RUSSIA LOWERS INTEREST RATES
The US and UK central banks raised interest rates last week to fight CPI inflation. However, while many central banks are busily raising interest rates, Russia has lowered their key rate. Last week, the central Bank of Russia lowered its benchmark interest rate from 8% to 7.5% and explained that they expect a slowdown in annual inflation. Russia’s current annual CPI inflation rate is 14.3%. Its Core inflation rate is currently 17.7%. However, its Month on Month CPI inflation rate has been a negative figure for the last 3 months and Producer Prices have almost stopped growing.
The Russian central bank has revised its inflation forecast lower, with annual price growth now expected to come in at around 11-13% in 2022, 5-7% in 2023, before returning to the 4% target in 2024.
It appears that the Russians have decided that the Peak of CPI inflation has passed. As explained last week, BOOM tends to agree and that the Western advanced economies have either passed the Peak or are close to it. Time will tell. Falling inflation rates would certainly be welcomed everywhere.
BOOM’s long held expectation of an inflation killing recession in the West in late 2022 was strengthened further during the week with the continued fall of GDPNow, the Atlanta Federal Reserve’s model estimate for real US GDP growth (seasonally adjusted annual rate) in the third quarter of 2022 which fell to 0.3%, down from 0.5 % on September 15. On September 1st, the expectation was for 2.6 %.
A fall from 2.6% to 0.3% in just 3 weeks is a collapse in GDP growth expectations. How the US consumer responds to this new paradigm of a rapidly slowing economy will determine the arrival (or not) of the Peak of CPI inflation in the US.
US COMMODITY PRICES CONTINUE TO FALL — US DOLLAR CONTINUES TO SURGE HIGHER
It’s time to look again at some of the key material inputs into the US economy. The prices used are Continuous Contract Prices at the CME. It is important to note that almost all of these commodities have been in price downtrend since early this year. The following price changes have occurred over the last week.
The Lumber price fell by 9.6 %
The Gasoline price fell by 2.83 %
The Copper price fell by 4.93 %
The US Steel Index fell by 7.73 %
The Cotton price fell by 6.8 %
The West Texas Oil price fell by 7.1 %
The Natural Gas price fell 9.94 %
The Gold price fell by 1.66 %
The Silver price fell by 2.4 %
The Platinum price fell by 4.7 %
The Corn price fell by 0.07 %
The Sugar price rose by 0.46%
The Soybean price fell by 1.57 %
The Wheat price rose by 2.4 %
The US Dollar Index surged ever higher — gaining 3.13% on the week.
The prices for wheat and sugar were the only commodities that registered a rise. Sugar’s rise was marginal. BOOM expects both to fall in the coming week. All other commodities on the list fell, some by large amounts, especially lumber, oil, natural gas, copper and steel. This is (obviously) a dis-inflation of commodity prices that is well established in the United States since early 2022. And that should ultimately help in bringing lower levels of CPI inflation to the US economy especially if wages growth stays subdued.
Personal Spending data in the US for August (Month on Month) will be released on 30th September by the US Bureau of Economic Analysis. If this number is a negative one, then we will have evidence of consumer reluctance. Watch for Retail Sales Month on Month to be released on 14th October from the US Census Bureau.
US Total Bank Credit peaked at $ 17.333 Trillion on August 24th. It fell to $ 17.286 Trillion on September 7th, rose to $ 17.310 Trillion on September 14th but may have stalled since late July when it was $ 17.251 Trillion. Any further falls from this range will be very significant indeed. The total is updated weekly by the Federal Reserve on Wednesdays.
EXCESS DEATHS RISING IN EUROPE
Excess Deaths are death numbers from all causes that are higher than the expected 5 year average. Any economy afflicted by excess death will suffer, especially if the excess death is occurring in all age groups. Excess mortality is also accompanied by increased morbidity (diseases) much of which will be of a permanent nature. The economic consequences of both are far reaching if they persist for long periods of time.
The average used here in these European statistics is the period 2016 – 2019. Current death rates are compared to the death rates that occurred in that period. Eurostat is the statistical office of the European Union, responsible for publishing high-quality Europe-wide statistics and indicators that enable comparisons between countries and regions. The numbers released by Eurostat last week were shocking.
Europe is now recording excess deaths against the 2016-2019 average on a weekly basis and has been all year but the numbers are getting worse during the summer months and winter is yet to come. We’re also seeing thousands of excess deaths every week across England and Wales. The Office for National Statistics (ONS) publishes weekly figures on deaths registered in England and Wales
Excess mortality in the European Union climbed to +16% in July 2022 from +7% in both June and May. This was the highest value on record so far in 2022, amounting to around 53,000 additional deaths in July this year compared with the monthly averages for 2016-2019.
This was an unusually high value for this month. In 2020, the excess mortality rate was +3% in July (10 000 excess deaths) and, in 2021, it was +6% in July (21 000 excess deaths).
If this phenomenon were to continue in Europe at the current rate (without growth) for the next 12 months, then 636,000 excess deaths would occur, over half a million. That scenario is a staggering possibility and must be seriously considered. Why? Because we don’t really know what the cause is for those unexpected, excess deaths. It is almost as if a silent plague is present and growing, steadily killing more and more people. Large scale autopsy studies are required to find out what is happening. And nobody is planning such studies. They would need to include special staining for the Spike Protein produced by the Covid Vaccines to see if the Spikes are the culprit. This is not being done either. We are flying blind and we could be doing so into a future storm of growing excess death and disability.
Case numbers for Covid have been falling in Europe throughout 2022 and so have Death numbers attributed to Covid. Deaths attributed to Covid have fallen from 6 per day per million population in February to just 0.83. New confirmed Covid cases per day have fallen from 2,466 per day in February to just 89 per day in early September.
Of course, the validity and reliability (or lack of it) of the PCR Test to diagnose Covid is still a major bone of contention. False positive results are the problem. Many of these “cases” and “deaths” attributed to the illness known as Covid may not actually be caused by the SARS CoV2 virus. Pre-existing co-morbid conditions could have been a major contributing cause in up to 94 % of the deaths as estimated by Governmental authorities in both the US and Israel.
However, to summarize crudely, European Excess Death numbers are now rising in 2022 while Covid cases and deaths are falling dramatically. Many mainstream media articles are now promoting the narrative that “mild Covid” and “Long Covid” are the cause. However, this is ludicrous. It is well known that mild respiratory illnesses do not cause death numbers to increase and neither do Post Viral syndromes.
So if excess mortality rose on average throughout the European Union in July, what happened in the individual nations? Prepare to be shocked.
Excess mortality varied significantly from nation to nation across Europe. One nation (Latvia) recorded no excess deaths. However, excess deaths increased in July by the following amounts in all other countries.
Iceland 55.8%,
Spain 36.9%
Cyprus 32.9 %
Greece 31.2 %
Portugal 28.8 %
Malta 26.4 %
Switzerland 26%
Italy 24.9 %
Austria 17.5 %
Slovenia 16.5 %
Ireland 16.3 %
Germany 15.2 %.
Others that rose but by less than 15% were Poland 5.8 %, Estonia 12.3%, Finland 9.4%, Norway 14.8%, Denmark 10.3%, Czechia 4.4%, Slovakia 7.7%, Hungary 4.5%, Romania 2.4%, Croatia 14.6%, Netherlands 14.7%, France 14.1%, Sweden 2.7%.
The ONLY nation reporting a lower number than normal was Latvia negative – 0.5%. Iceland’s result is very concerning. Their total population is only 346,000; they are heavily vaccinated with Covid vaccines and they are particularly prone to vascular causes of death. Spike Protein attack on blood vessels is now well documented. The Covid vaccines create and release trillions of Spike Proteins into the body. Iceland could be the canary in the coalmine to watch for increased death and disease patterns as the future unfolds. Watch carefully.
PFIZER CEO ALBERT BOURLA HAS COVID FOR SECOND TIME
The highly vaccinated CEO of Pfizer, Albert Bourla, has just been reported as testing Positive for Covid for the second time. Bourla has received four doses of the COVID vaccine. He said that he has not yet taken the new bivalent booster vaccine.
URSULA VON DER LEYEN SUPPORTS DEMOCRACY?
Over the last 2 weeks, Ursula Von Der Leyen, the President of the European Commission which is the most powerful body in the structure of the European Union, has made a State of the Union speech and others praising democracy. She does not seem to understand that she herself was not elected to office. She was appointed. There is no democracy in the European Commission. It is an autocratic committee of appointed officials. The European Commission (EC) is the executive of the European Union (EU). It operates as a cabinet government, with 27 members of the Commission (informally known as “Commissioners”) headed by a President. It includes an administrative body of about 32,000 European civil servants. The Commission is divided into departments known as Directorates-General (DGs) that can be likened to departments or ministries each headed by a Director-General who is responsible to a Commissioner.
None of the office holders run for office in an election. That is rather strange form of “democracy”, tolerated by the people of the EU.
At present, those appointed members are plunging Europe into a very serious and possibly long lasting economic recession which they say is caused by Russia, not by their own actions. They are also preparing sweeping new emergency powers for themselves, called the Single Market Emergency Instrument (SMEI). The details were revealed on September 19th by the European Commission (EC). The SMEI, if adopted by the EU will grant special powers to the European Commission including the power to declare a state of emergency.
“We need new tools that allow us to react fast and collectively,” said Margrethe Vestager, the European Commission’s executive vice president. This means that the unelected Commission will have the power to “build up strategic reserves of critical goods” and then have the power to “distribute these strategic reserves” in a “targeted manner” and “demand that businesses accept priority rated orders for key supplies. Businesses would be forced to comply with such demands or explain “the grave reasons justifying refusal,” the EC said.
“Forced to comply” — that sounds like some more “democracy” and “freedom”, as defined by the unelected autocrats at the European Commission. Ursula Von Der Leyen in particular does not seem to understand the meaning of the word hypocrisy.
The proposed new “Emergency Instrument” still needs to be put to the European Parliament for a vote, so several months are likely to pass before it becomes law.
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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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.
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.u/quarterly-bulletin/2014/q1/money-in-the-modern-economy-an-introduction
and https://www.youtube.com/watch?v=ziTE32hiWdk
Paper: Money in the Modern Economy — CLICK HERE
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/en/tasks/topics/how-money-is-created-667392
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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