BOOM as at 29th November 2020

NEW ZEALAND TO CONSIDER HOME PRICES IN MONETARY POLICY
IS THIS A FINANCIAL REVOLUTION?

The Finance MInister in New Zealand, Grant Robinson,  last week asked the New Zealand central bank to take house prices into account when considering their future interest rate settings. This is a monumental development in historical and economic terms. Central banks  do not include house prices in their settings of official interest rates. Why? Because the religion of mainstream economics tells them not to.

Of course, the central bank in New Zealand is regarded as independent from the government (just like all central banks). But that does not mean that the government cannot express its opinion to the central bank. And in this case, it did so in writing; in a letter from the Finance Minister. That makes it more significant than a random comment or an off the cuff critique. It is almost an instruction — but not quite.

The central bank wrote back to the Minister and said — “We will consider your suggestion of how the Monetary Policy Committee (MPC) could further take into account house prices when formulating monetary policy, and will respond with considered feedback in due course. I can assure you that the MPC, in making its decisions, gives consideration to the potential impact of monetary policy on asset prices, including house prices“.

House prices in New Zealand are remarkably strong and show no signs of dis-inflation or deflation. They demonstrate Asset Price Inflation Writ Large. Over the last 20 years, they have increased steadily in total from NZ$ 300 Billion to NZ$ 1,200 Billion  — a fourfold increase. In other words, they have doubled and then doubled again. The average annual increase in percentage terms has been around 7 % per annum.

Meanwhile, the share market index has doubled three times while bank loans in total to the private sector have tripled and GDP in total has increased fourfold. However, in that timeframe, average wages in New Zealand have doubled only ONCE.

Mainstream economists are trained to ignore asset price inflation despite the fact that fresh new money must inevitably chase house prices because the bulk of new bank loans is linked to home purchases. They seem blind to the consequences of fresh new money creation and where it occurs. At the Monasteries of Economics — we call them “universities” — they learn to ignore this reality. They learn that CPI inflation is the only demon that must be tamed and avoided at all costs. Thus, they watch carefully and obsessively for CPI inflation risk even while the advanced economy nations on Earth are all in persistent CPI Dis-inflation since 1981. For those readers, who don’t know, dis-inflation means positive but persistently falling levels of CPI inflation.

So, for almost 40 years, the central banks have been on CPI “inflation watch”. They have repeatedly sought to tame that demon with higher interest rates whenever it has appeared to be a threat. And during this whole period, the long term secular trend has been one of clear CPI Inflation decline. In other words, the central bankers have been paid well for doing nothing. They have lowered interest rates far more than they have raised them.

Since 1981, the fresh new money supply has continually expanded through the creation of more and more credit money via the modus of bank loan creation. And those bank loans have been tied to asset prices as collateral all along. The money cannot be created without that asset tie. House prices are the key asset that drives bank loan creation and bank loans are now 97% of the new money supply in most advanced economies.

Think about it. If interest rates were to rise when asset prices rose, we would all be living in a completely different economic world.

CUI BONO?
WHO BENEFITS?

To determine who benefits from this, one must ask the questions — who has controlled the religion of mainstream economics since 1981? Who has controlled the curriculum in the “top notch” universities? Who has decided which staff will be appointed to teach the religion?

To BOOM, the answers to these questions are clear. The Bishops and Arch-Bishops obviously  reside within the ivy covered walls of “prestigious” universities in the UK, the USA, France, Italy, Germany, Scandinavia, Japan, Australia and New Zealand.

And the beneficiaries of that religion are the banks and bankers who have been allowed to forever expand interest bearing debt to fund asset purchases at higher and higher prices. The volume of non interest bearing cash in circulation has been in steady decline since 1981.

That world works well for bankers and almost nobody else.

And now bankers are advising governments to “get rid of cash”, to move to a cashless society. Why? Because they want control over the entire money supply and they want to track every transaction.

Currently, they control 97% of the fresh supply of new money. That is not enough for them. They want to eliminate the 3 % which is non-interest bearing cash.

And the politicians whom we elect seem to have no clue whatsoever about what is happening.

A COMMENT ON MASKS

BOOM is reproducing here a comment that was made in response to this article published last week on a website called The Burning Platform. BOOM is not an expert in Mask technology and cannot claim that the comment is true in all respects. However, BOOM has a long past history of career involvement in medicine, medical research, genetic engineering and epidemiology before turning to economics and finance. The comment appears to have been made by an expert in mask technology.

The article — https://www.theburningplatform.com/2020/11/19/brandon-smith-now-is-the-time-for-americans-to-rebel-against-lockdowns-mask-mandates-forced-vaccination/

The Comment — “I was trained as a chemist. A large part of my professional career was working in various parts of the filtration industry. I developed a line of mixed esters of cellulose membrane filters. Millipore type filters, that were used to sterilize flu vaccines for Merck Sharp and Dohme as well as other medical products companies. I developed respiratory protection products for Wilson Safety Products used in the mining industry. I worked for Baxter developing medical / IV filters. I have patents on three IV filters I invented. Baxter sold more than 5 million of one of those every year for most of a decade. I know a little bit about filters.

Surgical masks were not designed as filters and were not intended to be used as filters. Surgical masks were designed to be used by surgeons standing face down over an operating table holding a patient with an open wound. The surgeon wearing the mask would be able to talk to others in the room without discharging spittle droplets into the patient’s wound. Spittle droplets are large and can cause infection.

I witnessed a test of surgical masks. Small plaster particles were generated in a room. They were visible as a white dust in the air. A man was properly fitted with a surgical mask and spent a short time in the room. When he came out the mask was removed. A camera was focused on the man’s face. The entire area that had been covered by the mask was coated by the white dust. The camera showed that his nostrils and his mouth had been penetrated by the white dust. The dust particles were measured and found to be around 40 micrometers in diameter. The particles that penetrated the mask were the same diameter.

Covid-19 virus molecules are about 0.1 micrometers in diameter. That is 400 times smaller than the plaster particles that penetrated the mask.

Surgical masks will not prevent the wearer from inhaling or exhaling viruses or bacteria. They provide absolutely no protection for either the wearer or anyone nearby. They create a very dangerous false sense of security for everyone. They also force the wearer to rebreath carbon dioxide. Which will over time reduce the wearers blood oxygen level. That can become very dangerous especially for older people.


This farce is being promoted by sleazy politicians who believe that if they can convince people that they are protecting them or creating a safe environment for them by pushing this mask farce those people will re-elect them.


All politicians pushing this dangerous mask farce should be voted out of office as soon as possible
“.

Readers should always cross check facts in such a technical comment. This second article discusses the size of SARS CoV2 viruses  — the cause of positive PCR tests and, sometimes, the cause of Covid 19 disease. 

https://www.news-medical.net/health/The-Size-of-SARS-CoV-2-Compared-to-Other-Things.aspx

In addition to mechanistic information, researchers have also evaluated the size and content characteristics of the SARS-CoV-2 particles. Upon analysis of negative-stained SARS-CoV-2 articles by electron microscopy, researchers have determined the diameter of this virus to range between 60 nanometers (nm) to a maximum diameter of 140 nanometers (nm).

140 Nanometers is equal to 0.14 micrometers
60 Nanometers is equal to 0.06 micrometers

From these facts, one can deduce that masks almost certainly provide very little protection against the SARS CoV2 Virus and Covid 19.

If BOOM can find this information within seconds of research, WHY is this not being shown to our politicians and why have “professional” journalists in the mainstream media not discovered it?

Conversions:  https://calculator-converter.com/nanometers-to-micrometers.htm

In economics, things work until they don’t. Until next week …………  Make your own conclusions, do your own research.  BOOM does not offer investment advice.
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EMAIL: gerry {at} boomfinanceandeconomics.com

Return to the BOOM Main Website –  BOOM Finance and Economics at  http://boomfinanceandeconomics.com/

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HOW MOST MONEY IS CREATED

BANKS CREATE FRESH NEW MONEY OUT OF THIN AIR (but they always need a Borrower to do so)

THERE IS NO SUCH THING AS A DEPOSIT
BANKS PURCHASE SECURITIES, THEY DON’T MAKE LOANS
BANKS DON’T TAKE DEPOSITS, THEY BORROW YOUR MONEY
Watch this short 15 minutes video and learn as Professor Richard Werner brilliantly explains how the banking system and financial sector really work.
https://www.youtube.com/watch?v=EC0G7pY4wREhttp://

How is Most New Money Created ?

LOANS CREATE DEPOSITS — that is how almost all new money is created in the economy (by commercial banks making loans).

From the Bank of England Quarterly Bulletin Q1 2014    —
“Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.“Most money in the modern economy is in the form of bank deposits, which are created by commercial banks themselves”.

Youtube Video —  https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-in-the-modern-economy-an-introduction

and

https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy

Paper:  Money in the Modern Economy  PDF —  CLICK HERE

Quarterly Bulletins Indexhttp://www.bankofengland.co.uk/publications/Pages/quarterlybulletin/2014/qb14q1.aspx

Most economists are unaware of this and even ignore the banking & finance sectors in their econometric models.

On 25th April 2017, the central bank of Germany, the Bundesbank, released a statement on this matter —

“In terms of volume, the majority of the money supply is made up of book money, which is created through transactions between banks and domestic customers. Sight deposits are an example of book money: sight deposits are created when a bank settles transactions with a customer, ie it grants a credit, say, or purchases an asset and credits the corresponding amount to the customer’s bank account in return. This means that banks can create book money just by making an accounting entry: according to the Bundesbank’s economists, “this refutes a popular misconception that banks act simply as intermediaries at the time of lending – i.e. that banks can only grant credit using funds placed with them previously as deposits by other customers”. By the same token, excess central bank reserves are not a necessary precondition for a bank to grant credit (and thus create money).

”Reference: https://www.bundesbank.de/Redaktion/EN/Topics/2017/2017_04_25_how_money_is_created.html

The Reserve Bank of Australia (Australia’s central bank) has also contributed to the issue in a speech by Christopher Kent, the Assistant Governor on September 19th 2018.“…… the vast bulk of broad money consists of bank deposits”“Money can be created …….. when financial intermediaries make loans

“In the first instance, the process of money creation requires a willing borrower.” “It’s also worth emphasizing that the process of money creation is not the result of the actions of any single bank – rather, the banking system as a whole acts to create money.”
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MOLS Denmark

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