QUESTION: Marty,
living in Europe where the talk about the elimination of cash is loud I am asking myself what is planned for foreign currencies, e.g. USD, one holds in cash at home? They can´t forbid it because foreign exchange is needed for traveling.
Even when they forbid it, there must be the possibility to change them to the new “national cryptocurrency” at the official exchange rate. So one is still better off here in the EU with USD in cash rather than Euro in cash?
Please share your opinion on this topic as it is important for so many of us here in the EU in the danger of being robbed by Brussel. YOUR BLOG is the ONLY light out there! Thank you for sharing your knowledge with those who are interested. You probably save a lot of lives enabling normal people to prepare.
ANSWER: Yes, you are correct. The USD is being hoarded everywhere. The reason for this is that the US has NEVER canceled its currency, so a $5 bill from 1861 is still valid although it is worth more than 10 times its face value to a collector. Europeans should hoard US dollars. The worst they can do is make it illegal to hold gold or US dollars. I would recommend common circulated US $20 gold coins. You can get away with calling them collector coins in Europe.
QUESTION: Hi Martin.. thanks so much for all your world/economic content and perspective. I was reading a comment you made recently concerning real estate mortgages. In the comments, you suggested carrying a low fixed-rate mortgage rather than paying off the property.
My question is what happens when a financial institution goes bust. You’ve taken out a mortgage on your house and deposited the excess money from the mortgage in your bank account. Doesn’t this expose you to bankruptcy risk? If the bank collapses you could potentially lose what’s not covered by FDIC insurance. In one case the house is paid off and the money is out of the banking system. In the second case, the money is held in the banking system and is at risk. Or am I missing something?
Cheers,
Bob
ANSWER: If you have cash at a bank, then you have the risk of the bank failing. However, if you are the borrower and the bank holds the mortgage, then as long as you are current on your payments it cannot foreclose. It will typically sell its assets to raise cash so your mortgage could be resold to another bank or an investment pool.
The problem you will have in a crisis is that real estate is illiquid. When I was growing up, a friend of my father owned virtually the entire main street in town. I recall talking to him and he said that he bought the entire main street in town back in 1937 because he had cash and bought it for 10% of its 1929 value.
If you borrowed and have the cash on the side, you will be in a far better position to sell liquid assets and buy the house at a discount if the bank is in trouble.
Today President Trump is participating in the formal establishment of US Space Command as a unified combatant command, ie. “space force”.
The President is expected to deliver public remarks for the first time since returning from the G-7 Summit in France and since the Justice Department Inspector General released the report on former FBI Director James Comey’s handling of the Russia investigation. Anticipated Start time 4:15pm EST
President Trump just does not understand the dollar. This old school idea that lowering the currency will increase domestic jobs and exports sounds logical, but the value of any currency is determined by the level of international confidence. It is absurd to think you can lower interest rates and the dollar will decline to support more exports. Nobody considered that you then wipe out pensions and force the elderly to work because they cannot live off the interest from the savings.
I really get tired being called into meetings over the same childish one-dimensional theories that it seems only an idiot would believe in. Trump has voiced his dismay over the strong dollar claiming U.S. manufacturers are at a disadvantage. “With substantial Fed Cuts (there is no inflation) and no quantitative tightening, the dollar will make it possible for our companies to win against any competition.” I testified before the House Ways & Means Committee how the greatest deterrent to American exports are TAXES. An American company bidding on a foreign project must pay domestic taxes on worldwide income. A Germany or British company pays taxes ONLY on domestic business — not international. American companies are at a greater disadvantage because of taxes rather than the value of the dollar.
You would think that a child with a calculator could figure this out. Those in power just cannot bring themselves to address the issue because of class warfare is the main argument the Democrats use to inspire people to vote for them. I have been in meetings with Democrats and never will they listen because they do not know how to run for office without inspiring hatred of the rich and blaming them for every failure in their own policies. The only Democrat to ever listen to me was Governor Jim Florio of New Jersey who I debated at Princeton University. I pointed out that the poor and middle class have to pay income taxes and wait for a refund at the end of the year, so you are borrowing from the poor and middle class and cheat them on interest.
Many analysts believe the Federal Reserve will yield to the demands for a further rate cut at the September meeting. This is due to the world economy imploding outside the USA not simply because of Trump-bashing the Fed. We live in a world where we are in the midst of a Dollar Contagion that is impacting the entire world because SOCIALISM is collapsing outside the United States first.
COMMENT: Marty,
The central banks tell us they will lower interest rates, even into negative territory, in order to stimulate the economy through bank lending. YOU tell this is an outdated theory that has NEVER worked and I believe you.
Surely the central banks persist will this excuse not because they think it will work but because they can use the theory as a smokescreen to hide the real reason.
The real reason is, I believe, that they are being leaned-on by politicians to keep rates low or negative because our governments cannot afford to pay higher interest on the massive debts they have accumulated over the decades and have never paid off.
AB
REPLY: You are correct. We warned that when the Economic Confidence Model turned in 2015.75, it would be the beginning of the Sovereign Debt Crisis. Today, the ECB owns 40% of all Eurozone public debt with no end in sight. They have destroyed their bond market. This cycle should collide with the Monetary Crisis Cycle, so we will have some very interesting times ahead.
We must separate the USA from the rest of the world. Europe especially cannot allow official rates to rise without blowing up the entire EU austerity move. The Fed was raising rates because that was the proper policy. He ran into stiff resistance from outside the USA because Europe left its banks with all the toxic bombs and cut rates hoping they would make enough money to cover their losses. This is why Deutsche Bank is in trouble and rumors are flying about HSBC.
But the Fed cannot stand against the entire world. The USA has the ONLY viable bond market. Lowering rates in the USA will also destroy the US bond market and then we are looking at a not so happy ending to the debt crisis.
Brexit Party leader Nigel Farage calls in to Neil Cavuto to discuss the latest maneuvering by the various political forces as they position to stop Brexit or modify the terms. [Backstorywith details] Mr. Farage discusses Prime Minister Boris Johnson’s request to close parliament in order to push through ‘no-deal’ Brexit. Farage says the closing of parliament is a normal process being hyped by opposition leaders.
Reports today about FBI raids on the homes of United Auto Workers (UAW) President Gary Jones who is under investigation in a nationwide corruption sweep.
MICHIGAN – FBI and IRS agents raided the home of UAW President Gary Jones in metro Detroit early Wednesday as part of a nationwide sweep of sites tied to the autoworker union.
Agents also raided the California home of Dennis Williams, who preceded Jones as UAW chief; the union’s northern Michigan conference center; and additional UAW locations in Wisconsin and Missouri.
The raids were a major step as federal officials ramped up their corruption investigation of the autoworkers union — which is in the midst of contract negotiations with Detroit automakers.
As many as a dozen agents collected evidence from Jones’ home on Wildrose Drive in Canton, and would remain there “as long as it takes,” Special Agent Mara Schneider said from the site late in the morning. The search lasted six hours. (read more)
Internal British opposition leader Jeremy Corbyn was developing a plan to stop the U.K from leaving the European Union through legislation aimed at blocking any Brexit without a pre-existing deal. Additionally, Corbyn was proposing calling a vote of ‘no confidence’ in a scheme aimed at weakening Prime Minister Boris Johnson’s no-deal brexit.
To thwart that opposition plan, PM Boris Johnson asked Queen Elizabeth to suspend Parliament, thereby cancelling the legislative time Corbyn would have to form his anti-Brexit law and scheme. Britain’s Queen Elizabeth II agreed to suspend Parliament.
In addition, Prime Minister Johnson has significantly diminished the ‘no-confidence’ scheme by stating if Corbyn follows through PM Johnson would continue to proceed with the Brexit process, and call for a snap election immediately following the October 31st ‘no deal’ exit from the EU. The globalist opposition is going bananas.
LONDON – […] The controversy here lies solely in the timing of the move. Britain is on track to leave the European Union on Oct. 31 and anti-Brexit lawmakers were working frantically to try and thwart the departure via the House of Commons — with plans in motion to try and pass legislation to tie the hands of Johnson’s government when Parliament returns from recess on Sept. 3rd.
Specifically, lawmakers were trying to ensure that Britain is not allowed to leave without a formal withdrawal agreement with the E.U., similar to the kind that May secured with E.U. leaders but failed to get through Parliament — leading ultimately to her resignation in June. Johnson has said he would prefer to leave with a deal, but is prepared to leave without one if E.U. leaders won’t meet British demands.
Tuesday’s announcement torpedoes those opposition plans to tie the government’s hands, icing Parliament for the majority of the remainder of the time left before Oct. 31. Speaker John Bercow, who has made no secret of his anti-Brexit sympathies, called the move a “constitutional outrage.” (link)
With so many prior lies, delays and stall tactics by British leadership beholden to the ideology of multinational influence, there were/are many people concerned about whether Prime Minister Johnson could actually be trusted to deliver on the Brexit referendum supported by the majority of the British voters.
Today’s strong moves by the prime minister seem to dissuade some of those fears. What Great Britain needs is a strong leader who will stand in the gap against relentless leftist opposition and deliver what the people of Britain have voted for.
Today, despite his prior orientation toward fence-sitting weasel-speak, Johnson provides some cautious optimism that he might just be the strong leader the British deserve.
Prime Minister Boris Johnson sent the following letter to members of the House of Commons:
QUESTION: I am a bit confused. You have forecast that interest rates will rise but official rates will decline. Exactly how does this materialize?
Thank you
GF
ANSWER: People seem to look at just the official interest rates set by the central bank and assume what I am saying is wrong. They have to look at what is really going on in interest rates. We have witnessed the greatest gap between official rates and private rates in history. While deposit rates are virtually zero, car loans which are secured, are at about 4.5% in the United States (up to 9.5% outside the USA). The Bank of America, N.A. prime rate was 5.25% as of August 1st, 2019.
In 1981, the Fed’s Discount Rate for banks was 14% at the peak back in 1981. The Prime Rate peaked at 21.5% at that time. This meant that the Prime Rate was 53.5% above the Fed’s Discount Rate. In August 2019, the Fed’s Discount Rate is 2.75% and the Prime Rate is 5.25% or a 90% markup. The spread between public and private rates has nearly doubled.
Official rates can be manipulated by the central bank for it can control the short-term rates, but not the long-term without instituting some form of capital controls. But they close the free markets in government bonds.
The spread on the private rates v official rates has doubled! I am nor forecasting the superficial trend in manipulated rates by central banks, but the real world rates in the private world. I have stated numerous times, the bankers have NOT passed on the lower interest rates to the people. The spreads have doubled – not declined nor did they even stay the same. If the spread was the same as it was in 1981, then the Prime Rate should be 4.2% instead of 5.25% and a secured car loan should be 3.4% instead of 4.5%.
QUESTION: The Thai baht has been very strong for some time now. It doesn’t seem to be affected by the China – US trade war. Is the Thai baht a safe haven in your opinion?
MW
ANSWER: Thailand has been benefiting from the China-US trade war as manufacturing has been moving to Thailand from China. Thailand’s automotive industry has contributed to 12% of the GDP with more than 1.94 million vehicles produced. Thailand is now ranked as the largest automotive producer in Southeast Asia and 12th in the world. Many people now call it the “Automotive Hub of Asia.”
On top of that, you have countless Americans who have gone to Thailand to retire on their visa program. Americans can even open bank accounts in Thailand, unlike in Europe. Many have moved out of Bangkok to the southern region in Cho Brui.
People from Cambodia, Laos, and Myanmar, also known as Burma, often move to Thailand to find work. The Thai economy has been stable and a magnet for foreigners. The culture is one of the friendliest in Southeast Asia, more akin to Japan than Hong Kong. The Thai even take their shoes off at the door as do the Japanese.
As far as the currency is concerned, July fell and bounced off of an important Monthly Bearish Reversal for the dollar. As long as the July low holds, the dollar may now begin to rise simply because of the tensions in Asia as a whole.
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This is a library of News Events not reported by the Main Stream Media documenting & connecting the dots on How the Obama Marxist Liberal agenda is destroying America
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