The Federal Reserve’s higher interest rates after 12 years of zero interest rates are devaluing the asset side of banks’ balance sheets. This frightens depositors and they withdraw their deposits. Depositors also are withdrawing their money because they can get much higher interest rates on safe US Treasuries. According to some reports, $1 trillion has already been withdrawn from US banks. Bloomberg is reporting rumors that Schwab’s $7 Trillion empire based on low rates is cracking from bond losses. In the face of this vulnerability of the financial system, the Federal Reserve raised interest rates further.
There is also the problem of the currency and interest rate derivatives. No one knows the risk in these instruments. The US dollar itself is declining in use as world reserve currency. Alarmed by Washington’s weaponization of the dollar with sanctions and confiscations, much of the world is arranging to abandon the dollar’s use to settle international trade accounts, but the supply of dollars is not declining. This implies a fall in the dollar’s exchange value. The offshoring of manufacturing and food production has made the US heavily dependent on imports. A loss in the dollar’s exchange value resulting from countries settling their trade balances in other currencies means a sharp rise in US inflation.
The Federal Reserve hasn’t the intelligence to think through the consequences of its higher interest rate policy. The federal government cannot comprehend the consequences of offshoring for the US trade deficit or the consequences of continuing massive US budget deficits for the Treasury market.
Washington is too arrogant to comprehend the new way in which the US is perceived abroad. The world sees the dollar-based reserve currency system as Washington’s punishment device, and the world sees dollar-based debt expanding while demand for dollars declines. The result will be a drop in the foreign exchange value of dollar denominated financial instruments such as stocks and bonds.
The collapse of the Soviet Union gave Washington the opportunity to lead the world on a path of peace and economic development. But the neoconservatives could not resist their attempt for world hegemony and launched twenty-five years of war. Wall Street and corporate executives with eyes on bonuses could not resist deindustrializing the US by locating US manufacturing offshore, thus boosting Chinese economic growth instead of American economic growth. These major failures indicate the total failure of US policymakers.
The repeal of the Glass-Steagall Act in the closing days of the 20th century launched the US into the 21st century on a path of financial instability. Nothing has been done to correct this, and nothing has been done to correct the offshoring mistake or the failure to control the supply of government debt. As countries move away from using the dollar to settle international transactions, a dollar glut will result in US inflation and declining American living standards.
Discussing the seriousness of our country’s situation with Michael Hudson, it is difficult to find hope. To admit that mistakes are being made implies acknowledging that we are on the wrong path and that China, Russia, and those governments aligning with them are on a better course, using their banks for financing industrial wealth instead of acting as brokerage casinos and dealing in financial arbitrage and debt leveraging. No American policymaker will risk being asked “why do you support the policies of Xi and Putin?” That they, and not us, have the right policy is not a permitted thought.
Article cross-posted from Paul’s blog.
Why One Survival Food Company Shines Above the Rest
Let’s be real. “Prepper Food” or “Survival Food” is generally awful. The vast majority of companies that push their cans, bags, or buckets desperately hope that their customers never try them and stick them in the closet or pantry instead. Why? Because if the first time they try them is after the crap hits the fan, they’ll be too shaken to call and complain about the quality.
It’s true. Most long-term storage food is made with the cheapest possible ingredients with limited taste and even less nutritional value. This is why they tout calories so much. Sure, they provide calories but does anyone really want to go into the apocalypse with food their family can’t stand?
This is what prompted the Llewellyns to launch Heaven’s Harvest. They bought survival food from multiple companies and determined they couldn’t imagine being stuck in an extended emergency with such low-quality food. They quickly discovered that freeze drying food for long-term storage doesn’t have to mean sacrificing flavor, consistency, or nutrition.
Their ingredients are all-American. In fact, they’re locally sourced and all-natural! This allows their products to be the highest quality on the market, so good that their customers often break open a bag in a pinch to eat because they want to, not just because they have to due to an emergency.
At Heaven’s Harvest, their only focus is amazing food. They don’t sell bugout bags, solar chargers, or multitools. They have one mission – feeding Americans in times of crisis.
What they DO offer is the ability for people to thrive in times of greatest need. On top of long-term storage food, they offer seeds to help Americans for the truly long-term. They want them to grow their own food if possible which is why they offer only Heirloom, Non-GMO, Non-Hybrid, Open-Pollinated seeds so their customers can build permanent food security on their own property.
Neoliberalism was just as guilty if not more so…
You lost me at neoconservatives. Bill clinton repealed Glass-Steagall. The juxtaposition of those two incomplete paragraphs may lead the uninformed that neocons are to blame for the repeal.
I really get tired of the names. The swamp does not have a party and pits one side against the other instead of unifying them. Washington was right that parties were a bad idea. But we play with what we got. The republicans of all strips better get together or one by one we get picked off and they started at the top.
Under the 14th amendment, we are guaranteed equal application of the law. When does the grand jury convene and when do the firing squads get assembled for our leaders? Never, unless “WE” do it… Otherwise, enjoy your communism, because thats what you get.
Neoliberalism and neo conservatives are the same bird. This is structured takedown of USA. The great reset. It won’t go as expected but they’re all in.
Yeah, I’m sure they are amazed at just how easy it was, and just how little “we” would do to defend ourselves.
This is what Fractional Reserve Lending gets you.