Posted originally on the CTH on March 16, 2023 | Sundance
The European Central Bank (ECB) raised interest rates again today, while simultaneously promising to support further bank bailouts that might come as an outcome of raising the rates again. In the bigger picture there are two dynamics supported by the ECB playing out.
The first issue is the ideological effort to change the economic models based on climate change. The Build Back Better (Green New Deal) policy, a traditional energy production control effort, is being supported by the ECB effort to shrink the EU economy to meet the rate of diminished energy production. Make the economy smaller to meet the lower energy production rate.
Lowered energy production (oil, coal and natural gas) has raised energy prices; this is the fuel behind supply side inflation. The Western policy created energy inflation is hitting every aspect of the EU, US and western global economy. The prices of all downstream goods and services have risen dramatically as a result. The European banks are not going to stop trying to make the economy smaller just because banks are failing. That brings us to the second issue.
Like the first issue with BBB controls, the World Economic Forum action plan for government also includes the creation of central bank digital currencies (CBDCs). The collapsing of the traditional banking system supports the agenda to create CBDCs. Raising interest rates puts more pressure on already weak banks. This is a feature not a flaw of the intent.
Shifting the economy from traditional oil, coal and natural gas is one aspect (climate change). Shifting the banking system from traditional currency to central bank digital currencies is the second aspect (total govt financial control). The banking instability is the crisis that facilitates the CBDC solution. Ergo, continue raising rates and continue making the crisis more useful.
In the bigger picture, this is an ideological quest to fundamentally change the western economic model. Support for that change is what we are witnessing as the EU central banks continue raising rates. Ultimately, banks being controlled by government is the necessary step to achieve the second phase of the larger plan.
(Via Wall Street Journal) – FRANKFURT—The European Central Bank raised interest rates by a half-percentage point while promising emergency support for eurozone banks if needed, showing the policy makers’ balancing act as they seek to combat high inflation without aggravating strains in the financial system.
The ECB said in a statement that it would increase its key rate to 3%, following consecutive half-point rate increases in February and December. The 50 basis-point rise surprised analysts who had expected a smaller uptick given the tense market situation after the collapse of Silicon Valley Bank.
At a news conference, ECB President Christine Lagarde signaled the bank would be cautious about further rate increases, while stressing it stood ready to provide fresh liquidity to banks. Policy makers will make future rate decisions based on coming economic data, she said, a change from previously announcing plans for rate increases months in advance.
“It’s not business as usual,” Ms. Lagarde said. “It is not possible at this point in time…to determine what the path will be going forward.” (read more)
Meanwhile in the U.S., the Fed/Treasury plan is to do essentially the same thing by supporting the big banks with over $2 trillion in available backstop funding. The Fed is celebrating the big banks supporting the smaller banks. Ultimately, this is the banking system downsizing and getting more control with less players.
Washington, DC — The following statement was released by Secretary of the Treasury Janet L. Yellen, Federal Reserve Board Chair Jerome H. Powell, FDIC Chairman Martin J. Gruenberg, and Acting Comptroller of the Currency Michael J. Hsu:
Today, 11 banks announced $30 billion in deposits into First Republic Bank. This show of support by a group of large banks is most welcome, and demonstrates the resilience of the banking system. (LINK)
The implementation of a U.S. digital currency will become easier if there are fewer players in the banking system. WATCH:
Can you spot the Neocons? Trump and Biden seem to be alone amongst GOP members in their desire to end America’s role in the Ukraine-Russia conflict. Trump said he would end the conflict within 24 hours, while DeSantis said Ukraine is not a vital national interest. Trump has already been attacked for merely existing, but now the establishment Republicans are going after DeSantis for his comments.
Florida Senator Marco Rubio criticized DeSantis for calling the war a “territorial dispute.” “Well, it’s not a territorial dispute in the sense that any more than it would be a territorial dispute if the United States decided that it wanted to invade Canada or take over the Bahamas,” Rubio stated. “Just because someone claims something doesn’t mean it belongs to them.” Clearly, this has no validity. The Donbas region has always been primarily Ukrainian. Those along the Canadian border don’t identify as American nor has their land been American territory since about 1846, when a treaty established the 49th parallel from the Rocky Mountains to the Strait of Georgia. Rubio also falsely claimed that the war is about Russia’s “sphere of influence, not so much about the land.” America had no reason to fear Russian influence at any point.
Nikki Haley, a popular potential candidate, is also pro-war. She claimed DeSantis is merely copying Trump on his opposition to mass deaths. “America is far better off with a Ukrainian victory than a Russian victory,” Haley said after claiming she does agree with Trump on “most policies.” Why would it be more beneficial to see an insignificant trading partner win? Is the result really worth the “blank checks” that we are sending Ukraine, as DeSantis said?
Lindsey Graham voices his terror of big bad Putin, and failed politician Liz Cheney is keeping her dad’s legacy alive by reiterating her desire to rid the world of Russia. Clearly, we can spot the Neocons and within the Republican Party who are within the establishment and will make choices based on the greater agenda rather than the wishes of the people. The issue of Ukraine will be a hot topic for the 2024 US Presidential Election, again, if the election is even permitted.
This is the former adviser to Zelensky, Alexey Arestovich, who quit in protest. He has publicly stated that “The west deceived Russia. They promised not to push NATO to the east, and they did. They turned Ukraine into a huge anti-Russian country. If I was in Russia’s shoes, I would have done the exact same thing.”
The West’s Neocons have exploited Ukraine to wage war against Russia, for the sole reason they hated Russia, and even with the fall of the USSR, they have never changed their views. They tried to stop Reagan from meeting Gorbachev. I found myself back in 1999 to seize control of Russia by having the bankers, led by Edmond Safra, blackmail Yeltsin to step down and hand Russia to the boy, Boris Berezovsky. They tried to get me to invest $10 billion into their Hermitage Capital Management. When I refused, even Boris tried to call me to persuade me to contribute to their cause. When I refused, Edmond stole $1 billion I had on deposit at his bank and the NY press supported the Neocons, as always.
Ironically, they began their manipulation of Ukraine in 2014. It was the Neocons, not the CIA with this plot. John McCain was there meeting even with the Neo-Nazis in public and promising the crowd that America will stand with them if they overthrow their government – Regime Change has always been their agenda. It has NEVER worked out even once – Vietnam, Iraq, Syria, Cuba, and Ukraine just to mention a few.
A lot of people have been asking where to go, what bank is safe, and what’s next? This is by no means over. The fiscal mismanagement is off the charts and we have a major clash with the Marxist views of the Democrats who always want to punish the rich and then ask them for funding. Only in the Democratic Party can you have a $ 10,000-a-plate fundraiser and preach how evil inequality is and that the rich must be held accountable.
Those who keep calling for a gold standard are clueless. To have a return to balanced budgets means that the Democrats will have to completely reform. They DO NOT know how to govern without class warfare. Politics has deeply divided the United States to the point that the only reasonable solution will be to separate between the blue v red. As Lincon said, a house divided cannot stand. That is becoming so obvious that there will come a day soon when that will be the case. There are over 30 civilizations that have come before us. Every single one has collapsed. We are merely waiting for our 15 minutes in the spotlight.
We must understand that things are far worse outside the United States geopolitically thanks to the Neocons who have done nothing by conniving endless wars. They are ruthless evil people who have no problem sacrificing your family for their political aspirations. Short term, as they create World War III, the dollar will be the strongest currency as capital always flees from a conflict. We really need to IMPEACH Biden, because he is a dangerous puppet who reads whatever the Neocons write on the cue cards. Then we really need to launch an investigation of these Neocons who have usurped US foreign policy for decades and are never held accountable.
Now, many people have asked what is a small bank. They are typically local regional banks. The problem is if they just make decisions based on the talking heads on TV, then they will face tremendous problems ahead. To be diverse, for now into 2024, you may want to look at US T-bills 30-day to the 90-day max. Not every bank is in trouble. You should ask if they publish their portfolio. The big risk is that money was basically free, and they were investing that long-term. But as rates have risen, they have suffered losses.
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 $7,192.64GROSS 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!
QUESTION: The sales pitch seems to be that there is this $2 quadrillion in global debt that overhangs everything. Paper assets, therefore, will all implode! They seem to be saying that everything has risen due to this debt bubble and it was all created with Zero interest rates. Now that they are going up, the debt bubble will burst and everything will decline. The story seems to be that this decades-long Boom Bust cycle was created over and over by the Federal Reserve.
This seems to be like you have said, they try to reduce everything to a single cause and effect.
What really happens?
PCJ
ANSWER: These people seem to keep preaching the same story but have no historical understanding whatsoever of how the monetary system has ever worked. Their focus on the Federal Reserve shows that they are not looking at the world economy and they do not even comprehend how bad things really are outside the United States. They do not comprehend what is an interest rate. It is the compensation to a lender for his anticipation of inflation plus a profit. If I think the dollar will decline by 50%, why would I lend you dollars for a year if when you pay me back it buys half of what it did when I lent it to you?
Debt can be a performing asset. I advised many of the Takeover Boys during the 1980s. We would borrow in one currency to buy the asset in another using the computer to distinguish the long-term trends. I would not recommend that to someone just operating on a gut feeling.
We were also advising on real values, which Hollywood distorted and based the movie Wall Street with Michael Douglas and his famous speech on greed. What they did not really understand was that after a Public Wave that peaked in 1981, stocks were suppressed and the full-faith in government created the broadly supported bond market. Hence – bonds were conservative and stocks were risky. There were two aspects that were behind the entire Takeover Boom.
First, I was showing these charts and how in terms of book value, the Dow Jones bottomed in 1977. It was obvious that if you could buy a company, sell its assets, and double or triple your money, then the market was obviously not overpriced. We had forecast that the Dow was undervalued and that it would rise from the 1982 low of 769.98 and test the 2500 level in two years in 1985. Indeed, it reached 2695.47 by September 1987. We also projected that by the next decade, the Dow would test 6,000 on its next rally.
Even the press in Japan was shocked. We were also projected that Crude would fall below $10 in 1998. Indeed, that forecast was covered by Mark Pitman at Bloomberg News. It bottomed at $10.65 in 1998. In gold would forecast that it would drop to test $250 by 1999 completing a 19-year cycle low. Then gold would rally to test 1,000. Gold reached the $1,000 level by 2008. The Japanese press thought those forecasts were wild, to say the least.
The SECOND aspect of our advice to the takeover boys of the ’80s was something the press NEVER understood. We would advise borrowing in one currency for an asset in another. We were able to turn debt into a performing asset. We would make 20-40% profit on the currency alone. Often, the press would just look at the debt and not understand what we were even doing.
Most of this reasoning stems from Sir Tomas Gresham’s observations when he represented England at the Amsterdam exchange during the reign of Henry VI’s reign and debasement. As Henry debased the silver coinage as was taking place in Spain, the more they debased the coinage, the higher the inflation took place. His observation that bad money drives out the good has been grossly misunderstood. When I was growing up, they took the silver out of the coinage in 1965. People were culling out the silver showing that the debased new coinage of 1965 drove out of circulation the old silver coinage. The same thing has taken place with the copper pennings.
Because people hoard old coinage, the money supply shrinks. That then forces the government to issue far more debased coinage to compensate for the coinage that has been withdrawn from hoarding. Consequently, inflation unfolds for all tangible assets to rise in value as expressed in the newly debased coinage.
What these people always try to sell is the same old scenario that they cannot point to a single instance in history where everything collapses to dust but only gold survives. Such periods will typically result in revolution. When Caesar crossed the Rubicon, that was also all bout a debt crisis.
You must also understand that interest rates will be at their LOWEST internationally in the core economy of the Financial Capital of the World – which is the USA right now. The further you move from the center, the higher the interest rate will be. Hence, I have warned that the United States will be the LAST to fall – never the first. This is not based upon my opinion, this is simply historical fact.
The Bottom Line is very simple. There is just no such period as people describe where everything turns to dust and only gold survives. Even if that were true, they what good would the gold do if everything else is worth ZERO? Gold would have also ZERO value since nothing would have value.
The real issue is that as government defaults unfold, tangible assets will rise in value for the amount of money in debt always dwarfs that in even the stock market. We are in a Sovereign Debt Crisis and that is very different from a private debt crisis.
Our sources in Ukraine, not Russia, are warning of serious dissent building against Zelensky. He is a high-heel actor who has been playing a confidence game. He is by no means a military leader and the Ukrainian Military is at its ends with him. The Ukrainian General Valery Zaluzhny, is having a serious conflict with Zelensky. Even others have come out and commented to the German newspaper, the Bild, that the General called for a withdrawal from the Donbas city weeks ago, but Zelensky orders his men to die all for his endless PR campaign to pretend that Ukraine is winning.
The General told Zelensky to withdraw from Bakhmut. But Zelensky pretends for PR that it is a fortress despite the fact that it has been cut off and completely;y surrounded with only one road available for possible evacuation and Zelensky refuses to withdraw. Even the Biden Administration has been urging Zelensky to pull out and focus on preparing a major counteroffensive for the spring. Yet, Zelensky fears admitting publicly a defeat that would hurt the billions flowing into Ukraine. This was part of the Ukrainian defense line that they created when Kiev began its invasion of the Donbas in 2014 on their claimed Anti-Terrorist offensive to kill all Russians and deny them any right to separate seeking their independence in the 2014 Revolution.
Even those speaking to the Bild expressed deep concern that they “do not understand why the city is being held”and believe they should have withdrawn a long time ago. Zelensky proclaims that his Ukrainian forces would defend Bakhmut as long as it “remains reasonable” to do so.
Our sources are clearly saying that Zelensky is losing support and if anyone will becomes the next President it will be General Zaluzhny.
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