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so You'll Thrive and Profit, In Spite of It... "

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The Feared 0.5% “Shock And Awe” Rate Increase Is A Joke

Excerpted from comments on previous DollarCollapse.com posts:

“Powell The Pivoter Cannot Now Pivot Back To Dove” — February 7

Just about everybody seems to think the Fed is going to “tighten” significantly. Then most think the financial markets will fall roughly 20-30% until the Fed has to “pivot,” but a few think the markets – the stock market at least – may actually be able to handle it and the party can continue. (One guy even thinks we’re about to enter an epic “melt up” in stocks that will last for months.)

But nobody seems to think that the Fed actually welcomes price inflation and all that that implies, and aren’t going to actually do much about it, except maybe to keep it under 10% or so. Everybody talks about the US government being unable to pay higher interest rates on Treasury bonds but higher rates will only take effect slowly because most Treasuries are already outstanding. It’s not like the coupon rate changes for those. Only the new issuances would be at higher rates and they’re still very low. The feared 0.5% “shock and awe” rate increase at “some time in the future” is a joke.

Businesses may also be able to handle the higher rates – or so they seem to think – so we’ll see about that, especially the junk-rated “zombie” companies. I’ve been hearing about the fracking business being a debt pit money loser for years and that’s never amounted to anything, at least so far.

Higher price inflation effectively cheapens existing debt, and not just for governments but for everybody. Price inflation tends to raise business revenues and workers get higher pay so their fixed expenses (like student loans, etc.) effectively cost less. Higher revenues, wages and salaries also imply higher tax revenues that can help pay the higher interest rates on new bonds, both from rollovers and new issuances.

I personally don’t think it’s going to be that smooth but nobody has mentioned that possibility and if there’s one thing I’ve learned about this financial bubble is that whatever is the crazier is what tends to happen.

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“How is sound money related to happiness?” — January 30

A political word to describe happiness is liberty. Liberty means freedom from government, government restrictions and intrusions, and especially coercion. One of the problems of government “fiat” currency is that it’s not real money. Currency is not the same as money, and fiat currency is a product of and controlled by, government.

When a government purposely devalues its currency over time, “regular” people are compelled to “invest” their savings in at least some kind of interest-bearing account at an institution in order to preserve the purchasing power of their earnings. In a more just system – a system of sound money, like gold – that shouldn’t be necessary. The time and effort and labor, etc. that one expends in exchange for payment should not necessarily diminish in purchasing power over time. It should not require one to “earn interest” on savings just to maintain it. An individual may not want to do that, for whatever reason.

Some people don’t know – or want to know – about the “money game” or they may not want to play it. Just because one chooses to live in a cave, say, for twenty years shouldn’t mean they lose their purchasing power when they emerge and rejoin society. But the government’s fiat currency system imposes that, which is a violation of liberty.

Real money like gold, however, automatically and naturally preserves one’s purchasing power over time. A one-ounce gold coin in 1922 had the same purchasing power as about twenty US dollars. Both could buy, say, a good quality suit. However, after 100 years those same twenty dollars can’t buy nearly a good suit – which now “costs” about $1,800 – and yet the same one-ounce gold coin can still buy that suit. (Even if one saved that $20 in an account that paid 2% interest per year, the targeted rate of “inflation” by the Fed, one would have only about $144.)

Sound money is free of government and thus supports the liberty to pursue happiness on our own terms.

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“Exactly Which Dystopian Novel Are We Living In?” — December 17 2021

I love that diagram. It could mean that the authors of the individual probabilities were all picking up on the same craziness but focused on only certain aspects.

Similarly, it could be that there is a mass belief among many individuals that a kind of “end times” will occur and have their own particular “modern” fears so the mass event is a compilation.

There has to be an explanation for why the world reacted to the covid scam so completely when it will ultimately be recognized as just another flu virus that creates a kind of nasty cold (for the vast majority). Basically no different than many others and will always be around. Did anyone (politicians and unelected bureaucrats) give a crap about all the deaths caused by other viruses and other medical ailments before 2020? The “ordinary” flu has caused more deaths in 2020 and 2021 than covid-19 (and that’s including deaths being mislabeled as covid-19). It’s incredible.

Bruce C runs Miami-based Calder Construction.

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This Is When The Next Crash Happens

Michael Burry was one of the few who profited from the 2008 crash. He made $750 million for his investors and $100 million personally. Now he’s warning the “mother of all crashes” is coming.

If you have any money in the markets, I urge you to click here and learn the timing of the next stock market crash.

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