When Banks Are Forced To Buy Bonds, will Interest Rates Go Down? Yes! Chances are as Lending Tightens, Interest rates may not only go down they may go Negative, But wait THERE’S MORE – April 20, 2022,

Private Bank behavior is based on being profitable, if Banks have to pay you more money to hold your (Something they obviously want to do) what happens to consumer price inflation as the economy experiences economic DEFLATION! Well, this falls in line with what many argue is inevitable HYPERINFLATION. The misallocation of resources is indeed a misallocation of resources, but in Western Societies, the PRIVATE banks do most of the money printing.

This system works, because Private banks are PROFIT driven. If let’s imagine for a second I go to a “Private” bank in Communist Cuba, this “Private” Bank likely won’t be profit-driven, its existence would revolve entirely on whatever the Communist government of Cuba decides. Once investors comprehend that private banks in certain regions are WORTHLESS, that country’s currency also becomes worthless.

Now, for many in the Western World, they see Private banks as State enterprises, but we haven’t reached that point yet. Yes regulations on private banks and even some banks embracing “Social justice” causes are becoming normalized, and all of these events point to monetary collapse, but we all still have to watch this thing play out.

So when the bond market starts dictating interest rate policy, I ask the question are we headed for AUSTERITY measures or even more government intervention? If you look at the political landscape in the United States and this is really sad to observe, but Joe Biden has given more leeway to the Federal Reserve than Donald Trump. Now, will this change once conditions change for the worst? I don’t know, but when Donald Trump got rid of some regulations, instead of welcoming higher interest rates in “The Greatest economy ever” Donald Trump began verbally attacking Jerome Powell.

Now, an easy way to “drain the swamp” would be to stop financing the swamp, but Trump for his own reasons, didn’t drain the swamp, he became the swamp and a lot of Trump supporters have become swamp creatures themselves. Joe Biden is better described as bought and paid for. Biden appears to have an extremely low financial IQ and oddly enough that works in favor of The Federal Reserve because they can do whatever they think is best(at least for now)

With that said, consumer price inflation in the modern era has little to do with interest rates and more to do with rules and regulations on the economy. Joe Biden has all sorts of NEW rules and regulations for the economy and for as long as these rules and regulations exist, the U.S economy will continue to experience consumer price inflation along with SHORTAGES.

So let’s say interest rates go up or down, consumer price inflation might rage on anyway, which is why I’ve been saying for years now, that it wouldn’t surprise me if countries like Canada end up with NEGATIVE interest rates. Now, if this happens, this is when I expect commodities to really start getting expensive because it’s an admission that WE’RE STUCK IN THE MUD!

What the hell am I talking about exactly? AUSTERITY MEASURES ofcourse!

 

Former Governor of Puerto Rico Luis Fortuño who isn’t a perfect man, ofcourse he like all of us has his flaws, but he did, what is UNTHINKABLE, he shrunk the size of government. Now, why many of us like him is because it’s easier said than done. Now, if I’m, to be honest, I bought into CANDIDATE Donald Trump, who had the character to shrink government, but when the pressure was on the line, Trump folded.

Now, I don’t think Donald Trump should be blamed for everything, he did a decent job as President, and I like the man, but I use Donald Trump to show you how difficult it is to shrink Government. You have to understand that some people’s ENTIRE LIVELIHOODS rely on a Big government. Imagine I worked for the government for 30 years and some politician had my job canceled, or threatened to have my job canceled, maybe I might join the smear campaign against my boss?

That’s how this works, and once you understand this, you understand consumer price inflation is likely not going away, sire it might subside, but rules and regulations are what they are and if they force costs up if I as a business person can not find profitability based on the governments new rules and regulations and I can’t raise prices, I’ll either sell, go bankrupt or cease operations =>SHORTAGES.

Now, the banks prefer lending out money, but in this type of climate, there might be fewer PRODUCTIVE and innovative people who will bite on private bank debt. This is how capital gets sidelined and how banks inevitably force interest rates back down. But, what’s missing in all of this? Is that the Federal Reserve and other Central Banks by raising interest rates can actually force the Government to shrink in size.

Once you understand that rising interest rates force the government to shrink in size, you start to see how CLUELESS or Fraudulent Donald Trump was. I was so excited when Trump got elected because I thought at the very least he would have RESTRUCTURED America’s debts. By restructuring, I was referring to austerity measures, boy was I wrong and Trump was punished for this because he angered a lot of people when began attacking Jerome Powell.

Is trump better than Biden, sure, but a Joe Biden was inevitable anyway, it’s not like Donald Trump could be president forever, after Ronald Reagan, the world got George Bush, and a New World Order speech. These cycles are inevitable when politicians are UNWILLING to shrink government. People forget under Reagan the Plunge Protection Team was created. I point this out because during times like these you have to sit around and wait to see what happens.

What I see are rates going up so they can come back down again. But I also see consumer price inflation raging on. If consumer price inflation doesn’t rage on, expect SHORTAGES. Yes, shortages can happen with or without price controls. Market participants will try to imagine if a heavily regulated market is a good time to invest. My bet is a lot of investment will be sidelined. Is this a seller’s market? I’m a buy-and-hold investor myself!

Interesting times ahead!