Category The FED’s goal is to shrink the U. S. economy

Mar 9 2023

Why Most Americans Cannot Afford a Home – A Price Breakdown


Armstrong Economics Blog/Real Estate Re-Posted Mar 9, 2023 by Martin Armstrong

Are you too poor for the basic human necessity of shelter in Biden’s America? The average home price in Q4 of 2022 was $535,800, according to the St. Louis Fed.  If you live in a highly desirable area, expect to pay more. To simplify the math, let’s say that you are looking to purchase a $500,000 property. To heighten the fantasy, let us also pretend you are one of the rare Americans with zero monthly debt. This means that you do not have student loans, car payments, childcare expenses, medical bills, credit card debt, or any major outstanding bill. Fewer than 25% of American households are debt free and this number is rapidly dwindling.

Ok, so you decide to put 5% down on the house or $25,000 for a loan of $475,000. You manage to lock in a 6.7% interest rate for a 30-year mortgage under a conventional loan. Nationwide averages in real estate drastically undercut true averages due to the outliers, but the average annual property tax in America is around $3,000. I personally have not seen a property tax this low between FL or NJ, but I’ll attempt some optimism. After all, this should be a simple price breakdown that does not lead to a mental one.

We will average the PMI payment of 0.5% at $197.92 for 125 months. We will also incorporate the low home insurance average estimate of $1,000 annually. To be most forgiving in my calculations, I will also assume that your monthly HOA fee is $0. This is utterly impossible for anyone seeking to purchase a condo. In my area, the average HOA fee is $600 per month, and a $500,000 property will not afford you a single-family house. At best, you’d be lucky to find a two-bedroom property at that price point in my area. In contrast, home prices here were about 40% to 60% lower in 2019.

Therefore, the overall total monthly payment for a $500K home is $3,596.32. This home can be yours by 2053 if you close this year. Forget “starter homes” as once you are locked into a good rate, you will likely not leave. So how much income do you need to afford this monthly payment? The MAXIMUM debt that the bank will allow you to qualify for is around 50% of your total gross income if you have good credit. If you choose this method, you will be “house poor” and unable to afford other basic human needs. So based on these calculations, you would need to make at least $7,192.64 GROSS per month to afford this property and live “house poor.” This would equate to a salary of $86,311.68 per year BEFORE TAXES.

I did not factor in closing costs, inspections, maintenance, moving, or even furniture. So should you continue renting while establishing zero equity? The median rental price in America as of February 2023 was $1,978. Inventory is low, and landlords are compensating for the money lost during COVID moratoriums. Most leasing offices require tenants to earn 3X the monthly rental price, equating to a monthly gross income of $5,934. This has left countless Americans stuck on the rental carousel of paying the majority of their monthly income to the landlord and being unable to save for a future that includes home ownership. Landlords can raise rental costs yearly at whim, and there is no guarantee that you will comfortably be situated in your rental unit from one contract to the next. Rental properties have also begun charging fees for everything under the sun, such as repairs and parking, which was one of the reasons people chose this method.

Gone are the days when Americans comfortably paid ¼ of their monthly salary toward living expenses. We have not even touched on the astronomically cost of other basic living necessities such as food or energy. You must make a decent income if you want to buy a home in 2023. The bank does not care if you are unable to pay because they will simply take your house. Some are lucky enough to secure an interest-free loan from the central bank of mom and dad. Others, the majority of the Great Unwashed, are scraping by—YOU WILL OWN NOTHING AND BE HAPPY!

Mar 7 2023

Colonel Douglas MacGregor & Sources


Armstrong Economics Blog/Ukraine Re-Posted Mar 7, 2023 by Martin Armstrong

COMMENT #1:  I have been watching Colonel Douglas MacGregor (ret), on alt news sites. He is a former tank commander in the Gulf war and has worked extensively with NATO, before retiring. I love his direct commentary – so in a nutshell he says the following:
1. Ukraine has lost up to 250k troops and they are in dire straits. They will lose the war badly.
2. The US military is in dire straits too and if push, comes to shove, could only provide 50k troops within weeks. They are down on ammunition (all gone to Ukraine) and the recruitment targets for all 4 branches are lower than what the DoD is telling us.
3. The European military is not ready at all and would be ineffective.
4. Which leads to him saying that the USA/NATO will not enter the war, because sane heads in the military will not allow it. I hope he is right, but he does not rule out false flags or Biden’s ineptitude.
You should watch him, he’s great, a man with genuine battle experience and knows the political machinations of DC, yet strongly anti war.

NC

COMMENT #2: Colonel Douglas MacGregor has often come out and confirmed what you have said weeks or months before. It looks like he has similar sources. He went to West Point. Did they also teach your War Model as did the Citadel? A lot of generals graduated from the Citadel.

Keep up the great work

HB

REPLY: Perhaps we both have similar contacts. As far as West Point, I do not know if they ever taught our models. What I do know, is that there is a serious risk that Uktaine loses and all the fake news that keeps putting out the propaganda has not considered what happens if Ukraine loses.

Feb 28 2023

Ship of Fools


Armstrong Economics Blog/Cryptocurrency Re-Posted Feb 28, 2023 by Martin Armstrong

QUESTION: Do you think that this entire scam with cryptocurrencies that the government will be able to track, do they realize that in war you take down the power grid and all digital currency fails? If the backup system is destroyed, all your digital currency will vanish. Are they this stupid? Is this why they have shills saying you are wrong?

HK

ANSWER: Yes. I have spoken to people involved in creating this insanity. First, they do not think there will ever be a nuclear war. Second, they really do think that they will create regime change in Russia at the expense of probably every Ukrainian alive today who are fools being led to the slaughter. When I have brought up the subject – WHAT IF YOU ARE WRONG! They dismiss it and do not even entertain plan B. The whole digital currency is all about tracking every dime. I have said many times, this is all about the new world order which is Schwab’s Great Rest and he knows that is our 2032 forecast. They all believe that forecast and are preparing to redesign the world this time to achieve their totalitarian dreams.

When I asked – Did you authorize Bitcoin? They just do not reply. Silence is golden. The launch of Bitcoin was just too damn convenient. That was standard operational political tactics – you float a balloon and see how the people accept it.

If you have ever been to Nuremberg, Germany, they have a bronze statue there – the Ship of Fools. The sculpture named Ship of Fools by Jurgen Weber is based on the satirical allegory by Sebastian Brant. This is now a reality.

Feb 23 2023

Is the Biden Administration Just Completely Brain-Dead?


Armstrong Economics Blog/War Re-Posted Feb 23, 2023 by Martin Armstrong

Russia has deployed tactical nuclear weapons on all its ships. The US arrogantly told China not to support Russia or that they would impose sanctions on China as they have done with Russia. That is like waving a red flag in front of a bull. Once you make such a public demand on China, they now MUST  act against it or their leadership will lose face.

I have dealt with governments for some 40 years +. Warnings of this nature have ALWAYS been communicated privately – NEVER publicly for that is confrontational and will necessitate the opposite side to vote against your demand. I cannot imagine that even I know far more about diplomacy than anyone in the Biden Administration. That suggests to me that this is deliberate. They just cannot be this stupid. They seem to be deliberately moving Russia and China together against the arrogant West in the very same manner that resulted in the Peloponnesian War with Sparta taking down Athens for its arrogance.

As the world teeters on the edge of World War III between Russia, China, North Korea, and Iran against the United States, Canada, Australia, Japan, and Europe,  diplomatic efforts to reach a peaceful settlement are seriously lacking. Europeans should be storming their own parliaments demanding the end to supporting Ukraine and honoring the Minsk Agreement to forestall a potential conflict the likes of which Europe has not seen since the end of the second World War and will certainly not survive.

The Biden Administration appears to be taking the advice of Adolf Hitler given the complete lack of any diplomacy whatsoever. China has offered a peace settlement but the Biden Administration wants war. China had no choice but to respond to Biden:

‘The US is in no position to tell China what to do’

The United Nations has become a joke. The Security Council can take action to maintain or restore international peace and security under Chapter VII of the United Nations Charter. Sanctions measures, under Article 41, encompass a broad range of enforcement options that do not involve the use of armed force. The UN has refused to remain unbiased and should have imposed sanctions on Germany, France, the UK, and the United States for their bad faith in negotiating the Minsk Agreement and for their unwarranted sanction of Russia that even began before the 2022 invasion. The UN no longer represents an independent body of nations but has been usurped with lofty ideals of becoming the one world government thanks to Schwab’s World Economic Forum and the pressure from the American Neocons directing US foreign policy.

The United Nations took its marching order from the United States and suspended Russia from the Human Rights Council on April 7th, 2022. They have courted world war with the vision of emerging as the new one-world government. They self-proclaim: “Now, more than 75 years later, the United Nations is still working to maintain international peace and security, give humanitarian assistance to those in need, protect human rights, and uphold international law.” Sanctioning private individuals claiming that will put pressure on Putin was a blatant violation of international war. Under this theory, then the Republicans could confiscate all the personal assets of Democrats until the Democrats agree to their terms. This is absurd.

The United Nations has REFUSED to be impartial and to prevent World War III. They are a total failure and a disgrace to humanity. Here is the simple pattern they should have investigated if they really cared about preserving world peace.

  • (1) In 2014 US installs an interim government in Ukraine which is unelected and immediately sends troops to attack the Donbas for wanting to separate from Ukraine after its own revolution
  • (2) West engages in the Minsk Agreement whereby Merkel has come out and acknowledged it was in bad faith and intended only to allow Ukraine to build its army while making a fool out of Putin for trusting the West
  • (3) Zelensky is elected promising to end corruption and the civil war with Russia
  • (4) VP Kamila Harris at Munich Security Conference tells Ukraine they should join NATO
  • (5) On February 23rd, 2022, Zelensky announces that Ukraine should rearm itself with nuclear weapons

February 24th, 2022, Putin intervenes to support the Donbas when the West ignores their human rights. If the United States even exists after World War III which they are promoting, then we would no doubt have a similar investigation into the deliberate policies that have rejected any possible peaceful negotiations and promoted war for the total destruction of Russia.

When not just diplomacy fails we get war, but when the United Nations acts in its own self-interest against all the member states that fund it and ignores the very foundation upon which it claims any authority. That seems to be in line with the World Health Organization to dictate its policies to the world.

Feb 22 2023

Chairman Xi Plans Moscow Visit, Putin Suspends START Treaty, Maersk Exits Russia, Biden Talks Moldova, Planets Aligning for War


Posted originally on the CTH on February 21, 2023 | Sundance 

First things first, history may not always repeat, but it always rhymes.  Secondly, history tells us that only two things have ever pulled what we now call “western nations” out of a collective economic depression; (1) war, and (2) housing starts.

If you accept the WEF climate control agenda of a ‘managed transition‘, where economies are reduced in size to match lowered energy production, as generally speaking akin to a western economic depression.… then, you begin to ask the logical question.  How do the managers avoid the consequences?

If global (non BRICS) economic contraction is akin to a western economic depression, I would argue the consequences are identical.  Then, when major economies are in a state of shrinking and the citizens are feeling the horrible effects, something large is needed to change the economic equation.

With central banks raising interest rates to achieve the policy supporting contraction, the option for ‘housing starts’ to change the dynamic is removed.  That leaves, ‘war’.

President Putin and Chairman Xi are not stupid men.  They are big picture strategists.

♦DATA POINT – Russian President Vladimir Putin’s move to suspend his country’s involvement in the last remaining arms control treaty with the U.S. came as a disturbing surprise to multiple former officials who negotiated the pact and nonproliferation experts committed to ending the expansion of nuclear forces. (read more)

Can you blame him?  The Western Alliance has already blamed Putin for the global food crisis they created by the World Economic Forum energy policy shift.  The Western Alliance accepts no responsibility for advancing hostility -through NATO expansion- on to Russia’s doorstep.  The Western Alliance has attempted to sanction Russia out of the global economy.  With the same Western Alliance now positioning for war, why would Putin adhere to their limitations?

♦DATA POINT – Chinese leader Xi Jinping is preparing to visit Moscow for a summit with Russian President Vladimir Putin in the coming months, the Wall Street Journal reported on Tuesday, citing people familiar with the plan. (read more)

Can you blame them?  Pay no attention to the Reuters narrative woven inside the article about China wanting to negotiate peace.  To accept that narrative is to believe there is no dragon behind the panda mask.  We are too far into the geopolitical awakening to say the dragon doesn’t exist and simultaneously hold its own interests (belt & road, and/or Taiwan) within the context. Ignoring the dragon behind the mask is really quite silly.  BRICS exists as an economic alliance of like-minded nations for exactly this geopolitical dynamic.

♦DATA POINT – Shipping and logistics group A.P. Moller-Maersk (MAERSKb.CO) has agreed to sell its two logistics sites in Russia to IG Finance Development Limited, it said on Monday, nearly marking the end of its business activities in the country. […] After that, Maersk will not have any business in Russia. (read more)

The major multinationals always position themselves to avoid the consequences of war.  Additionally, Moller-Maersk is already going to feel a major financial impact from the shrinking of the Western economies they generally service with their cargo transportation.  Smaller economies = less cargo = less ships = less revenue.  Moller-Maersk has to pick a side; they are aligned with the Western Alliance.  Hence their exit from Russia.  China/India will eventually fill the void. Again, BRICS.

These are data points just in the last 12 hours.  In addition to these data points from today, the saber rattling from the DC foreign policy and war machine financial system is on display in the Biden policy as transmitted from Warsaw. Again, just today.

Like us, I’m pretty sure from watching his statements and eventual policies over the past several years, President Donald Trump views foreign policy through the prism of economics.   If “economic security is national security,” then what is it when economic insecurity is an intentional design policy?

All of the economic data points have aligned toward direct military conflict between the Western Alliance and Russia that expands beyond the proxy war in Ukraine.

If the path is continued, this process eventually ends up with World War III.  Which, not coincidentally, boils down to the Western Economic Alliance -vs- BRICS, with a few remaining neutral and the middle east as the unknown variable.

Sound familiar?

Look below, you might find a familiar visual reference:

Yep, history rhymes.

Any questions? 

Feb 22 2023

West’s Duplicity – Biden’s Surprise Visit Before Putin’s Speech


Armstrong Economics Blog/Ukraine Re-Posted Feb 21, 2023 by Martin Armstrong

Biden made a surprise visit to Ukraine one day ahead of Putin’s National Address scheduled for February 21st. Biden had the audacity to put out the West’s constant propaganda:

“One year later, Kyiv stands. And Ukraine stands. Democracy stands,” he declared. “The Americans stand with you and the world stands with you.”

Putin is elected the head of Russia by its Parliament the same system that takes place in Britain, the EU, Canada, and every country with a Parliamentary system. Only the United States is where the head of state stands for election by the people. This nonsense that Ukraine stands for democracy against Russia is just total outright lies. This only demonstrates that we cannot trust a single word from governments in such times. As they say, truth is the first casualty in war.

Had the West simply been honest and honored what they negotiated that the Donbas under the Minsk Agreement was to be allowed to vote on their own separatist movement. All the deaths in Ukraine and their blood are on the hands of the West. This war would have NEVER taken place if the Minsk Agreement was honored.

Blinken has made it clear that the US will NEVER accept the Minsk Agreement and it was indeed only to buy time for a war they wanted from the start. The Biden Administration changed the arrangement with Ukraine in 2021 altering all previous agreements since 2008. This is a Neocon’s dream come true – a direct confrontation with Russia. He outright said that there shall be no peace by returning any land to allow the Russians of the Donbas to live in peace free of Ukrainian domination.

“If we do that, we will open a Pandora’s box around the world, and every would-be aggressor will conclude that, ‘If Russia got away with it, we can get away with it,’” Blinken said. “And that’s not in anyone’s interest, because it’s a recipe for a world of conflict.”

This illustrates the duplicity of the West and the desire for World War III. These are the people who are cheering the destruction of our future all for a strip of land that has been occupied by Russians for centuries.

Even China has come out and bluntly stated: “We would like a political solution to provide a peaceful and sustainable framework to Europe.” The US refuses to seek peace on any reasonable terms whatsoever. The arrogance of the United States is just astounding. They have told China not to aid Russia. As Fox News reported, China is furious after the US warns against arming Russia: “The US is in no position to tell China what to do.”

In all my years of dealing with governments, NEVER have I ever even once witnessed such stupidity and arrogance on the part of any government. This Biden Administration seems to be going out of its way to piss off just about everyone in the world to create World War III. This is just unimaginable. They seem to want to “shrink” the world’s population by 50% with war to get their pat on the back from Gates, Rockefeller Foundation, and Schwab. When you say it is your way or no way, that is not how you negotiate anything.

History will remember the Biden Administration with contempt as the Hitler or Napoleon of the 21st Century.

Feb 22 2023

The Hunger Games Begin – Soaring Energy Costs Lead to Rationing of Vegetables in U.K.


Posted originally on the CTH on February 21, 2023 | Sundance 

Follow the bouncing ball of consequence….

(Via Daily Mail) Vegetable rationing could last for ‘weeks’, it was warned today, after Morrisons joined Asda to became the second major supermarket to limit sales of certain items. 

Perishables like tomatoes, potatoes, cucumber and broccoli have been restricted to just two or three per customer in a host of stores up and down the country.

The crisis has developed in recent weeks due to soaring energy costs which have forced British farmers to switch off greenhouses as they desperately try to make ends meet – leaving a dearth of home-grown produce. (read more)

While it is prudent to remind everyone how fortunate we are to have Florida, California and Mexico for North American vegetable supplies, ie. no dramatic supply shortages, the energy price pressure being applied by Biden policy will lead to even higher consumer prices for all row crops.

18 months ago (Oct 2021), CTH first strongly recommended restarting victory gardens at home. The same recommendation only strengthens.

Feb 20 2023

Minneapolis Fed President Neel Kashkari Admits Goal is to Shrink Economy to Meet Decreased Energy Supplies


Posted originally on the conservative tree house on February 19, 2023 | Sundance

This video interview segment was sent to me today along with a “wow, you were right” message.  Apparently, the interview took place a few weeks ago (it’s new to me), but the admissions within it are quite remarkable.

The CNBC discussion surrounds inflation and the federal reserve raising interest rates. Minneapolis Fed President Neel Kashkari is talking about the jobs report, inflation and the intention of the federal reserve to continue raising interest rates until they achieve 2% inflation, regardless of consequence.  Kashkari doesn’t hedge on the latter issue of consequence; he affirms with absolute guarantee the fed will keep raising rates until the economy shrinks enough such that 2% inflation is achieved.  However, watch what happens when Joe Kernan takes that outlook and overlays “supply side” energy policy.  WATCH (10:22 prompted):

https://youtube.com/watch?v=XpZK-fexCUA%3Fstart%3D622%26feature%3Doembed

The issue is quite simple, really.  When additional oil, coal and natural gas development is blocked as an outcome of policy, energy prices jump massively.  We are seeing 2022/2023 price increases in electricity, home heating, fuel, gasoline, natural gas and other total energy price outcomes in the 60%+ range.

As a direct outcome of energy policy, all of the downstream products and services have massive upward supply side price pressure.  When the input prices are driving upward of 60%, the downstream prices increase accordingly.  Farming costs, fertilizer, feeding, transportation costs, food at retail and wholesale, and just about every petroleum-based product, which is almost everything, increases in price accordingly.

If supply side energy price increases are pushing +60%, and the Fed will only accept a 2% inflation output result, the only method of achieving the desired result is to shrink energy demand.  This is the goal of the current Fed monetary policy.  In this interview Kashkari admits the dynamic for the first time in public.

Prior to this interview, the Fed was being too-cute-by-half as they talked about targeting the ‘demand side’ through increased rates.  The demand they were targeting is the energy demand, but people (mostly in the financial and business world) were not willing to accept that Federal Reserve monetary policy would intentionally try to shrink the economy.

When overall energy price increases are driving upward of 60%, it is going to take a major amount of economic contraction to drop energy demand to meet the diminished energy supply.  CTH has been warning about this ultimate objective for over two years.  It’s a simple economic situation.

+60% price on the supply side, with a goal of +2% on the downstream demand side, equals a major amount of activity needing to be removed. Essentially energy use needs to drop by half.

You can put everyone in an electric car and still not even come close to dropping energy demand 50%.  You cannot “energy efficient” your way to a 50% drop in demand; there just isn’t enough waste in the system, especially when people are already paying close attention to energy use because it costs so much.

This “transition to the new green economy” is a whole of society shift.

This “transition to the new green economy”, is a multi-generational shift.

The transition includes putting people in smaller houses, stopping their travel, stopping their purchasing of new goods, taking down entire industries and limiting human activity on a massive scale.

Something akin to the COVID-19 lockdown period would be needed, only this level of diminished economic activity would be permanent.

It makes you wonder if the COVID-19 lockdown was the test to see how much energy use would drop if everyone was stopped in place.  And yes, during the COVID lockdowns, human activity did stop, economic activity did stop, and energy use did drop by the nearly amount we are talking about.

When you accept what Minneapolis Fed President Neel Kashkari is openly admitting in that interview segment, particularly as he is asked about the massive supply side costs and how that overlays, then you realize how prescient the image is below.

This image is the exact future you see flowing from the “radical transformation,” or what is also called “managing the transition“…

At the end of the transition, you have two social societies.   One social system is a massive assembly of human activity all in close proximity. The alternative social system consists of those who do not wish to be jammed into Build Back Better cities yet forced to sustain themselves because the energy production and delivery resources in the larger geography have been stopped.

Now you know why I asked the question, “where would you live” over a decade ago.