We talk a lot about how the Fed keeps its big fat thumb on the Treasury market. But it also has its big fat thumb on the housing market. And if the Fed really does follow through with its taper and its plans to shrink its balance sheet, it will have a big effect on the housing market.
If you’ve ever held something under tension down with your thumb and suddenly release it, you know what happens.
Pop!
The Federal Reserve is talking about raising interest rates. Well, that’s going to be a big problem for American consumers who are running up debt at a torrid pace. This is yet another reason why the Fed can’t do what it’s claiming it will do.
Consumer debt jumped 11% year-on-year in November, according to the latest data released by the Federal Reserve. It was the biggest single-month jump in consumer debt in 20 years.
The Fed FOMC minutes came out last week, signaling tighter monetary policy. Peter Schiff talked about the minutes in his podcast, arguing that the Fed can’t do what it says it’s going to do. If it does, it will crash the markets and the economy. And it won’t lower inflation.
November had been the weakest jobs report of the year until a meager 199k were announced for December. As shown below, over the last 18 months, only December 2020 was weaker. This was right when the Covid second wave was wreaking havoc and before vaccines became available to the public.
The debt ceiling was raised in December and the Treasury responded immediately, adding $709 billion in debt over the month.
To be fair, $470 billion of this was non-marketable, as shown below.
Note: Non-Marketable consists almost entirely of debt the government owes to itself (e.g., debt owed to Social Security or public retirement)
The Federal Reserve released the minutes from the December FOMC meeting this week. They were even more hawkish than expected. That sparked a big taper tantrum in the markets. In this episode of the Friday Gold Wrap podcast, host Mike Maharrey gives an overview of the minutes and then asks seven poignant questions they raise that aren’t being asked by the mainstream.
November 2021 charted a total trade deficit of -$80.2B just shy of the record -$81.4B in September. However, the data this month is far more concerning when digging into the details.
After a massive surge in the trade deficit occurred in September, October saw a big pullback to -$67.1B. The details showed that the volatility was driven by a data anomaly where Exported Goods from September were pulled into October. This created a series of Exported Goods values of $149.8B in August followed by $142.7B and $158.8B in September and October. Essentially, $8B moved from September to October, driving the trade deficit to all-time records.
I love exploring data to try and understand complex situations. My career has mainly been in finance giving rise to the name: Exploring Finance. Using data to explore the current financial landscape shows an unsustainable situation, which has led me to identify gold and silver as the best defensive investments.
The Fed has a difficult choice to make.
Will it crash the economy? Or will it crash the dollar?
Whichever way this coin flip turns out — you lose.
The Federal Reserve released the minutes from the December FOMC meeting on Thursday (Jan. 5) and the markets freaked once again at the prospect of monetary tightening. The minutes seem to indicate an even more abrupt shift to tighter monetary policy to fight inflation. But I have questions.
