Big Ag will never fail the US when it comes to food production, despite ridiculously high (for the US standard of living) food insecurity in this country.
As to the fears of running out of money and the debt ceiling, Pete Morici is no fan of the Biden spending spree, but as he said years ago:
“Now, the Treasury could print money to pay its bills, and the Fed could soak up the excess liquidity by selling its Treasury holdings. Between the Fed’s holdings of Treasurys, and Fannie Mae and Freddie Mac bonds and other securities held by the Fed, this drill could keep the government going and all creditors paid for another 18 months.”
The 14th Amendment will ensure that the debt of the US is honored, even if at a higher interest rate.
We are a long ways off of wheelbarrows full of rubles or bolívares paying for the 2 year old salted ham.
Not worried about debt ceilings at all. It’s more of a contrived orchestrated collapse by these psychopathic “elite” that have proven how much they hate America and what it stands for, by their actions and agendas. And they have the means to cause serious damage.
No I’m not worried about buying a house with bolivars, I’m not an unsophisticated investor. I pivoted from a pharma career to 100% self employment at 28. I want the economy to function as much as anyone for my children. But we’re controlled by nihilists that don’t seem to care about the future unless it’s parroting BS to increase costs on the middle class.
It is certainly not that orchestrated or contrived as it would take an X-Files-sized conspiracy of quiet, scope and brains to make that happen.
I do get what you are saying though, even as the trends you describe are more attributable to unconstrained wealth aggregation, widespread laziness, resource deprivation, jobs being sent overseas to rising 2nd/3rd world counties, workplace automation, technology and overpopulation more than anything else.
I was just commenting why an expat from a breakaway soviet state can see correlation from then and now. I know it’s super complex now with globalism. And there’s no easy solution, but the issues this country is bringing to the frontlines arent the real issues we have. They’re distractions. Why?
Can’t agree more with that. Which brings me back to boomer complacency like I said in my first comment! Besides those that went to NAM no one really had adversity to deal with and nothing but boom times for their portfolios.
Those that did go to nam we didn’t exactly comfort either to get them back to society. Another reason for distrust. People just look the other way. For the wealthiest nation that ever existed we do a shit job at mental heath which in turn costs more in collateral damage. Govt gets what they pay for, so again why allow that?
For the past TEN years, large corporations, businesses, banks, you name it, was able to take advantage of near ZERO rates. Combine that with the past year where we had the fastest rate hike in history. Not good. Specifically, the banks cannot handle such stress simply because their business model cannot work. The banks shouldn’t accept a volatile desposit to just turn around lend long lend to 30y mortgages. Information is traveling faster than ever and people can now withdraw their money in a matter of minutes.
3 years ago: 30y mortgage rate was 3.24% and the median home price in the US was $284k.
Today: 30y mortgage is close to 7% and the median home price is $389k.
What’s the effect? $21k increase in down payment (if you did 20%) and monthly increase from $987 to $1944.
Believe it or not it, the last thing I want is for the US to default. I believe the US will be one of the last countries to default because there are countries in far worse condition than us. But also I’m not going to say it’s impossible.
Think of it this way: Imagaine being $32,000 in debt and have $87 left in your bank account. OH! And you have AA credit rating! That’s the US right now.
I mean we have a whole credit thread on here, someone should ask the experts would they lend money to someone whose only option is QE?
Let’s talk a little bit more about the debt that’s in the system. The US interest payment is now equal to Defense spending. And soon will need to refinance a higher rates. Compounding interest is a son of a b. It’s either cut rates, or cut Defense spending, or cut entitlements (ex. Social Security), or print whatever is needed. What other options is there?
why is that not good? and why are we combining it with the fact that we had very low rates previously?
that’s not true in any way, shape, or form.
that’s not what banks do.
so can banks move money at the same speed. what’s this got to do with the rest of this post?
yes, lovely math. again, what does that have to do with the price of tea in china? you’re literally just painting a picture of an inflationary housing market coupled with higher interest rates.
whew. thank god.
in this scenario can i also make money? because that would be swell.
is that the only option???
do we have to?
this isn’t true. why on earth do you think this is true?
really just knocked out every single option there is. nice work.
dammit why are you asking me? you’re supposed to be the one with all the answers!
again this is another completely nonsense statement. why would the debt stay on the same trajectory for the next 10 years?
How did we get here? In many ways, we have these banking issues because of the regulatory and federal reserve reaction to the 2008 financial crisis. The reaction was to encourage banks to own what is called “high quality liquid assets” aka HQLA and that consists of treasures and mortgage backed securities. Both are backed and guaranteed by the full faith of the US govnerment. So the bank regulators want to take risk out of the banking system but banks have to make money so they take on interest rate risk. Combine that with QE and ultra low rates, you had banks including the Federal Reserve buying trillions of dollars of these securities, PLUS the ramp up from the Covid stimulus, inflation ran hot. Now since the banks were buying these securities at their highs but inflation ran hot, the Federal Reserve decided to raise rates, meaning the the price of the bond DROPS! In other words, if you’re a bank and you lend out a mortgage at 2.5% interest a few years ago and now let’s say the federal interest rate is 5% that means the value of that mortgage drops in half. That’s what created these unrealized losses on the banks’ balance sheets. When there’s a bank run due low confidence in the bank then now those unrealize losses become very very real.
It’s very simple. When interest rates go up, those long duration assets that you bought before goes down in value. The Fed’s reaction? They created this BTFP program where they’re buying US treasury bonds at par even though they might only be worth 70cents on the dollar because interest rates have gone up so fast in such a short time period. It’s a accounting trick because it’s just adding liquidity right back into the system that they just tried to take back out. It’s going out one end and right back into another.
The week before SVB went down, Powell testify before the Senate saying the banking system was capitalized, liquid, and sound. The morning of the SVB’s bank run, the head of supervision of the Fed, Michael Barr, said that Fed supervised banks don’t have bank runs because they’re subject to prudential supervision AT THE SAME TIME a bank they supervise is going under. That means that they did not see this coming.
Painting a picture? That is literally the housing market today.
The US will need to refinance its a debt at a higher rate. That is a fact.
What other options are there?
How is this a nonsense statement? This post literally shows the perfect example of compound interest applied to the US national debt. At some point in our lifetimes, just the interest payment on government debt would eat every single obligation or promise made to future generations. It’s already at the same level as defense spending.
Does any one invest in luxury brands like LV/Gucci?
I saw a recent CNBC video on luxury brands and their growth and it seems they did very well even during the pandemic.
they doing double-digit growths in the billions and I honestly never looked at them before in terms of investing. my eyes were only on the tech sector like Apple/Nvidia/Google/Microsoft/Amazon and such
50% up in 1 year does seem shady as hell, I wonder what’s causing this. I know a big portion is inflation and rich people getting richer but what the hell man?
The wealthy have become extremely wealthier since Covid. Inflation doesn’t hurt them nearly as much, some could say it helps them as they own many assets that are now inflated.
Lvmh also has great marketing through celebs/athletes making the poors want to play rich and spend a weeks paycheck on a T-shirt.
As a middle eastern American, One thing I can proudly say I respect highly off when looking at American white people is that they give zero cares about how they look, whether they have millions or few k they dress almost identically and down to earth. they have no need to flaunt their wealth. more about quality than the show factor.
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