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Post by kenmb on Jan 18, 2024 17:16:05 GMT -6
This didn't fit anywhere else so will start a new topic. May become a busy topic this year as all indications are interest rates may get bizarre.
I was going to post something since I mentioned the $us possibly dropping the other day. Was watching some of the 75 minute video in this article and this guy talks about similar but he says the US treasury will devalue the $us. Don't know how that gets done but in a world of negative interest rates, then anything is likely. A devalued dollar or higher interest rates would be good for commodities/grains I would think. But then again, perhaps signs of a collapsing system is bad for grains. So who knows.
I did manage to get a couple things right. Central banks still haven't cut rates after two years of "markets" and "experts" saying any day now. And there is no end to the crap the system can execute to keep things going.
Renewed a one year GIC today for dad at the RBC for 5.05% after the 4.75% expired. Lucky bet against all the experts saying lock in rates before they go lower.
If you are betting the farm on interest rates going down then I still think you need a back up plan.
Lots of news this week on interest rates in that central banks are not lowering them any time soon. The $us government is now looking to fund $2T deficit, when $1T was a big deal a year or two ago. An interesting point made in the video, and rightfully so, is government data (so fairy tales) has unemployment at a very low number. This would mean the economy is humming along. And the government is running up debt. Ok, so when does the government run a surplus?
This is a good question.
Did I ever mention the debt will never be paid back? That's not how the system works.
But now the US government has to sell $2T instead of $1T. Yes, it means selling debt. Someone is supposed to buy it. That's how it works. But lately the central banks create money out of thin air to buy it. Some of that is ending again this winter. So the system needs a new way to buy debt, and lots of it. Lots of debt.
Charts in article say people are chewing up their savings. I would say that is likely true. Massive debt with higher interest rates to pay is one factor. Maybe people bet on interest rates staying low.
But let's take out central bank buying for a second. If debt buyers had a hard time buying $1T of debt, how do you get them to double that? Do you pay a higher or lower return? Higher return means higher interest rate. If the Fed buys the debt I suppose that is lower interest rates.
In the video the guy basically says what if the bond buyers come to the conclusion they aren't getting paid at all. A government with low unemployment (theoretically a good economy) still running deficits is not a government looking to owe up to its obligations. So if the Fed buys the debt, the bond buyers will go buy something else - gold, commodities, real estate and such.
Some interesting questions with some answers likely coming the next six months.
Lots we don't understand but some things are simple enough when pointed out. Perhaps the entire video is worth watching but the first 35 minutes are so is probably a good start.
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Post by Oatking on Jan 18, 2024 17:53:43 GMT -6
Any one know interest rates in Europe , Russia , Australia or China ? Interesting to compare with our rates:
I heard an evonomic professor at the university of Manitoba say the government is likely to not drop rates to quickly because in the past they have done so and than had to raise them up again in a short time, level rates over time I’d better gor our economy I think.
It must have been tough times in the early 80s! I was reading the cooperator paper today and one article told the story of a father and son who had their farm seized by two bankers . The two farmers actually killed the bankers in anger !
I hope we don’t see those kind of crimes again .
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Post by shmiffy on Jan 18, 2024 18:38:17 GMT -6
Td is lowered no their rates. They are usually first to do so.
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Post by kenmb on Jan 19, 2024 10:18:41 GMT -6
True that banks can offer different rates than prime plus 2% or whatever. They can offer rates under prime if they want. It's not like it costs anything to issue more debt they don't have, just hit the computer keys and more money is created. If world debt is $200T, then who is the one with it to be lending out? The answer is no one, it just keeps being created. And therefore no lender actually needs to be paid back. I had read that some mortgage rates are lower now than a year ago so likely some banks offering different rates. Canada's debt was around $600B in 2016 and now $1.2T. Good news we are running deficits but not in recession therefore times are good and revenues are good. What happens to debt expansion when times are bad. The real question will come when people realize the debt is never going to be paid back so why are we being taxed to pay it. Just borrow more to pay expanding debt, then borrow more again. Better yet, why do we make debt payments in the first place? If the banks engaged in a high risk loan then let them hold the bag, what is Royal Bank going to do to the country of Canada? Send in 20 managers and take over parliament? This is why it is unheard of to talk of default, the reality is a default can be done anytime but since the banks run the show, it is the banks that don't want the peasants to realize this. So we are told we must keep paying in order to keep the scam going. But at sometime the people will realize the scam. Until then we watch what ever new manipulation will be dreamed up. If central banks cut interest rates because the economy is stalling due to inflation and debt, does that create more inflation and debt? Hmmmmmm. Will central banks hike rates because debt servicing is expensive and so prices are being hiked so hike rates because high interest rates are a problem. No one knows because the system is a farce. They make crap up as they go. The Federal Reserve has a dual mandate to maintain and is granted control by congress - maximize employment and seek stable prices. Both of which they have failed miserably at since 2008 and no one in government has figured out that such things should be reviewed occasionally to determine if the Feds control should be revoked. There is a reason, and it's not incompetence. As for interest rates, found this chart. Individual banks will lend at whatever they want in relation to central banks though.
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Post by kenmb on Jan 25, 2024 10:46:29 GMT -6
Interesting thing I should point out about that graph in the last point.
I often talk of the central banking cartel. Don't know if people understand that or not, but that is what it is and the chart shows it. It is a centrally planned and controlled entity, not a bunch of fully independent banks of countries undertaking policy that is best for their respective country. It is definitely not that as seen in the chart.
Each country should be very different and subject to different influences. Different populations, different resources, different trade flows, different government, different cost/spending /taxes, different debt. I could likely make a long list of why one country has a different finance outlook than another. But the chart says all those countries are actually exactly the same. How is that possible? The countries central bank should know how its country operates and adjust policy as needed.
That chart says all the countries had the exact same monetary needs. Exactly the same, right down to the month that something changes. They all completely missed the concept that infla0had been occurring since 2009 and they all suddenly decided that not only did they miss it, that they had to respond at the exact same time.
No, this is not possible. Independent countries with their own central banks doing best for their country would not respond like this.
It is centrally planned and that means a small group of people doing it. And now you have to determine if they are doing it for your best needs. Again, the chart would indicate that very different countries with a list of different needs, all happen to have the exact same policy that will be "best" for their individual population. I don't think so.
I wouldn't trust them. It's why i say that I don't expect interest rate policy to be based on what you think will be best for you and the guy next to you.
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Post by kenmb on Feb 2, 2024 8:40:52 GMT -6
I am going to say interest rates are more likely to go up, not down. Although 5% from Central banks isn't a bad rate since price of capital should have a cost and therefore holding at 5% for years is perfectly valid - what I don't know if whether or not they really intend to wreck things and go higher. Basically, I can see holding at these levels long term as being a way out that doesn't screw everyone. Cutting rates noteably would be bad, raising rates noteably would be bad. I mean 1% or 2% moves, 0.25 or 0.5% isn't going to do much harm. Powell said a month or two ago that a new metric they will watch is payrolls as a means to set policy. And coincidentally we have a report that says payroll is awesome so inflation is still at work. I don't mind Powell as of yet. Doing what should have been done 10 years ago. Only question now is where things go. If the numbers are fake then the policy is fake. www.zerohedge.com/markets/fed-has-pay-attention-simply-stunning-payrolls-report |
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