U.S. Debt Is Still Soaring Higher…

December 15, 2022

* Currencies & metals get sold in the overnight markets!

* Ron Paul stops by the Pfennig for some of his thoughts… 

Good Day… And a Tub Thumpin’ Thursday to one and all In past years, this would be my last Pfennig until after 12/26… But this year I’m doing things a little differently… I’ll be writing all next week, and then for 27th, 28th, and 29th. Then I’ll won’t be writing again until January 17th…  As I told you previously, I’m heading to even warmer temps than I usually have in S. Florida in the winter. Well… my doctor called me yesterday, to tell me he was sending me 2 epi-pens to have with me from here on out. Oh boy! But, like I said yesterday, it beats going into another anaphylaxis shock! I don’t ever want to have to go down that road again… ever! Today, is my younger sister, Terri’s Birthday…  Happy Birthday sis! Terri lives in Houston, so I only see her once a year, and that once a year is coming up next Friday! I’m listening to Beegie Adair’s Winter Romance CD this morning, and she’s playing her version of: Mistletoe and Holly… I love listening to Beegie Adair playing her piano, doing that will put anyone in the Christmas mood!

Well, the dollar was getting sold early yesterday morning, and continued that selling throughout the day, even after the FOMC hiked rates, and talked about more rate hikes… The BBDXY lost 4 index points on the day, following up the 10 index points it lost the previous day.  This dollar selling is becoming something that happens more often these days, and for the non-dollar investors, that’s a good thing… The euro has climbed above 1.06, in quite an orderly fashion too, I might add… It wasn’t that long ago that the euro looked down for the count, it was trading below parity, and inflation was soaring in the Eurozone.  But that was then, and this is now, and the euro is recovering… And it’s not because there’s a reason to buy the euro, like, interest rates are competing with the dollar, or anything good, like inflation is backing off, it has risen strictly because it is the offset to the dollar… When traders sell dollars, they have a myriad of currencies they could use as the offset. It used to yen, then it was sterling, but now it’s the euro, and that’s why I call it the Big Dog, and all the other currencies the little dogs…

Gold never did get turned around yesterday, but Silver did… Gold lost $2.70  on Wednesday, and finished the day at $1,808.80, and Silver gained 21-cents to climb over the $24 handle.. Silver closed at $24.02 on Wednesday… Copper, which has been very stealth-like with its rise in recent weeks, backed off for the first time in a few weeks yesterday… Only a cent or two, but still, it was having a nice run… I read a piece the other day that the writer said that Copper is ready to explode to higher prices…  Well, if that’s the case, then inflation rising isn’t far behind… I’m just saying…

The price of Oil took a day of rest, and remained in the $76 handle all day, yesterday. And bonds didn’t move off their 3.50% yield in the 10-year..

In The overnight markets last night… everything that has gone right for the non-dollar investments has been been wiped out in one fell swoop! The dolllar got bot hand over fist in the overnight markets last night, so apparently, the markets believe the Fed/ Cabal/ Cartel now, and are buying dollars in anticipation of further rate hikes. Never mind that the higher rates go, the lower the housing market will go, and credit card debt will see higher rates, etc. But we can’t let those details get in the way of a strong dollar rally…

So, the dollar has really ripped through the metals this morning… The BBDXY is up 8 index points from yesterday, and Gold is down $36 this morning. Silver has lost the $24 handle it reached yesterday, and is down 88-cents this morning. This is ugly folks… So, don’t look at the currency roundup below, just go straight to the FWIW!   You know, that in the past, whenever the dollar rallies strongly like this, it brings the price manipulators out of their caves, and they join in, piling on Gold & Silver’s losses…   I’m sure that’s what’s happening right now, so hold tight, this dollar tornado will blow over, and then we’ll be left to pick up the pieces… 

The price of Oil has bumped higher by a buck and trades this morning with a $77 handle. This is not a good sign for the economy folks, that the price of Oil is rising again… I’m just saying…

So, the FOMC did hike rates 50 Basis Points and brought their Fed Funds Rate to 4.5%…  Here’s a bit of explanation as to what they said afterward: “The bank released projections showing that growth will slow, unemployment will rise, and the key rate will reach about 5.1% next year, 50 basis points higher than previously estimated.”

So, no pivot in sight, for the 44% of traders out there that were still thinking the Fed/ Cabal/ Cartel, would turn around and cut rates… These guys and gals must still believe in monsters under their beds, because that turn around isn’t happening any time soon!

I just don’t see why on earth investors are buying the 10-year at 3.50%, when inflation is 450 basis points higher than that yield, which means the actual yield is NEGATIVE!  You may received 3.5% a year in interest, but the value of that money is worth less all the time due to inflation…

I know, I know, there’s a ton of cash sitting out there waiting to be invested, and the folks get tired of waiting, but C’Mon, have some patience! If you must buy Treasuries, because of your investment policy, then at least look at buying shorter bonds. Remember the yield curve is inverted, thus signaling a recession is either upon us already or coming. For instance the 1 year note has a yield of 4.67%, the 2-year has a yield of 4.24%, and the 3-year has a yield of 3.95%…   I do like that 2 year bond, if I were to be looking to buy bonds… It still has a negative actual yield, but it’s smaller than that of the 10-year.

So… now that we’ve settle that, let’s move on…  When the fed was printing money left and right, and giving it out on street corners, did you line up for any of that cheap credit? Or did you stash away 100 dollar bills in your mattress?  If you’re like me, Gold help you, I mean, if you didn’t get a dime of all that cash, then line up because you’re not rich enough to have received it…  This is called the Cantillon Effect, and here’s a description of what it is:  “When the Federal Reserve prints money, they distribute it to one of two places.

It either goes to the government or the banks.

The Banks then loan this money out to businesses and “qualifying” wealthy individuals.

If you and I want to buy a home, purchase a car, or use a loan to accelerate our small business, then your credit is checked.

By the time the money gets to you, the money supply has already increased, decreasing its value.

So, your money’s value goes down while the assets rich people own go up.”

This came curtesy of: www.dollarcollapse.com

And that brings me back to the budget deficit that printed for November, that I told you about on Tuesday this week, at least that when I think I talked about it. Anyway, the deficit was $249 Billion, and if we annualize that our deficit would increase over $3 Trillion this year!  Here’s some more on the $249 Billion deficit in November: The $249 Billion deficit leftover after November represents a record-setting year-on-year change for the month of November. The deficit for November of this year is $57 Billion more than it was in November of 2021. 

That got me going to the Debt Clock and checking some things out… You get a Gold star sticker if you can name the state in the U.S. that has the highest GDP to Defcit is, and they also are the state that has the highest unfunded pensions deficit…  Ok, I’ll tell you who that is later this morning… And no, it’s not California or New York… They have high ones, but not like the winner, winter Chicken dinner does!

The U.S. Data Cupboard yesterday, had the FOMC… and we’ve already covered that from top to bottom, so let’s move on to today’s Data Cupboard, which will have Nov. Retail Sales for us… The BHI (Butler Household Index) indicates that Retail Sales will be soft in Nov. Remember the Black Friday sales were not good… I’m just saying…  We’ll also see the color of Nov. prints of Industrial Production and Capacity Utilization…Both have been disappointing in recent prints, and I expect November’s print to be of the same ilk… And we can’t forget the usual Tub Thumpin’ Thursday fare of Weekly Initial Jobless Claims… The Continuing claims have been the story here, folks… 

To recap… The dollar continued to get sold throughout the day on Wednesday, even after the FOMC announced a 50 Basis Points rate hike, and said that there were more on the way…  Gold never turned around yesterday, but Silver did, and climbed above $24 in the process. Chuck has a long dissertation on bonds this morning, so if that’s not your bailiwick then I suggest you skip ahead… I know it may be too late for that, but that last sentence was for the folks that read the recap first… and then decide if they want to read the rest…  Why they would take the risk of missing out on Chuck’s views, is beyond me… no FOMOCV!

For What it’s Worth…  I’ve long been a fan of Ron Paul, because like myself, he’s a patriot, and uses logic to make decisions. So, a year ago, I signed up to receive Ron’s letter, that comes every now and then. But from that letter I have today’s FWIW article for you… It’s Ron Paul talking about debt and the “mother of al economicl crisis” that’s coming… That and more can be found here: The Ron Paul Institute for Peace and Prosperity : The Mother of all Economic Crises

Or, here’s your snippet: “Nouriel Roubini, a former advisor to the International Monetary Fund and member of President Clinton’s Council of Economic Advisors, was one of the few “mainstream” economists to predict the collapse of the housing bubble.

Now Roubini is warning that the staggering amounts of debt held by individuals, businesses, and the government will soon lead to the “mother of all economic crises.”

Roubini properly blames the creation of a debt-based economy on the near-or-at-zero interest rate and quantitative easing policies pursued by the Federal Reserve and other central banks. The inevitable result of the zero-interest and quantitative easing policies is price inflation wreaking havoc on the American people.

The Fed has been trying to eliminate price inflation with a series of interest rate increases. So far, these rate increases have not significantly reduced price inflation. This is because rates remain at historic lows. Yet the rate increases have had negative economic effects, including a decline in the demand for new homes. Increasing interest rates make it impossible for many middle- and working-class Americans to afford a monthly mortgage payment for even a relatively inexpensive home.

The main reason the Fed cannot raise rates to anywhere near what they would be in a free market is the effect it would have on the federal government’s ability to manage its debt.”

Chuck again…. Again, this was just a snippet, the whole article and it’s well written, can be found at the link above..

Market Prices 12/15/2022: American Stye: A$ .6769, kiwi .6390, C$ .7356, euro 1.0634, sterling 1.2305, Swiss $1.0771, European Style: rand 17.2843, krone 9.7852, SEK 10.2526, forint 381.94, zloty 4.4086, koruna 22.8201, RUB 64.85, yen 136.61, sing 1.3554, HKD 7.7725, INR 82.76, China 6.9677, peso 19.70, BRL 5.2961, BBDXY 1,258.94, Dollar Index 104.33, Oil $77.27, 10-year 3.50%, Silver $23.14, Platinum $1,020.00, Palladium $1,885.00, Copper $3.79, and Gold… $1,775.33

That’s it for today and this week… It took me a few days to get my wind back in my sails after last Friday, but eventually I came around! I had a great time yesterday, with Ty, and Jack, and Ty’s sister, watching France reach the World Cup Finals at my local watering hole. Ty and Jack know the Manager of the watering hole, due to their soccer pasts. Well, at least Ty’s soccer past, Jack just seems to know everyone in St. Louis! So, it’s France VS Argentina for the World Cup Championship… Should be a good game, as both teams have a super star player… Oh, and the name of the state that’s the winner, winner Chicken Dinner is…. Drum roll please… Kentucky!  Bet you didn’t think of that one! December 15th was traditionally the day my dad would bring home the Christmas Tree, and we would decorate it… I was always a live tree kind of guy, that loved to go out to a tree farm and cut one down… But not any longer… UGH! Oh well… Time to go… Beggie Adair is now playing Auld Lang Syne… to take us to the finish line today. I hope you have a Tub Thumpin’ Thursday today, and Fantastico Friday tomorrow! Please Be Good To Yourself!

Chuck Butler