possible without causing a panic to avoid the same financial hellfire currently raining down on Japan). Japan currently owns (has loaned to Americans) $1.38 trillion of US Treasury paper, and has been a loyal holder of that paper for years and years.
Remember last year how, when the Fed raised rates from near-zero to over 5%, that Silicon Valley Bank collapsed because its holdings of US Treasuries bought at near-zero interest rates suddenly became nearly worthless? I mean, who wants to buy a stinky pre-COVID US Bond from you that pays nearly nothing in interest when they can go to a current US Treasury auction and buy a bright, shiny new bond that pays 5% interest?
What happened to SVB last year is now happening on Godzilla-scale steroids to Japan. In the past 60 days the yen has collapsed as the Japanese national currency – nobody wants to hold it or use it on the world market. Yellen at Treasury and Powell at the Fed are now not only juggling rates in a balancing act between US consumers / US Government, they now also gotta somehow keep Japan on life support with the Fed Funds rates they choose, too. Probably by lowering those rates on new bonds (and kickstarting higher inflation in the US).
Else Japan is gonna start selling their under-performing Treasuries to raise cash to defend the Yen (currently dropping like a rock, recently hitting 150 per US dollar from around 100 last March – a 50% currency devaluation in a year!!!). Japan starting to SELL instead of HOLD their US Treasuries stash would likely trigger an avalanche of foreign investor dumping. During the last run of Quantitative Easing (QE), the fed soaked up trillions in bonds issued by JUST the US Government because NOBODY else wanted to buy them. IF during the next round of QE the Fed’s gotta buy up not only current Treasury bonds but ALSO repatriated US bonds being dumped by foreign holders, well…it’s all over.
Dominos. It’s all about dominos, and they are toppling.
https://www.reuters.com/markets/asia/if-japan-exhausts-intervention-slush-fund-treasuries-may-wobble-mcgeever-2024-05-01/
Ricky, I have gone to Japan for training from 2018 to 2020 and 2024 (break for The Plague). I believe when we started going and even to 2020, it was approximately 110 to 115 yen to the dollar. This year in January it was 130 yen to the dollar. To see it at 150 four months later means a 15% drop in value versus almost nothing in 4 to 6 years.
Thanks to John’s explanation of SVB, I now understand more fully how it happened – and how the US is following that exact same trajectory. Given the choices, I think Japan will ultimately choose its own currency over ours for political reasons, if nothing else.
At this rate, I wonder if we can even make it to the election before things go badly.
Excellent, excellent comment as usual, Ricky.
I have one million in gold (I really don’t), but if you want to buy some, I’ll hold it for you, and pay you interest. Over time, it will be worth more, and you’ll get a good return on your investment….except if you decide to cash in, and expect something, there will be nothing to give. Your money was spent on cheap whores and whisky, your investment was never really an investment. I was stealing from you, living large on your money, hoping I could get more people to fall for my scheme, and the only thing you can do is press charges, but that won’t work. I’m the U.S. government. By the way, I printed a bunch of money without backing, and the inflated amount is worth even less than the money I stole from you. I can send you some, but you’re going to need a big truck full to buy dinner. Can you pay the freight charge?
Jess, you better watch out because if you keep doing what you are doing, the Republicans in Congress will have no choice but to write you a strongly worded letter. And if you don’t heed that warning, they might have to form a committee to determine whether you should be investigated at some point in the future (and to fund that investigation, they will need to borrow some funds from you to cover the cost).
Nah, it’ll be too expensive to print all that. Remember, the Germans started printing money on one side only so they could print more. Made it useful as notepads for decades.
Do you know what the young lady in the Tiktok video doesn’t understand? EVERYTHING about economics and money.
Lathechuck
But she knows that what’s happening stinks.
Gradually, then suddenly, is playing out in real time. Or, as Wimpy always said, “I’ll pay you tomorrow for a Hamburger today.”
There’s no way out of this mess. Afghanistan, Ukraine, Israel, et al…failures. China knows we’re toast.
Clif High says something earth-shattering happens on 7/15-16. We’ll see.
Yep done deal. Wonder where China will sell all those Christmas decorations.
A “man” with a great plan is in wings, he will amaze the world and fix everything all he wants is worship.
SON24- They’ll sell the Xmas decirations to Russia. And Hungary.
The Ides of Celente draw near.
“When people have nothing left to lose, they lose it.”
Anybody else been pointing out to Normies and Former Normies specific targets as different screwed-up stuff happens and anger surfaces?
Again, this could go another 8 years. Really.
“Janet Yellen… biggest financial mistake of all time.”
It wasn’t a mistake, and she isn’t stupid. None of those calling the shots are. Every time they do something “stupid” we suffer and they benefit. The only stupid people is us, for not getting organized and doing something about it.
Exactly. I’m beginning to be convinced that Hanson’s razor (“Never attribute to malice that which can be adequately explained by stupidity.”) is entirely backwards. Further, unless you’ve (one has) grown up in certain sorts of cultures, it’s very very difficult to think like members of that culture. (And most of them similarly don’t have the perspective to understand that they are wired differently from the rest of us. Or they’re so narcissistic that it never even occurs to them to consider someone else’s perspective.)
I’m pretty sure most of us tend to believe that decent people (“normal people”) mostly try to follow the rules and try to do their jobs competently. If they deviate from the strait and narrow, we assume they’re doing so for money or power or sex. We usually don’t consider that a person (or a people) might want to fuck things up and burn the place down out of resentment and misplaced entitlement.
Or, paying off the bankers.
The mortgage payment tweet is staggering, I couldn’t afford to buy the place we are living in now that we purchased a dozen years ago if we were buying today. There is going to be a serious reckoning
Very much so – it’s the gradual immiseration of an entire people – on purpose.