At this time mortgage rates are up again, and some speculate 8% interest rates on a 30 year mortgage, even though the FED reduced rates.
The banks kinda know the future: higher interest rates due to inflation, and increased deficits that will compound each other.
Meanwhile credit card rates hover around 20%… Understand that credit card rates have not dropped. The lower FED rate just means banks make more money.
Banks make more money because they enjoy the FED’s lower interest rate, but they also make more money by maintaining high rates for credit cards and consumers. Also by maintaining high rates on mortgages. Banks defend themselves because they are brokers of risk. Hmmm… Banks are hoarding gold… This is shouting they expect inflation…
Then the FED adds another 1/4 point cut, so who makes even more money, and who benefits? The numbers don’t lie: public knowledge.
Again, the FED lowered rates, but the Banksters in turn did not lower their rates.
If legislation for not taxing working retirees Social Security that earn over $25K happens, pretty much Social Security insolvency will happen sooner than the projected 20 years out, and when that happens there will have to be cuts in benefits. Pretty much Social Security will become more underfunded to create its demise sooner. Understand that the taxes collected for these workers that are already collecting Social Security go into the Social Security fund.
Tariffs kinda work like a Federal Sales Tax. Pretty much the proposed 20% Tariffs on imports is paid by consumers, and the Federal Government pockets the revenue. Tell me if this is any different than say New York sales tax.
Looks like Republicans will get the majority in the House.
Some say that many or some of these proposals that were the Trump platform likely will get moderated because of bipartisanship, but if Republicans hold the Executive branch, the Senate, and the House how will Democrats or Independents have much or any pull?
Some say Tariffs might only be 8-9%.
As an example I have used many times, DJT in his first term instituted a 20% Tariff on Canadian raw lumber. He also placed a 25% tariff on Canadian finished wood products. The U.S. utilized 25% Canadian lumber as imports to meet the demand. Who do you think paid higher prices. Of course the cost of housing automatically went up with the prices.
Who do you think paid the higher prices? I say eventually the consumer.
Realize that tariffs cause almost immediate inflation.
We bought a house at the very beginning of the recognized housing shortage almost 4 years ago (just before Thanksgiving 2020). Our house in prior decades was a rental that had been last remodel in 1975, and back then it was a Home Cheapo Reno.
We spent a lot of money, and our house perhaps next year will be “turnkey” and I can kinda expect a crazy 62% higher selling price. This would be within an envelope of 5-years. How insane is that?
Again tariffs instituted after the 1929 crash helped create the Great Depression.
There was a tax cut also under DJT’s first term. The economy was fine and did not need stimulas. Basic economics of supply and demand started and ignited inflation. This tax cut also meant a bigger deficit. The money has to come from somewhere…
Deficit spending also was performed by George Bush the son. He started two wars, and wars are inflationary. He also gave out tax cuts that were stimulus that were paid by printing debt. Obama made ObamaCare a policy and mandate we could not afford that too caused inflation, and actually also shortages in healthcare. Also there was deficit spending.
I can’t blame Obama for the 2007-2008 credit crisis, he inherited that problem. George Bush the son started out his first term with a surplus and no deficit, but Obama and the FED bailed out the banks, AIG, and businesses that were too big to fail. The end of free market capitalism happened. Our deficits soared. Pretty much the huge losses were “Socialized.”
The American public’s future effectively got “mortgaged,” every citizen regardless of being a homeowner or not became a mortgage holder because of these losses. Effectively we all became endentured and enslaved to various degrees with debt. The American public paid for these losses, a concept here is the reinvention of slavery, but in a different form. Am I exaggerating here? I don’t think so…
Then Biden maintained the Trump Tariffs, escalated trade wars, and also added stimulus to further propel inflation.
So if you read my criticism, I am being bi-partisan, I say both parties suck, made major bad policies, created an inflationary situation, a deficit level that not only can’t be sustained that might not be able to be ever paid back.
The other day I felt peace. Pretty much this peace I feel because I see the future with a high degree of certainty. Mucho austerity, an economic decline of epic proportions that might become known as the “Greater Depression.”
DJT just speeds things up. Harris only moderated the increase in deficit.
What led up to the Great Depression was the Roaring Twenties, almost a decade.
2007-2008 was a bubble that did not burst; it was reinflated. The Pandemic was another collapse that got re-inflated with debt.
Our debt level here in the U.S. is about the same level as the end of WWII. Decades of growth and prosperity were required to manage all that. I’m talking the baby-boom, the rise of the middle class from the working class, and the growth of the American consumer. I can’t see that happening gain…
The electronics revolution that involved personal computers and digital communications allowed Clinton to pay down our deficit to zero by the year 2000. The U.S actually had a surplus, but pretty much it was squandered.
So here we are, 24 years later after a balanced budget and surplus to a massive debt that rivals the end of WWII. Kinda insane trying to max out your credit limit. Then add that higher eventual interest rates will compound the debt load making it harder to pay back.
Also remember that U.S. wages remained stagnant for decades under the Greenspan Era. About 3 decades. The middle-class kinda went sideways, and the standard of living was somewhat sustained by cheap imported goods (I use the word crap) that you buy at Walmart and K-Mart.
Eyes wide open, the erosion of the middle-class into what I would today call the working-class that live paycheck to paycheck, spans decades.
So pretty much I can be at peace because I kinda know the future. I can relax, get prepared, and not be anxious. I’m rather confident I know the ending of this story. DJT just makes it a shorter story to the end.
Cal
