Tag Archives: Big Government

Apr 25 2023

Is Your Money Safe in a Regional Bank?


Armstrong Economics Blog/Banking Crisis Re-Posted Apr 25, 2023 by Martin Armstrong

People often ask if their money is safe in a regional bank. Yes—if you keep it under $250,000 to guarantee the FDIC insures those funds. Some clueless minds brainwashed into fighting the class warfare thought, “Oh well!” for people who had more than them in the bank and did not care if the Silicon Valley Bank or Signature Bank failed.

My phone did not stop ringing and the bankers wanted to know if they should cover ALL the deposits. I actually lost my voice, screaming, “YES YOU MUST COVER ALL THE DEPOSITS! ALL OF THEM!!!” Aside from the fact that no one deserves to lose their hard-earned money, the primary issue here is that failing to cover the deposits would have completely wiped out small businesses.

Small businesses comprise 70% of GDP and must be protected at all costs. They must park large sums in the bank to cover payroll to pay their employees and operational costs. Small businesses would come to a standstill and banks would fall like dominoes. Unemployment would spike and the entire economy would plummet. We would see a massive banking crisis if all small businesses went under. More banks will go broke, it is only a matter of time, but it is crucial that deposits are covered

Apr 21 2023

About The New “Affordable Housing” Fees on Mortgages that Punish High Credit Borrowers


Posted originally on the CTH on April 20, 2023 | Sundance 

Stop looking at the Washington DC Potemkin village; start looking at the financial system behind it that controls it.

You may recently have seen this story:

WASHINGTON DC – Homebuyers with good credit scores will soon encounter a costly surprise: a new federal rule forcing them to pay higher mortgage rates and fees to subsidize people with riskier credit ratings who are also in the market to buy houses.

The fee changes will go into effect May 1 as part of the Federal Housing Finance Agency’s push for affordable housing, and they will affect mortgages originating at private banks across the country. The federally backed home mortgage companies Fannie Mae and Freddie Mac will enact the loan-level price adjustments, or LLPAs.

Mortgage industry specialists say homebuyers with credit scores of 680 or higher will pay, for example, about $40 per month more on a home loan of $400,000. Homebuyers who make down payments of 15% to 20% will get socked with the largest fees. (read more)

If you focus on the DC Potemkin Village, you view this move through the prism of Biden’s FHFA creating a policy to favor low-income (nonwhite) voters by punishing stable credit worthy borrowers.  That’s what the powers who control the levers, and create policy, want us to focus on.  That’s not what is going on.

Biden doesn’t control anything.  Biden is a puppet to the multinationals that control DC policy.  When Biden was installed, the people who control the money and wealth (Blackrock, WEF assembly etc.), the people behind the Potemkin Village, knew what the larger economic agenda would create.

{GO DEEP}. 

They knew BBB, or Green New Deal policy, combined with excessive govt spending would generate inflation.  They moved their money from inflation sensitive liquid and paper assets, into real estate.  Inflation raged, liquid assets depreciated, real assets (real estate) surged.   25% of housing was bought with investment dollars by institutional investors, housing prices skyrocketed – their investments increased accordingly.

The financial control operators avoided the consequences of the government policy they controlled.

Now, those same institutions need to turn those appreciated real estate assets into capital outcomes.  They need to sell the real estate.  However, the assets are now at maximum appreciation and dropping as a result of the central banking moves to raise borrowing rates.

How do they exit the investment?  They need a mechanism – a new policy to create the financial instrument that transfers the increased investment wealth back into their hands.

They need buyers.

How do they get buyers?  They create new policy.

That’s what is behind this new FHFA rule.  Fannie Mae and Freddie Mac will create a new category of buyers that allows the investors to sell the real estate assets at higher appreciated values and exit their investment.  They will transfer the depreciating loss of the asset to the new buyers, like a game of hot potato.

Learn to look behind the Potemkin Village to the institutional financial operators who control the laws, rules and regulations.  This is all a continual game of wealth transfer and redistribution.  There are trillions at stake.

Look at who moves the money around and how they position govt policy for the shifts into and out of the financial system they control.   All of this is being controlled, and Joe Biden has no idea what is happening beyond the talking points that are put in front of him.

Apr 21 2023

March Housing Sales Drop 2.4%, Year Over Year Decline of 22% From March 2022


Posted originally on the CTH on April 20, 2023 | Sundance

As higher interest rates continue to put pressure on borrowers, the ability of the average person to afford a mortgage diminishes.  Higher mortgage rates lead to downward pressure on residential home values as fewer borrowers can afford higher payments.  Simultaneously, commercial real estate is dropping in value as vacancies continue increasing.

Put both of these issues together and already tenuous banks holding mortgage bonds as assets can become more unstable.

This dynamic creates the continual tremors in the background of an economy already suffering from high inflation and low consumer purchasing of durable goods.

A perfect storm starts to realize.

(Wall Street Journal) U.S. existing-home sales decreased 2.4% in March from the prior month to a seasonally adjusted annual rate of 4.44 million, the National Association of Realtors said Thursday. March sales fell 22% from a year earlier.

March marked the 13th time in the previous 14 months that sales have slowed. The housing market had a surprisingly strong February, when sales rose a revised 13.75% from the previous month. But after mortgage rates ticked higher, March sales resumed the extended period of declines.

The housing market’s slowdown is now starting to weigh on prices, which have fallen on an annual basis for two consecutive months for the first time in 11 years. The national median existing-home price decline of 0.9% in March from a year earlier to $375,700 was the biggest year-over-year price drop since January 2012, NAR said.

Median prices, which aren’t seasonally adjusted, were down 9.2% from a record $413,800 in June. Home prices in the western half of the U.S. experienced some of the biggest gains for many years but are now falling the fastest.

[…] Housing starts, a measure of U.S. home-building, fell 0.8% in March from February, the Commerce Department said this week. Residential permits, which can be a bellwether for future home construction, dropped 8.8%.

The housing market slowdown shows one of the main ways that the Fed’s aggressive interest-rate increases are rippling through the economy. Housing is one of the most rate-sensitive economic sectors, and high housing costs have been a big contributor to inflation. (read more)

Before looking at today’s graph showing median existing home values, remember me saying this in 2021?:

“I said in June, at a macro level home prices had reached their peak (last two weeks of May, first two weeks of June was apex).  Obviously, there are some geographic home value increases still happening as COVID related regional issues and work opportunities are shifting populations.  There is also a lag and ripple effect that takes time to work through the economy.  The macro-apex will not be visible until next year.”

When I said that in 2021, people said I was wrong.   Well, with hindsight now visible within the data as it is reflected, look at the result:

May and June 2021 was the peak of year-over-year percent of change in median home value increases.

So, what was going on?

As CTH outlined in 2022:  If you look closely at the timing (keep in mind the data reporting lag) what you will notice is that financial institutions began a big surge in purchasing hard assets, specifically real estate, as soon as Joe Biden took office (Jan ’21), and the economic policy became evident.   Intangible financial instruments became an immediate risk as the professional financial control groups recognized energy policy would drive inflation (supply side) and devalued money would fuel it (demand side).

As an offset to predictable inflationary policy (the insiders’ game), institutional money (Blackrock, Vanguard etc) was moved into hard assets with tangible value.

This shift in asset allocation, institutional sales, helped fuel a false surge in home prices and their valuations.  CTH was writing about this in 2021, and sounding alarms as it took place.  25% of all real estate purchases were being made by institutional investors.

We The People got screwed. 

The dynamic was predictable.  The Biden administration economic policy, energy policy and monetary policy, was going to cause massive inflation.  CTH was shouting about it in early 2021 and warning everyone to prepare for waves of price increases that would naturally surface first on high-turn consumable goods, and then embed into longer-term durable goods.

Despite claims to the contrary, this 2021 inflationary explosion had nothing to do with the pandemic or supply chain shortages.  It is entirely self-created by western governmental policy; the collective ‘Build Back Better’ agenda.  You can see now from the background moves within the financial sectors, they too knew the reality and their money shifts reflected that despite their ‘transitory’ pretending they were mitigating their own exposure.

We the People were yet again going to be victims of specifically intended monetary, regulatory, energy and economic policy.

The investment class rulers of the WEF assembly shifted assets to avoid the pain that we would feel.   We “would own nothing and be happy,” and their shifts would position them to own everything and be in control.

Overall govt spending and regulatory controls drove inflation for these past two years.  The ‘demand side’ was blamed, despite the lack of demand. I will be proven right when history is concluded with this.  Interest rates were raised by central banks in an effort to support the policies that are driving ‘supply side’ inflation, not demand side.

Energy policy was/is crushing the consumer by driving up the cost of all goods and services.  To support the overall goal of changing global energy resource and development (a false and controlled global operation), central banks raised interest rates.  Various western economies, including our own, have been pushed deeper into a state of contraction by central banks crushing consumer demand, and eliminating investment via increased borrowing costs.

In short, the goal was/is to lower energy consumption by shrinking the economic activity.  This, according to the BBB plan, was needed at the same time as energy development was reduced.  These economic outcomes are not organic, they are all being controlled by collective western government agreement.

Within this control dynamic, there was always going to be a point where the reaction of the people to their economic reality means the financial control elements need to shift direction.  They will always maximize profit and minimized risk, while knowing what the larger objective remains.

Just like every other durable good, housing demand contracts as prices and costs become unaffordable.  The loss of equity within your home is damaging to your own value or ability to borrow against it.

From the perspective of an institutional asset, that same equity drop is an investment loss.  However, the investment loss is not materialized until the sale of the lower valued asset is completed.  Retaining declining real estate on investment books, creates an artificially high appearance of the investment result; unless and until the real estate is sold at a diminished value.

As mortgage rates rise, just as a consumer would pull back from the housing market, so too will institutional investment groups now control the slow dumping of the asset to remove the equity they pumped into it.  Much of the investment housing will be retained as rental housing, with the monthly rents being part of the returns on the investments.    However, as this dynamic unfolds further investment purchases of houses stop, because the asset overall is declining in value.  This halt of investment activity also worsens a steeper drop in home values.

Notice this line within today’s WSJ article: “The housing market had a surprisingly strong February, when sales rose a revised 13.75% from the previous month.”

What happened in February?  The BIG CLUB [Blackrock, Vanguard, Citadel, etc.] moved liquid assets out of banks into hard assets (real estate), to avoid a predictable banking issue which surfaced a month later in March.  They knew what was going to happen in banking, they moved their own assets to avoid it.

Apr 15 2023

Gold & the Dow Rally Together? OMG


Armstrong Economics Blog/Dow Jones Re-Posted Apr 14, 2023 by Martin Armstrong

COMMENT: Well, the goldbugs are wrong again. This claim that the stock market must crash and only gold will rise is as you say sophistry. It looks like gold and the Dow are rallying together. I can see how they are just promoting a cult-like agenda.

Thanks for being objective

MH

REPLY: We became the biggest institutional adviser because there was never an agenda. Everything goes up, and everything comes down. There is an old saying among actual traders – NEVER marry the trade. I buy gold personally. I just bought a hoard of $20 gold pieces all uncirculated and all dated 1924. I do not regard it as a trade, just a stash for the long-term. It will go up and go down. Do not pretend that something only goes in one direction.

Here is a chart from Socrates on the Quarterly Level of the Dow/Gold Ratio. Anyone who only forecasts a single direction is NOT an analyst – they are a promoter like a used car salesman. No matter what we look at, there is a time to buy and a time to sell. EVERY market functions that was.

Here is an advertisement from April 9th, 1930 pitching Bank Stocks. Brokers were telling people to buy all the way down, average in, but it took 26 years for the Dow to reach the 1929 high again. Anyone selling any product will ALWAYS tell you to BUY. That is their business. It is up to you to come to terms with how ALL markets really move. Hence, there is always a TIME TO BUY just as there is a TIME TO SELL.

Apr 12 2023

Pentagon Confirms Document Leak


Armstrong Economics Blog/War Re-Posted Apr 12, 2023 by Martin Armstrong

There is a mole within the Pentagon and officials are eagerly seeking to find the source. Someone has been leaking classified documents to the public that include plans to involve the international community in the Ukrainian conflict. Someone in the intelligence community wants the public to know about America’s increasing involvement in the Russia-Ukraine proxy war.

A source close to Zelensky has said that Ukraine has scrapped previous war strategies due to the leaked information. The documents actually mention that the US has been spying on Zelensky himself, which comes as no surprise. Chris Meagher, the assistant to the secretary of defense for public affairs, said the leak is under investigation and that they do not know how much information has been leaked. Meagher claims some of the documents have been altered in an attempt to cover up the truth. He is reassuring allies “of our commitment to safeguarding intelligence and fidelity to our security partnerships.”

The documents were highly classified and contained information on how the US spies on its allies and enemies alike. The documents began appearing on Discord servers, 4Chan, and other platforms about a month ago, with over 50 sensitive documents now revealed to the public. The Five Eyes intelligence alliance, which includes Canada, Australia, New Zealand, and the UK, are now urging the US to rectify the situation immediately. Time will only tell what secrets these documents reveal.

They could not deny that the papers were real. We have seen how the intelligence community treats those who expose the truth like Edward Snowden who must live out his existence in fear. The source knows the risks and will likely risk their life to expose the truth.

United States Code at 18 U.S.C. § 2381

Whoever, owing allegiance to the United States, levies war against them or adheres to their enemies, giving them aid and comfort within the United States or elsewhere, is guilty of treason and shall suffer death, or shall be imprisoned not less than five years and fined under this title but not less than $10,000; and …

Mar 13 2023

The Myth of Fair Value


Armstrong Economics Blog/Understanding Cycles Re-Posted Mar 13, 2023 by Martin Armstrong

QUESTION: If the metals are not trading at a fair value relative to everything else, then does that not prove they are manipulated?

SN

ANSWER: Your problem is the assumption that everything must be trading at some fair value. That is up there with the theory of random walks.  ALL markets trade for periods where they remain well below fair value. That was the entire takeover boom of the 1980s which they also blamed on me because I was advising many of the takeover players. I simply showed these charts back then which show in terms of book value, the Dow Jones bottomed in 1977. The market was grossly undervalued because you could buy a company, sell all its tangible assets, and double or triple your money. Michael Douglas’ famous speech in that movie about “greed” would not even be possible if everything always trade like some mythical robot at fair value. Everything overshoots and undershoots.

The metals are NO DIFFERENT. Every market swings between grossly UNDERVALUED and then grossly OVERVALUED. This is part of the business cycle. If there were no periods of gross undervaluations, there would not be a sudden boom either.

This is what you have to come to grips with. There is such a thing and the business cycle. Our cyclical analysis would not be possible if everything was trading at a flat line of fair value. This nonsense in metals is made up of people who have been wrong, and need to blame someone else. It is like blaming climate cycles on CO2. This notion of fair value is rooted, I hate to tell you, in Marxism, because he too did not understand  the business cycle.

Jan 21 2023

DOJ Tells Republican Congress Not to Expect Cooperation and Thank You


Posted originally on the CTH on January 20, 2023 | Sundance | 200 Comments

The U.S. Dept of Justice (DOJ) has sent a five-page letter to congress, copying Politico for the public distribution therein.  [SEE pdf HERE]

The snarky and passive aggressive Lawfare tone inside the letter is rather remarkable in its sanctimony and condescension.  Essentially, Main Justice is telling congressional oversight, specifically House Judiciary Chair Jim Jordan, not to expect any timely responses because there’s a lot going on.

Additionally, as the letter directly implies, Republican oversight is not in the favor of the current administration or DOJ and, well, in general terms, get over it – they aren’t complying.  However, feel free to initiate the formal negotiation process that will likely take several years.

From the letter to Jim Jordan, “Your January 17 requests—made now in your position as Chairman—initiate the constitutionally mandated accommodation process. Under this process, the Legislative and Executive Branches have a constitutional obligation to negotiate in good faith to meet the informational needs of Congress while protecting the institutional interests of the Executive Branch. We look forward to beginning this process in response to your January 17 letters.” (link)

(Via Politico) – […] The letter, addressed to Judiciary Committee Chair Jim Jordan (R-Ohio), acknowledges the GOP’s multiple requests for information during the last Congress but doesn’t divulge any new information. Instead, Uriarte outlines how he hopes DOJ could have a “productive relationship” with Republicans in the new Congress, as Jordan had in previous letters accused the DOJ of “stonewalling” their requests, raised the possibility of a subpoena and said the committee could resort to “compulsory practices” to obtain the requested information and documents.

It’s an early marker of DOJ’s position as Republicans pledge to probe President Joe Biden’s administration over a laundry list of issues, including with a select subpanel that has a broad mandate to investigate the federal government. Conservatives have hinted they would use that panel to try to look into certain ongoing law enforcement investigations. (read more)

I think at this point everyone outside the professional political class in the Legislative Branch knew this was going to happen.  However, the Republicans in Congress will likely pretend to be stunned by this development, Fox News Sean Hannity will be outraged by it, and then the RNC and RCCC will dispatch fundraising campaigns citing the refusal of the DOJ.   Win, win, win… wash – rinse – repeat.

Predicting this approach was exactly why CTH said the House Subcommittee on Weaponized Government should not waste time looking for assistance, documents and or internal support from the various DC silos.  Instead, the oversight committees need to go through the formal request process (blah, blah, blah) but focus their efforts at getting documents from the private sector collaborators outside the DC silo system.

If it seems like the Democrats always know how to use power more effectively than Republicans, you would be absolutely correct.  However, few people really understand the reason for it.  So, I will repeat.

The Republicans want money.  The Democrats want power.  The Republicans use power to get money. The Democrats use money to get power.  The ideology of the Democrats drives their donor funding.  The donor funding of the Republicans drives their ideology.

This core truism carries forward beyond electoral politics and into the realm of legislative battles and oversight conflicts.  Republicans want money as their primary objective.  If the Biden administration wants to get an ideological bill passed, the Democrats simply buy the votes of Republicans (especially Senators).

As an additional outcome, Republicans in congress have no core values, no core objectives, no goals to achieve.  After all, their structural goal is money.

Give Republicans power and they don’t know what to do with it, because the voters essentially boosted the dog to catch the car… now what?

What you see in the outcome of elections is that Republicans do not have any plan for power, because it’s not the issue that takes up their intellectual time.  That’s reserved for deep analytical thoughts about how to make money from (XXX).

The Democrats know this, they know the main mission of Republicans.  Ergo, the Lawfare DOJ pats the Republicans on the head and waits for the frustrated voters to get sick of the GOP doing nothing again, and the Democrats simply wait them out.

We have been in this repetitious abuse cycle for about two decades.

Battered Conservative Syndrome is a very real thing.

There are an enormous amount of codependent enabling voters in this process.  I call them Seagull Republicans because they are voters who will fly down and shit over anyone who complains about this reality – then they fly up to their high perches and look down their noses.

In case you missed it, the Seagull Republicans are currently aligned to support Harmeet Dhillon and Ron DeSantis.

One UniParty consisting of two wings, the RNC and the DNC.  One bird, two wings.

The GOPe priority around money is the one constant on the right wing.  But don’t worry, because the Seagulls are promising that Ron DeSantis will protect us from teh geys.

Jan 11 2023

The Fed & the Misinformation


Armstrong Economics Blog/Central Banks Re-Posted Jan 11, 2023 by Martin Armstrong

QUESTION: Marty, I was there at your Berlin conference when one of the attendees openly admitted he was from the Bundesbank. He was very open about it. There have been other central bankers at your WEC. I suppose they have to attend just to get a whiff of the trend. Powell has come out and asserted the Fed’s independence and it will not make policy based on climate change. That was very refreshing.  The bulk of analysts still cry about the creation of money at the Fed are insisting that a recession is coming because when the Fed stops printing, we will see a correction worse than 2008. Some call this a confetti party. Many claims to be fed watchers, but have never stepped inside their door. Meeting the people I have at your WEC events, you are always in the center and I can see it is not your opinion but Socrates that they want to listen to for an unbiased view. So will there be a huge correction when this party is over or have the fed watches been talking sophistry with no real insight?

HD

PS: What about a Dubai WEC because the world imposes vaccine passports?

ANSWER: I know, This is the typical myopic domestic view that the Fed is in a very dangerous situation and a wrong move in any direction could cause a financial system meltdown worse than 2008. The argument is that since we have a debt-based monetary system if the Fed stops increasing the money supply this will lead to an economic withdrawal process that will be worse than 2008-2009. Once more, this is only looking at the domestic economy. They live with blinders on and do not see the world around us with respect to the globalization policies that are all in chaos.

Even at Davos in 2003, Alejandro Toledo, then President of Peru, urged the participants to listen to the voices of those protesting outside and to build a bridge with the participants of the Porto Alegre anti-globalization conference. “We must give a human face to the global economy and globalization,” he said. “Managing the economy is not an end in itself, but a means to improve the quality of life. Globalization is meaningless if it does not contribute to reducing poverty all over the world. “ Schwab preaches equality but at the price of Authoritarianism and the loss of individual rights.

The Fed is not between a rock and a hard place domestically. It just made it clear that it is not like the ECB and is not in the climate change business. The Fed is INDEPENDENT and will not be bullied by Biden. The Fed understands that it has become the world’s central bank and its actions in raising rates have had a far greater impact externally particularly in emerging markets because so many other nations issue their debt in US dollars.

The focus is not entirely on the nonsense of the domestic number of the money supply. If a foreigner buys property in the United States, they convert their currency to dollars, and in effect that increases the domestic money supply for that capital now free up cash domestically. The Fed has no control over that aspect and central banks have become aware of this effect which is not taught in economics class and not factored into the doomsday forecasts all based on the same reasoning forever.

All the analysis is constantly based on the Quantity Theory of Money which no longer works in our global economy. That was the foundation of the money theory that emerged with Sir Tomas Greshan who was the agent for the British crown. He saw that when Henry VIII debased the coinage, the value declined in Amsterdam when the exchange rate was solely based upon the metal content of the currency.

All we have ever heard is that the Fed has the power to create money out of thin air. They never explain why the Fed was given that power. You cannot have a fixed money supply as the population increases, then you end up with DEFLATION which is the rise in the value of money. They are married to the argument and nothing you can do will deter them from that saying. During the Great Depression, people hoard their money and do not spend it. That was why the ECB went to negative to try to force people to spend money. You can DOUBLE the money supply but if the people hoard it, you will never create inflation.

Because people hoard their cash, there was a huge contraction in the velocity of money. This resulted in massive shortages and it led to over 200 cities issuing their own money to try to enable a local economy to still function for there was not enough cash to even pay anyone for services.

INFLATION is actually the decline in the purchasing power of the currency as measured against assets. DEFLATION is the rise in the value of money and the decline in the value of assets. The way the term “inflation” is handled today, the government puts the blame on the private sector. During DEFLATION we are blamed for not spending our money.

All this talk about bail-ins and bail-outs misses the point. They act as if they in the end really matter. HYPERINFLATION will never arrive based on increasing the money supply. It arrives with the collapse of CONFIDENCE in the government. Germany imposed a forced loan and confiscated 10% of everyone’s assets in December 1922. Germany lost the war and in 1918 there was a Communist Revolution that led to the creation of the Weimar Republic. The money supply increased 10 fold during 1922 when they were struggling to meet the reparation payments. That undermined the confidence in the government. But it was December 1922 when they confiscated  Note that the hyperinflation took off in 1923 after that forced loan. It was no longer safe to have assets in banks.

This idea that we are headed into so black hole all because the Fed creates money is insane. That misinformation that the German Hyperinflation was all because of printing money was totally absurd and a lie. Once the government stole 10% of everyone’s assets, that was the final straw. They then had to print just to try to cover costs and meet reparation payments.

The Lesson of Germany is seriously distorted and has inflected the view of money supply and inflation which ignores the actions of the government. That is the real issue.

Jan 4 2023

The Uni-Party of Capitol Hill


Armstrong Economics Blog/Politics Re-Posted Jan 3, 2023 by Martin Armstrong

This speech by Congressman Matt Gaetz is actually very important. Listen carefully to what he is saying – he and others will not vote for this “uni-party” candidate Kevin McCarthy from California. I cannot emphasize more that what he is talking about is what I have been writing about for a long time.

John McCain would have voted for Hillary before Trump because they are all the same – they protect the SWAMP. The battle is not as fierce between the Republicans and Democrats as it often appears. Both sides like things the way they are. Kevin McCarthy would simply be another Pelosi. There really would be no difference. This is why we must simply Crash & Burn. Politics is hopeless. The corruption has eaten away everything from the inside out. Gaetz is correct for they call it on the Hill the “uni-party” where it is not for the people, but for maintaining power.