Fiscal stimulus measures, notably the recent $1.9 trillion American Rescue Plan Act, appear to be an elaborate joke. The method of funding these initiatives resembles a grand deception. The enormous deficit piled on top of a staggering debt is facilitated by the consistent devaluation of the dollar.
The Federal Reserve’s aggressive intervention in credit markets is a fundamental requirement. Additionally, the Bureau of Labor Statistics continues to deny the existence of price inflation. This week’s consumer price index (CPI) propaganda reported an increase of 0.4 percent in February and a 1.7 percent rise over the past year.
The merger of extreme credit market manipulation and misleading inflation statistics is turning credit markets into a farce. Where should we start?
When you buy a Treasury note, you’re effectively lending money to the government for a predetermined period (ranging from 30 days to 30 years) at a fixed interest rate or yield. Historically, the risk of default on Treasuries has been regarded as negligible.
The federal government, aided by the Federal Reserve, can always create money to settle its obligations. However, this approach is fraught with risks. Continue reading
In 2004, Ashley Revell from London felt an uncontrollable urge that he needed to explore.
This whim was sparked during a casual evening discussion with a friend, quickly evolving into something he couldn’t ignore.
The plan was bold: Revell would sell all his belongings, head to Las Vegas, and risk everything on a single roulette spin. While it sounded utterly irrational, Revell’s determination led him to make it a reality.
Over six months, he liquidated his assets and arrived at the Plaza Hotel and Casino in Las Vegas. On a Sunday morning in April 2004, with his parents watching and a film crew present, Revell placed a bet of $135,300 on red.
What followed? Here’s Revell’s own words:
“That spin was the most amazing moment of my life. While it might sound clichéd, time indeed stood still. A serene calm enveloped me as I had done all the hard work.”
“I had sold everything. I was devoid of possessions. The choice boiled down to red or black. No further decisions loomed – it was a liberating feeling.”
“The ball danced before coming to a stop; though I thought it had landed on red, it momentarily faded from view. As the wheel spun back into focus, it proudly rested on number seven. Red.”
Continue reading
This week brought a rather sobering realization: we’re facing significant challenges ahead.
On Thursday, the yield on the 10-year Treasury note soared above 1.55 percent. As a result, the Dow Jones Industrial Average plummeted 559 points after reaching an all-time high on Wednesday. It seems Wall Street is not heeding Federal Reserve Chairman Jerome Powell’s warnings.
Earlier this week, in testimony before the Senate Banking Committee, Powell reaffirmed that the central bank intends to maintain the federal funds rate close to zero until maximum employment is reached. Additionally, the Fed’s recently published Monetary Policy Report indicated that it would continue to produce credit from thin air, purchasing $80 billion worth of Treasuries and $40 billion of mortgage-backed securities (MBS) every month.
The Report emphasized that the Fed’s acquisition of Treasuries and MBS “…will persist at least at this rate until considerable progress is made toward achieving its employment and price stability goals.” The key phrase being, “at least.” Continue reading
“Where the hell are we?” – President Joe Biden, February 16, 2021
Highway to Hell
The President posed a critical question. Let’s provide him some clarity…
The United States is racing down a path of destruction. The nation’s finances are in a state of turmoil.
Spending is rapidly eclipsing revenue, and debts and deficits are expanding uncontrollably, much like mold flourishing on damp walls. The core infrastructure of the nation has deteriorated significantly.
Skeptical?
According to the recent Congressional Budget Office (CBO) report, Budget and Economic Outlook: 2021 to 2031, the financial situation is dire. The CBO anticipates a federal budget deficit of $2.3 trillion in 2021. This would represent 10.3 percent of gross domestic product (GDP), marking the second largest deficit since 1945, topped only by last year’s 14.9 percent shortfall. Continue reading
