Biden, The Federal Reserve and insane Federal spending are killing King Dollar. Countries that used to use the US Dollar as reserve currency are dumping the dollar like a month old burrito.
What countries are dumping the dollar?
A lengthy list of countries are moving away from using the US dollar, which has long been the reserve currency of the world. The following countries are in the process of reducing their dependency on the dollar.
Russia
China
Iran
Brazil
Argentina
Saudi Arabia
UAE
India
The result?
Biden has vacationed 40% of the days he has been President. In his defense, he has probably needed that time to hunt down the classified documents has left strewn around his his home, vacation home, the Penn-Biden Center and Chinatown in DC.
My friend Phill Hall asked me about the state of the US housing market yesterday. My answer? “Chaos.” Why chaos? Here is why: 23 consecutive months of NEGATIVE real wage growth, declining availability of homes for sale, still expensive home prices following the Covid spending surge, and rising mortgage rates as The Fed fights inflation.
And now we have mortgage demand shrinking 4.1% from the previous week according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 31, 2023.
The Market Composite Index, a measure of mortgage loan application volume, decreased 4.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 4 percent compared with the previous week. The Refinance Index decreased 5 percent from the previous week and was 59 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 4 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 35 percent lower than the same week one year ago.
Throw in the declining inventory of homes for sales, and we have chaos.
Not to mention 23 consecutive months of negative REAL wage growth.
Well, at least REAL home prices are growing more slowly (-3.86% YoY) than REAL weekly wage growth -1.9% YoY). So much for housing as a hedge against inflation!
Talk about an economy that seems dependent on Federal government money printing. The US economy seems hopelessly addicted to gov money printing.
Today, US job openings fell in February to 9,931k. While that is still a large number, look at the chart of job openings and M2 Money printing. There is a one year lag between maximum printing and job openings. But M2 Money growth has collapsed.
Silicon Valley Bank’s blunders were encouraged by US regulation, went untested by the Federal Reserve and were “hiding in plain sight” until Wall Street and depositors grew alarmed.
That’s JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon’s assessment of the US banking crisis that sent markets careening last month, an episode he predicts is “not yet over” and will be felt for years. He said US authorities shouldn’t “overreact” with more rules.
In his wide-ranging annual letter to shareholders on Tuesday, Dimon described his firm’s aspirations for using artificial intelligence and ChatGPT, weighed in on geopolitics, and provided updates on JPMorgan’s activities in Ohio. This time, many of his sharpest remarks ripped at regulation, including capital rules that pushed banks to binge on low-interest assets that lost value as interest rates shot up.
“Ironically, banks were incented to own very safe government securities because they were considered highly liquid by regulators and carried very low capital requirements,” Dimon said. “Even worse,” he added, the Federal Reserve didn’t stress-test banks on what would happen as rates jumped.
When Silicon Valley Bank’s uninsured depositors realized it was losing money selling securities to keep up with withdrawal requests, they raced to pull their cash. Regulators then intervened and seized it.
Yes. Banking regulators were so focused on credit-exposure of banks (remember the subprime crisis of 2008?) that they really screwed up by having banks load-up on low credit-risk assets that usually have interest rate risk associated with them like Treasuries and mortgage-backed securities (MBS). What could go wrong?
What went wrong was that interest rates rose and unrealized losses on Treasuries and Agency MBS exploded.
Here is a chart of urealized losses on investment securities that banks have accumulated.
Apparently, The Fed and FDIC (and the myriad of Federal and State regulators) sit high on a mountain top and ignore interest rate risk.
Not only did the ISM Manfacturimng Report on New Business Order fall to 44.3, but price PAID also fell as The Fed hikes rates (yellow line) and slowing M2 Money growth (green line).
Office REITs are really hurting as Count Powellula sucks the blood (liquidity) from the market.
Count Powellula. “I vant to suck the blood from your economy.”
To show you how Yellen/Powell’s Too Low For Too Long (TLFTL) monetary polices coupled with Biden/Pelosi/Schumer’s (add McConnell to this foul-smelling witches’ brew), Powell and The Gang (aka, The Fed) slammed on the monetary brakes. On a year-over-year basis, M2 Money growth has crashed tl -3.13%. The shocking number is The Fed Fund Effective Rate which rose over 5,000% YoY.
Actually, the US has been on a money printing spree since 1995, but it was Covid spending and monetary expansion in 2020 that crushed M2 Money Velocity (GDP/M2).
Here is Supernatural’s Leviathan monster Dick Roman handing an award to sparkless President Joe Biden. But Biden did spark massive inflation that crushed the US middle class and low wage workers.
Well, the University of Michigan consumer sentiment indices are out for March … and they are ugly.
As a baseline, consumer confidence in February 2020 (just before Covid) was 101. After Covid and massive Fed stimulus and Federal government spending spree, consumer confidence in March fell to 62.0, a far cry from 101 under Trump.
Even worse, the UMich buying conditions for housing hit 142 in February 2020 but has declined to 47 in March 2023.
Why would ANYONE have confidence in the US economy under a complete fool with dementia like “China Joe” Biden??
Inflation is slowing just a little. But my feeling about The Fed (that partly caused the problem in the first place by keeping rates too low for too long (TLTL) under Yellen is all I can do is laugh.
The US Core Deflator (Personal Consumption Expenditure CORE PRICE Index YoY fell only slightly in February to a still-high 4.6% in February despite The Fed jacking up interest rates and slowing M2 Money growth.
I thought Biden and Congress passed the inflation reduction act??
Confounded Interest - Anthony B. Sanders 
You must be logged in to post a comment.