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Will the Fed Kill The Housing and Mortgage…

Updated: Oct 21, 2022

So, the markets have been crashing for maybe three or four weeks, and at the beginning of January, the beginning of 2022. And the market had just gone down and down and down. In fact, the NASDAQ was down about 17% from the time around Thanksgiving, the end of November. And so, the market is crashing. Why? Well, because the Fed came out and said, “we got to get on top of this inflation situation and that inflation has gotten out of hand…”.

What are they doing? They’re going to raise rates as if that’s going to solve the problem. Well, when you raise rates, you put brakes on the economy. Why is that? Well, first of all, you raise rates, and it makes it harder for people to borrow. It’s more expensive. People don’t want to spend more money on mortgages. And so, people quit spending money on mortgages. Well, when you quit spending money on mortgages, people quit selling houses, or building houses, or buying houses.

And so, the housing market starts to slow down. When the housing market starts to slow down, what happens? People get laid off, when people get laid off.. What do they do? Well, they look to the government for money, or, you know, they take a wage cut. But that’s not good for the economy, you need velocity of money, you need money moving around a society to be able to sustain it. That’s the way we’ve set up our capitalism, right? We’ve gotten people addicted to consumption, instead of production. And so, now we consume things. But what happens when people don’t have jobs where they can’t buy the handbag? Or the Gucci shoes or the Nikes? Right? They quit spending money? Well, when you quit spending money, people quit paying taxes, or pay less. And it’s a downward spiral. So without getting into the debate of whether the Fed can really raise rates on a sustained basis, because they said they’re going to raise it four to six times this year.

I don’t think they’re going to be able to even do one, they’re going to try it, and it will spook the markets like it already has. And they’re going to go, okay, okay, because their real mandate now is not inflation, their mandate is not let the market go down. Because, you know, politicians are the ones that appoint them.

So, I think they’re painted into such a corner. And the question is this, is it going to kill the mortgage market? And therefore, is it going to kill the housing market? If the Fed raises rates, what people hope and what Jerome Powell, the Fed Chairman hopes, is that he’s going to raise rates a little.

And they will say, well, it’s only a quarter of a point, it won’t kill the market. So, we will raise it another quarter point, the market gets used to it. But see, it won’t. You can’t, if you take a tissue, and you hold it up on top of your head, and you start to blow the tissue up, the tissue will rise.

But eventually, the tissue will come back, because you’re going to have to take a breath. So, Jerome Powell is hoping that the market just takes a little breath, and then the tissue will continue to rise. But the problem is, he doesn’t have much breath anymore, right? They have no more tools in the toolbox. And so that’s what’s happening to the government, to the Fed, is that they’re screwed, he can’t really raise rates, because the markets will continue to crash.

So, I think they’re going to cause a big housing bubble to burst, they’re going to cause a mortgage problem, they’re going to kill the housing market, it’s going to create a recession. I think it’s beyond a shadow of a doubt. Now, if it’s a depression that comes out of a recession, we’re in real trouble. Because we’ve weakened the dollar, we’re at a real risk of losing the US Dollar as the reserve currency.

But we put sanctions on Iran over the last 10 years because Iran’s the bad guys right? We deem them bad guys. And so since Iran are bad guys, we tie up all their money.

Whether you agree or not whether we should do that. That is what the US does. It is that “where’s the big bully in town”? We then say “don’t let anybody do any business with Iran”. So, Iran says, “well, we got all this oil, who wants some oil”?

We don’t want to make America mad at us, right? America’s big and strong. We don’t want to make them mad. But after a while people are like, you know, “screw America”. They’re blowing everything up. They’re, bombing people that don’t need to be bombed, and they’re printing money that doesn’t need to be printed. And they’re, ruining the dollar. We’re using it and they’re debasing it.

Hey, Iran, maybe we come up with a little something else to use to buy your oil. They’ve come up with a makeshift thing that they’ve cobbled together other than the dollar to buy their oil.

And now they’re doing Bitcoin.

So now that Iran, one of the biggest oil producers in the world, is telling people just pay us in Bitcoin, go around the dollar, we don’t need it anymore. You know, where else is this going to happen?

It’s going to happen in Russia, where everybody’s trading oil and gas and everything else in Petrodollars. And Russia’s like, “I think we have a weakness here”. We’ve got a weak president over there in the United States, potentially. And if he’s weak, then maybe we’re strong, and we can weaken the dollar. We’ve wanted to get off this dollar reserve system for a long time. Why don’t we go ahead and weaken the dollar? Or forget about the dollar all together? Let’s look to use Bitcoin. They haven’t said they’re going to do it yet. But you know what they did recently, they came out and said:

We think that Russia can be a big player in the mining business. Pretty good. That doesn’t sound like an outing of Bitcoin to me. And then one of their members of parliament, and their financial ministry came out and said, “we’re going to figure out a way to regulate Bitcoin, so that it’s fair to everybody”. They didn’t say anything about banning it, or getting rid of it like China says they’re going to try to do. Because China wants everybody to be on their central bank, digital currency. That”s their crypto. 

Russia is like, “hey, why don’t we get people trading Bitcoin over here”? And then we can trade oil with Bitcoin. And then other people, other countries will accept Bitcoin, and we can blow the US out of the water and the US is no longer the reserve currency. US is having supply chain problems anyway; people are going to move over to some new currency anyway. Russia doesn’t have to create it and have to compete against China. China doesn’t have to create it and, you know, blow everybody else out. It’s already there. Just use it.

That’s a real potential.

It’s really interesting to see what’s going on in the world when it comes to this. Hope that was helpful. I just wanted to shed some light on those subjects.

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