Markets Are Starting To Question The “Transitory” Narrative

https://www.nationandstate.com/2021/10/11/markets-are-starting-to-question-the-transitory-narrative/
Markets Are Starting To Question The “Transitory” Narrative By Ven Ram, Bloomberg Markets Live Analyst and Commentator When chess grandmasters meet, the opening moves are usually well-rehearsed. Then, when one makes a single non-standard move, the game becomes intriguing. Similarly, inflation markets were moving lock-step with the Fed’s guidance so far in the current cycle.…

APRA’s mortgage crackdown catches out hopeful home buyers – ABC News

https://www.abc.net.au/news/2021-10-07/apra-crackdown-on-maximum-borrowing-limit-hits-first-home-buyers/100518444

… this week, the financial regulator announced banks would have to start
demonstrating, from next month, that new borrowers were capable of making mortgage repayments if home loan interest rates rose 3 percentage points above their current rate…

Reserve Bank warns home loan restrictions ‘may be adjusted’ if housing market doesn’t cool – ABC News

https://www.abc.net.au/news/2021-10-08/reserve-bank-fsr-apra-home-loan-mortgage-restrictions/100523400

  • Reserve Bank says new home lending rules may take several months to have an effect on the property market
  • RBA says the current rules are likely to hit property investors and first home buyers slightly harder than other borrowers
  • The
    bank’s Financial Stability Review canvasses additional restrictions
    that may be introduced if the housing market and lending do not slow

House prices surge more than 20pc over the past year, CoreLogic data shows – ABC News

Comment by tonytran2015: Investing in property through companies expose the desperate young Australian investors to frauds and abuse by the management class. Investing in property by otherwise-homeowners is NO solution to the housing crisis.

https://www.abc.net.au/news/2021-10-01/home-prices-surge-more-than-20pc-over-the-past-year-corelogic/100506228

  • The national average home price jumped 20.3 per cent over the past year
  • That is the highest annual pace of growth since the year ending June 1989
  • First home buyers appear to be increasingly turning to property investment as they are priced out of homes they want to live in

Democratic Sen. Warner calls for eliminating ‘crazy’ debt ceiling tool altogether

https://www.nationandstate.com/2021/10/07/democratic-sen-warner-calls-for-eliminating-crazy-debt-ceiling-tool-altogether/
Warner compared the debt ceiling to a ‘live hand grenade’ that can be used by ‘extremists’ in both major political parties Go to Source Author: {Just The News}… Read more

The Black Market & the Future | Centinel2012

https://centinel2012.com/2021/10/05/the-black-market-the-future/

Armstrong Economics Blog/Economics Re-Posted Oct 5, 2021 by Martin Armstrong

QUESTION: Marty, you have said that if they move to a digital currency they think they will eliminate crime. What will happen to the underground economy?

BH

ANSWER: Since money drives them, it is possible that they might tax it. When the Colosseum was struck by lightning in 217 AD, repairs were expensive, and money was in short supply. Therefore in 230 AD, Emperor Alexander Severus placed a tax on pimps and both male and female prostitutes, with the stipulation that the income raised go not into the public treasury but towards the cost of restoring the Colosseum. (Imperial Lives, Severus Alexander 24.3).

It is one thing to say you will eliminate prostitution and the drug trade, but then how do you pay the girl next door even to babysit? Prostitution is legal in Amsterdam, and their red light district is a major tourist attraction. The girls have to have health certificates to work, so it is possible that they will just legalize some aspects and collect taxes.

Otherwise, this will end up like Japan, where each emperor devalued the coinage in circulation to 10% of its former value, and his new coins were then full value. After doing this a few times, the people just stopped using Japanese coins and turned to bags of rice and Chinese coins. Japan lost the ability to issue coinage for 600 years.

That is the serious risk that the West would face. My advice to China would be to keep the paper currency; the yuan could then replace the dollar and the euro and provide the basis for a black market. The Western government could outlaw cryptocurrencies or even gold, once again, as a free market. But they could not devalue the currency of a foreign nation.

House prices surge more than 20pc over the past year, CoreLogic data shows – ABC News

https://www.abc.net.au/news/2021-10-01/home-prices-surge-more-than-20pc-over-the-past-year-corelogic/100506228

  • The national average home price jumped 20.3 per cent over the past year
  • That is the highest annual pace of growth since the year ending June 1989
  • First home buyers appear to be increasingly turning to property investment as they are priced out of homes they want to live in

How Can Houses Be Unaffordable AND Booming? | The Wentworth Report

https://wentworthreport.com/2021/10/02/how-can-houses-be-unaffordable-and-booming/

How Can Houses Be Unaffordable AND Booming?By John Rubino.

How is it that homes are both unaffordable and soaring in price? As with so many other things that shouldn’t be, the answer can be found at the intersection of Wall Street and easy money. During the previous decade’s Great Recession, hedge funds and private equity firms figured out that they could borrow for next-to-nothing and buy up the houses that banks were repossessing, then rent those houses back to millions of newly homeless Americans for good returns. Combine these positive cash flows with massive recent price appreciation, and those foreclosed houses turned out to be phenominal investments. Now Wall Street is doubling down, using hundreds of billions of essentially free money to outbid individual buyers for whatever houses are still avalable. In some cases investment giants like Blackrock buy up entire neighborhoods at big premiums to the asking price, pushing everyone else out of the market. Hence the disconnect between home prices and family incomes. … Looks like housing is yet another example of how easy money perverts formerly free markets. Where family income used to dictate (and limit) home prices, now the driver is the yield on corporate and asset-backed bonds. The lower those rates go, the higher home prices climb. If individual buyers are priced out, well, they can just rent from Wall Street, on whatever terms our new landlords think is fair.

Steven Saville, on all that “transitory” inflation:

The clue that the price action has monetary roots is in its frequency, that is, in the number of markets that are experiencing huge price run-ups. Each huge price run-up in isolation can be put down to market-specific supply constraints, but when the same thing happens in so many different markets at different times within a multi-year period then we can be sure that the root cause is linked to the monetary system itself. In the current environment, the root cause is the combination of rapid monetary inflation courtesy of the central bank and a huge increase in government deficit-spending.Thanks to the Fed, the supply of US dollars is about 50% greater today than it was two years ago.

Biden’s Absurd ‘Zero Cost’ Claim—$3.5 Trillion Is Real Money And It’s Coming Out Of Your Pocket | PA Pundits – International

https://papundits.wordpress.com/2021/10/02/bidens-absurd-zero-cost-claim-3-5-trillion-is-real-money-and-its-coming-out-of-your-pocket/

By David Ditch ~

Talk about a ludicrous advertising pitch! Speaking of the record-breaking tax-and-spend package currently being pushed through Congress, President Joe Biden last Friday said, “It is zero price tag on the debt. We’re going to pay for everything we spend.”

This is flatly wrong, and it isn’t even close.

President Joe Biden incorrectly claimed the $3.5 trillion spending bill will pay for itself and has no cost whatsoever.

While we don’t yet have a full accounting of the 2,465-page behemoth, it’s expected that the bill’s total amount of spending and tax credits will reach $3.5 trillion.

In contrast, the bill would increase taxes by about $2.3 trillion, leaving a gap of over $1 trillion. Democrats claim that the difference would be made up by imposing price controls on prescription drugs and through hoped-for economic growth—even though independent analysis says the bill would actually depress growth.

Yet rather than correct the record, Biden doubled down and then some.

In a tweet last Saturday, he said, “My Build Back Better Agenda costs zero dollars.”

It’s one thing to incorrectly claim that legislation pays for itself. It’s another thing to claim that possibly the most expensive piece of legislationin world history has no cost whatsoever.

Make no mistake: There is no free money. Every dollar the federal government spends must either be taken from taxpayers or borrowed.

Extra borrowing would be irresponsible. The federal debt currently stands at $28.4 trillion, or about $220,000 for every household in the country.

The problem is only getting worse, with tens of trillions in unfunded liabilities for programs like Social Security and Medicare. That’s bad for retirees and future generations alike, and Congress is refusing to address the coming crisis.

Tax hikes also have a real cost, and not just for high-income individuals.

Despite Biden’s promises that his plan wouldn’t increase taxes on people earning less than $400,000 per year, the official congressional scorekeepers show the tax burden will increase for families bringing home as little as $30,000 per year.

As for economic growth, a higher tax burden would kneecap the competitiveness of American businesses against foreign competitors. It would also discourage the private sector investment that creates jobs and drives wage growth for workers.

With the post-pandemic recovery still on shaky ground, this is an especially bad time to increase the tax load.

Unfortunately, Biden’s absurd talking point of a “zero dollar” cost is spreading. From Rep. Pramila Jayapal, D-Wash., head of the House Progressive Caucus, to mainstream media headlines about “zero” cost, there is now an active campaign to pretend that a radical big government agenda is free.

Since “trillion” is a nearly incomprehensible number, it’s vital to understand what the bill’s $3.5 trillion price tagactually means.

*The amount drained from the private sector works out to over $27,000 per U.S. household, which is more than the cost of five years of groceries for a typical family.

*Spending at $1,000 per second, it would take 111 years to reach $3.5 trillion. Yet because the bill would cram that spending into a single decade, it would spend an average of $11,000 per second for 10 years.

*At the time it was passed, [the Affordable Care Act] was one of the most expensive pieces of legislation ever. Adjusted for inflation, it cost $1.1 trillion—less than one-third the size of Biden’s tax-apalooza. Even the most ardent supporters of Obamacare never claimed it had a “zero” cost.

Concerns about the legislation go well beyond its incredible cost. The way those trillions would be spent is also riddled with problems.

Expanding the welfare state would discourage work for low- and middle-class families, creating dependency on government rather than creating wealth.

Doling out hundreds of billions to “green” businesses would have no measurable effect on global temperatures, but it would create a new left-wing political constituency using taxpayer dollars.

Democrats are also determined to try and force mass amnesty for illegal immigrants into the tax-and-spend bill.

At the end of the day, this legislation would further concentrate power and control in Washington, D.C. The idea that Congress and federal bureaucrats deserve more responsibility over our day-to-day lives should be a punchline regardless of one’s political leaning, yet that is exactly what the bill would do.

Instead of railroading through a piece of legislation that’s longer than the combined length of two King James Bibles, Congress ought to slow down and consider alternatives.

Reforms to already-existing benefit programs can encourage work and reduce long-term deficits. Maintaining a pro-growth tax code would do more for jobs and wages than any amount of federal meddling.

Taking a responsible approach to the nation’s finances would be a welcome surprise. Unfortunately, Biden seems intent on pretending that everything he wants is free.

He’s wrong. And if the legislative package passes, America will pay a very real price.

This article originally appeared in Fox News.

David Ditch is a research associate specializing in budget and transportation policy in the Grover M. Hermann Center for the Federal Budget at The Heritage Foundation . http://www.heritage.org/

Read more informative articles at The Daily Signal http://dailysignal.com/

David Stockman on the Banking Ponzi Scheme That’s Savaging Depositors | STRAIGHT LINE LOGIC

https://straightlinelogic.com/2021/10/01/david-stockman-on-the-banking-ponzi-scheme-thats-savaging-depositors/

Banks are not paying enough interest to compensate good old-fashioned savers for the depreciation of their dollars due to inflation. From David Stockman at internationalman.com:

The toxic effects of the Fed’s relentless interest rate repression are many, but among the worst has been the absolute savaging of bank depositors.

Interest rates on 12-month CDs (under $100,000) dropped below the inflation rate in October 2009 and have been pinned there ever since.

There is no other word for this than “expropriation” — an unconstitutional taking of property from tens of millions of households that needed to keep their funds liquid and didn’t wish to roll the dice in the junk bond market or stocks.

Worse still, the resulting vast transfer of income from depositors to banks has resulted in an egregious, artificial ballooning of bank profits and stock prices.

For instance, the combined market cap of the top six US banking institution — JP Morgan, Bank of America, Citigroup, Wells Fargo, Morgan Stanley and Goldman Sachs — has risen from $200 billion at the bottom of the financial crisis during the winter of 2008-2009, where it reflected their true value absent government bailouts, to $1.5 trillion recently.

That 7.5X gain, which was 100% orchestrated by the Fed, is an unspeakable gift to the wealthy who own most of the stocks and especially to top bank executives who have cashed-in on vastly appreciated options.

Needless to say, this massive bubble in banks and other financial stocks is unsustainable. When the Fed is finally forced to shut down its printing presses, the bank stocks will be among the first to dive into the abyss.

While this might represent condign justice from a policy and equitable point of view, the extent of the harm to everyday Americans cannot be gainsaid.

That’s because Wall Street is going for one more bite at the apple, claiming that the currently accelerating rate of inflation is good for bank stocks.

Consensus stock price forecasts for JPMorgan are up 20% by 2023 and for Goldman Sachs by 70%.

Needless to say, this is just another 11th hour lure from big money speculators looking to unload vastly overvalued stocks on unwary retail investors.

Accelerating inflation supposedly portends higher growth and loan demand, but that’s a complete humbug because what we actually see in the market is stagflation.And that will cap loan demand even as it squeezes net interest margins, causing bank earnings to fall big time.

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