(Natural News)—For Wolf Richter, publisher of finance and econ site Wolf Street, the long-term treasury market is finally waking up from its delusion that the Fed is going to gradually cool inflation to its target of two percent.
It is also finally admitting it cannot normalize interest rates after having spent 18 months believing in the hype about a Fed pivot and rate cuts to something like zero percent that would be forced on the Fed by a steep recession, with lots of forever-quantitative easing (QE) to follow.
The latest retail report reflected high increases in retail sales that were in good part due to high increases in inflation. Richter called the occurrence a “bond bloodbath.”
“Today, it is the 30-year treasury yield that pierced the five percent line. It currently trades at 5.02 percent, the highest since August 2007,” Richter wrote in his October 18 article. “The 10-year yield jumped to 4.92 percent at the moment, the highest since July 2007, edging within easy reach of the magic five percent line.”
These long-term yields above five percent only indicate that a form of normalcy is gradually being forced upon the bond market by the resurgence of inflation, and by the belated realization that this inflation isn’t just going away on its own somehow. “This is a huge regime change after years of the Fed’s QE and interest rate repression, and all prior assumptions are out the window,” he further pointed out.
The Daily Doom‘s David Haggith agreed with Richter’s sentiments and commented: “Delusion ends hard when the denial breaks up, and the Fed’s financial demolition is accomplishing that destruction now. If it doesn’t, inflation will do the job for it.”
His forecasts include: as the Fed tightens into a steep recession, the slide into the second plunge since last year’s dip will be steep as it will not likely come until the Fed tightens hard enough and long enough to break the “Everything Bubble” – an expression referring to the correlated impact of monetary easing by the Fed on asset prices in most asset classes, such as equities, housing, bonds, many commodities and even exotic assets such as cryptocurrencies and special purpose acquisition companies (SPACs).
This will send the American economy rapidly into recession in an all-out panic because people who have been investing based on such enormous delusions panic when they finally realize that they’ve run out past the edge of a mighty high cliff, he said, adding that the Big Bond Bubble crash would be inevitable because of the Fed’s quantitative tightening and its raising of interest rates. The government’s massive addiction to endless and enormous deficits, requiring massive new bond issuances, could also contribute to the collapse, he further noted.
“This deficit-spending by the government has to be funded by piling enormous amounts of Treasury securities on the market that need to find buyers. Yield solves all demand problems by rising until demand emerges. And that’s in part what we’re seeing now.
All of this is happening as the Fed is unloading its balance sheet at a record pace, having already shed over $1 trillion in securities in a little over a year,” a separate Wolf Street feature indicated.
Losses in Treasury bonds far worse than mortgage losses in 2008
Meanwhile, banks are in shambles as losses in Treasury bonds were found to be far worse than mortgage losses in 2008.
According to Haggith, the losses become realized losses if banks actually have to sell the bonds in their reserves to fund any flow out of the bank, as we saw last spring. Now, Wall Street bond investors are reportedly worried about the burgeoning U.S. federal debt because the trend in deficits is a strongly established fact and the Fed faces potential policy pitfalls ahead as it wrestles with how to respond to investor angst about the U.S. government’s humongous $33.5 trillion government debt.
As the Fed considers postponing plans for another interest-rate increase, they might be waiting to see if the bond vigilantes are doing their work for it now and pricing bond yields up, whether the Fed raises rates or not.
“At this point, the Fed will merely be running to catch up to what the free market is already doing just so it can appear to still be in control,” Haggith further predicted. “The Fed cannot help the government finance those massive deficits without spraying new gasoline directly into the inflation inferno it has already fueled, and the government cannot seem to stop itself from runaway spending. Even if it does manage to stop itself, the Fed’s roll-off of more Treasuries that have to be refinanced will continue to worsen the picture for bonds. So, will the rising of inflation, a major fear factor now that it is starting [to be] seen by investors, be back on the move?”
What is unfortunate is that until now, the bond market still foolishly believed the Fed would cave in on the inflation fight and go back to QE and/or it foolishly believed that the Fed’s inflation fight would be easily won. “This week’s economic news shined a bright light on the fact that all of that was fantasy. Realization about the inflation fight that remains is repricing everything,” he said hoping that the realization finally wakes the market fully now. (Related: Alarming study: 60% of Americans are still living paycheck to paycheck amid soaring inflation and rising interest rates.)
Visit DebtCollapse.com to read related news on the collapsing state of the U.S. economy.
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Five Things New “Preppers” Forget When Getting Ready for Bad Times Ahead
The preparedness community is growing faster than it has in decades. Even during peak times such as Y2K, the economic downturn of 2008, and Covid, the vast majority of Americans made sure they had plenty of toilet paper but didn’t really stockpile anything else.
Things have changed. There’s a growing anxiety in this presidential election year that has prompted more Americans to get prepared for crazy events in the future. Some of it is being driven by fearmongers, but there are valid concerns with the economy, food supply, pharmaceuticals, the energy grid, and mass rioting that have pushed average Americans into “prepper” mode.
There are degrees of preparedness. One does not have to be a full-blown “doomsday prepper” living off-grid in a secure Montana bunker in order to be ahead of the curve. In many ways, preparedness isn’t about being able to perfectly handle every conceivable situation. It’s about being less dependent on government for as long as possible. Those who have proper “preps” will not be waiting for FEMA to distribute emergency supplies to the desperate masses.
Below are five things people new to preparedness (and sometimes even those with experience) often forget as they get ready. All five are common sense notions that do not rely on doomsday in order to be useful. It may be nice to own a tank during the apocalypse but there’s not much you can do with it until things get really crazy. The recommendations below can have places in the lives of average Americans whether doomsday comes or not.
Note: The information provided by this publication or any related communications is for informational purposes only and should not be considered as financial advice. We do not provide personalized investment, financial, or legal advice.
Secured Wealth
Whether in the bank or held in a retirement account, most Americans feel that their life’s savings is relatively secure. At least they did until the last couple of years when de-banking, geopolitical turmoil, and the threat of Central Bank Digital Currencies reared their ugly heads.
It behooves Americans to diversify their holdings. If there’s a triggering event or series of events that cripple the financial systems or devalue the U.S. Dollar, wealth can evaporate quickly. To hedge against potential turmoil, many Americans are looking in two directions: Crypto and physical precious metals.
There are huge advantages to cryptocurrencies, but there are also inherent risks because “virtual” money can become challenging to spend. Add in the push by central banks and governments to regulate or even replace cryptocurrencies with their own versions they control and the risks amplify. There’s nothing wrong with cryptocurrencies today but things can change rapidly.
As for physical precious metals, many Americans pay cash to keep plenty on hand in their safe. Rolling over or transferring retirement accounts into self-directed IRAs is also a popular option, but there are caveats. It can often take weeks or even months to get the gold and silver shipped if the owner chooses to close their account. This is why Genesis Gold Group stands out. Their relationship with the depositories allows for rapid closure and shipping, often in less than 10 days from the time the account holder makes their move. This can come in handy if things appear to be heading south.
Lots of Potable Water
One of the biggest shocks that hit new preppers is understanding how much potable water they need in order to survive. Experts claim one gallon of water per person per day is necessary. Even the most conservative estimates put it at over half-a-gallon. That means that for a family of four, they’ll need around 120 gallons of water to survive for a month if the taps turn off and the stores empty out.
Being near a fresh water source, whether it’s a river, lake, or well, is a best practice among experienced preppers. It’s necessary to have a water filter as well, even if the taps are still working. Many refuse to drink tap water even when there is no emergency. Berkey was our previous favorite but they’re under attack from regulators so the Alexapure systems are solid replacements.
For those in the city or away from fresh water sources, storage is the best option. This can be challenging because proper water storage containers take up a lot of room and are difficult to move if the need arises. For “bug in” situations, having a larger container that stores hundreds or even thousands of gallons is better than stacking 1-5 gallon containers. Unfortunately, they won’t be easily transportable and they can cost a lot to install.
Water is critical. If chaos erupts and water infrastructure is compromised, having a large backup supply can be lifesaving.
Pharmaceuticals and Medical Supplies
There are multiple threats specific to the medical supply chain. With Chinese and Indian imports accounting for over 90% of pharmaceutical ingredients in the United States, deteriorating relations could make it impossible to get the medicines and antibiotics many of us need.
Stocking up many prescription medications can be hard. Doctors generally do not like to prescribe large batches of drugs even if they are shelf-stable for extended periods of time. It is a best practice to ask your doctor if they can prescribe a larger amount. Today, some are sympathetic to concerns about pharmacies running out or becoming inaccessible. Tell them your concerns. It’s worth a shot. The worst they can do is say no.
If your doctor is unwilling to help you stock up on medicines, then Jase Medical is a good alternative. Through telehealth, they can prescribe daily meds or antibiotics that are shipped to your door. As proponents of medical freedom, they empathize with those who want to have enough medical supplies on hand in case things go wrong.
Energy Sources
The vast majority of Americans are locked into the grid. This has proven to be a massive liability when the grid goes down. Unfortunately, there are no inexpensive remedies.
Those living off-grid had to either spend a lot of money or effort (or both) to get their alternative energy sources like solar set up. For those who do not want to go so far, it’s still a best practice to have backup power sources. Diesel generators and portable solar panels are the two most popular, and while they’re not inexpensive they are not out of reach of most Americans who are concerned about being without power for extended periods of time.
Natural gas is another necessity for many, but that’s far more challenging to replace. Having alternatives for heating and cooking that can be powered if gas and electric grids go down is important. Have a backup for items that require power such as manual can openers. If you’re stuck eating canned foods for a while and all you have is an electric opener, you’ll have problems.
Don’t Forget the Protein
When most think about “prepping,” they think about their food supply. More Americans are turning to gardening and homesteading as ways to produce their own food. Others are working with local farmers and ranchers to purchase directly from the sources. This is a good idea whether doomsday comes or not, but it’s particularly important if the food supply chain is broken.
Most grocery stores have about one to two weeks worth of food, as do most American households. Grocers rely heavily on truckers to receive their ongoing shipments. In a crisis, the current process can fail. It behooves Americans for multiple reasons to localize their food purchases as much as possible.
Long-term storage is another popular option. Canned foods, MREs, and freeze dried meals are selling out quickly even as prices rise. But one component that is conspicuously absent in shelf-stable food is high-quality protein. Most survival food companies offer low quality “protein buckets” or cans of meat, but they are often barely edible.
Prepper All-Naturals offers premium cuts of steak that have been cooked sous vide and freeze dried to give them a 25-year shelf life. They offer Ribeye, NY Strip, and Tenderloin among others.
Having buckets of beans and rice is a good start, but keeping a solid supply of high-quality protein isn’t just healthier. It can help a family maintain normalcy through crises.
Prepare Without Fear
With all the challenges we face as Americans today, it can be emotionally draining. Citizens are scared and there’s nothing irrational about their concerns. Being prepared and making lifestyle changes to secure necessities can go a long way toward overcoming the fears that plague us. We should hope and pray for the best but prepare for the worst. And if the worst does come, then knowing we did what we could to be ready for it will help us face those challenges with confidence.
October 29, a day which will live in infamy