How Effective are Covid Vaccines? — Relative Risk Versus Absolute Risk — Bond Money Moving to Risk Off — The Magic of Government Issued Bonds


We have all heard the reports that some Covid vaccines are “95 % effective” and “94 % effective”. Politicians and the mainstream media love to repeat these claims. They never explain that the numbers (which come from company reports of the clinical trials) are based upon assessments of relative risk and not on assessments of absolute risk.  You may be very shocked to learn the critical difference.

The Moderna Covid Vaccine generates a relative risk reduction of 94.1 % but only 1.1 % if looked at on the basis of absolute risk reduction.

The Pfizer/Biontech Covid Vaccine generates a relative risk reduction of 95.1 % but only 0.7 % if looked at on the basis of absolute risk reduction.

Are you shocked yet?

On 26th February, the peer reviewed medical journal, Medicina, published an article by Dr  Ronald Brown from the University of Waterloo, Canada. Dr Brown’s paper, titled “Outcome reporting bias in COVID-19 vaccine clinical trials” is also listed in the U.S. National Library of Medicine of the National Institutes of Health.

The Abstract reads as follows — “Relative risk reduction and absolute risk reduction measures in the evaluation of clinical trial data are poorly understood by health professionals and the public. The absence of reported absolute risk reduction in COVID-19 vaccine clinical trials can lead to outcome reporting bias that affects the interpretation of vaccine efficacy. The present article uses clinical epidemiologic tools to critically appraise reports of efficacy in Pfzier/BioNTech and Moderna COVID-19 mRNA vaccine clinical trials. Based on data reported by the manufacturer for Pfzier/BioNTech vaccine BNT162b2, this critical appraisal shows: relative risk reduction, 95.1%; 95% CI, 90.0% to 97.6%; p = 0.016; absolute risk reduction, 0.7%; 95% CI, 0.59% to 0.83%; p < 0.000. For the Moderna vaccine mRNA-1273, the appraisal shows: relative risk reduction, 94.1%; 95% CI, 89.1% to 96.8%; p = 0.004; absolute risk reduction, 1.1%; 95% CI, 0.97% to 1.32%; p < 0.000.

Unreported absolute risk reduction measures of 0.7% and 1.1% for the Pfzier/BioNTech and Moderna vaccines, respectively, are very much lower than the reported relative risk reduction measures. Reporting absolute risk reduction measures is essential to prevent outcome reporting bias in evaluation of COVID-19 vaccine efficacy.

Dr Brown’s conclusion should rattle the entire planet  —

“Such examples of outcome reporting bias mislead and distort the public’s interpretation of COVID-19 mRNA vaccine efficacy and violate the ethical and legal obligations of informed consent.”

Source Links:     and

There is an excellent interview with Dr Brown here:

The Hidden Truth Behind the Too-Good-To-Be True COVID-19 Vaccines: An Interview with Dr. Ronald B. Brown, PhD


For about 8 months, conservative investors in the US Government Bond markets have been steadily moving their savings from long term Treasury Bonds (10, 20 and 30 year terms) towards short term Treasury Bonds (called T Bills with terms of 4 weeks, 8 weeks, 13 weeks, 26 weeks and 52 weeks). As they do this, they are becoming the major source of funding for the massive and growing US federal government deficit spending programs. Currently, private US investors now own $ 8.65 Trillion of the US federal government’s total bond issuance. The central bank (the Federal Reserve) only owns $ 4.7 Trillion — as at the end of 2020.

These private investors include pension funds, US corporations,  family funds, wealthy individuals, bond funds, insurance companies, banks, hedge funds and private equity firms.

Such short term Treasuries (T Bills) are seen as less risky than longer dated bonds. They are almost akin to holding cash in a bank but are considered to be much safer. When investors are favoring cash over other investments, what are they really saying? They are taking less risk with their savings and indicating that they don’t believe in the central bank’s efforts to increase CPI inflation rates. The result is an ever steepening sovereign yield curve.

A steepening yield curve is often interpreted as being a positive sign for an economy and especially for the banking sector. In other words, it steepens in response to a positive economic outlook. However, it is now arguably being twisted into a steeper shape by these conservative bond investors seeking more and more safety at the short end. So, with these dynamics at play,  it is possibly becoming a negative sign for the future of higher risk US financial assets — long bonds and stocks.

If the 10 Year sovereign bond yield continues to climb towards 2 %, housing mortgage rates could soon move higher. It reached 1.75 % on Friday.

The sudden, unexpected emergence of higher mortgage rates would be seen as a grave threat to the economy. Such suddenly emergent higher mortgage rates would also be seen as a threat to US stock prices that often appear to be on an asset price hyperinflation trajectory.


Last week, BOOM discussed the three big current threats to the global economy and the financial markets. They are (1) rising long term interest rates (2) uncertainty about Covid vaccine safety & effectiveness and (3) Bitcoin production causing an artificial boost to US money supply inside the US asset markets.

There is a 4th threat that is not current but which is a potential threat. That is the threat of a military confrontation between the US/Israel and Iran leading to a blockage of oil supply through the Strait of Hormuz. If such a scenario occurred, the price of oil would skyrocket immediately.

Last week, an Iranian container ship was reportedly attacked in the Mediterranean sea. The Iranian government felt that it was a deliberate attack by Israel. Earlier in the month, an Israeli merchant ship was attacked in the Gulf of Oman. In that case, the Israelis accused the Iranians of being behind the attack. That incident caused the oil price to surge by over 10 %.

Thankfully, the oil price has now fallen back to the levels of early March. But the two incidents are worrying and show that the oil price is vulnerable to sharp rises.


When a Government issued Bond matures at the end of its term, the original buyer of the bond receives the dollar amount they paid for it (as long as they hold it to maturity) plus a small amount of interest owing. Only the interest is a negative on the ledger of the Federal Government, and can be easily funded with another new bond issuance.

This is the magic of government bond issuance. When it issues a bond, a government pulls old money held as private savings into its treasury and spends it into the real economy. This is very similar to what happens with government taxation revenue.

There is an exception to that process and that is when a central bank buys a newly issued government bond. In that case, called Quantitative Easing, new money is created inside the banking system to pay for the bond. That money is then spent into the real economy by the government. Unfortunately, when a central bank does that, it causes a distortion in the bond market because everyone in the market knows that the central bank is a buyer. Such distortions cause false signals which wash through the asset prices of both bonds and stocks.

Strong, false price signals have consequences in the real economy for goods and services. And they also tend to boost asset prices. The result is Asset Price Inflation which helps the rich become richer and the poor to become poorer. Social unrest and political instability is baked into the cake.

So this answers the question often put by politicians — how will our grandchildren pay back our government’s debt? The answer is simple — by issuing another bond. And how will they pay back the interest owing? Again, the answer is simple — by issuing another bond. This game can be played forever because, theoretically, governments are immortal beings.

Because central banks have now demonstrated their willingness to become the ultimate buyers of last resort of government bonds, the only real constraint is out of control CPI inflation and/or currency collapse.

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.


EMAIL: gerry {at}




Watch this short 15 minutes video and learn as Professor Richard Werner brilliantly explains how the banking system and financial sector really work.
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 —


Paper:  Money in the Modern Economy  PDF —  CLICK HERE

Quarterly Bulletins Index

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).”

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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