U.S. Infrastructure Bonds

If the President can’t get his tax increases through Congress to pay for infrastructure improvements, are infrastructure bonds an option?

Will a bridge collapse prompt demand for infrastructure bonds?

Podcast Summary:

Introduction: 0:00-3:00

How Will the Fed Push off Raising Rates and Re-introduce QE?

3:00-12:35 discussion of what excuses the Fed will use to put off rates hikes and to eventually restart quantitative easing (QE)- ex: ECB is doing QE, BOJ is printing trillions of Yen, the dollar is soaring, or there is deflation. The Fed continues to talk up the dollar and threaten to raise rates so that when they have to do an about face the dollar falls from a higher peak. The possibility of doing one rate hike for “credibility” is discussed.

Had the Fed said in 2009 that they were going to embark on a six year multi trillion dollar money printing program the dollar would have collapsed. Because the Fed started and stopped QE the dollar actually became stronger when it “ended” QE3. By spacing out QE programs the Fed can claim they worked and therefore can always return to QE as viable monetary policy. QE is now part of all central banks’ options. The Fed needs to appear as if QE is not a perpetual program, but one rather that they resort to only when they have to.

U.S. GDP growth since 2009 has been LESS than the amount of the QE programs, so stopping QE will cause a deceleration of the economy.

4th Quarter GDP/Consumer Spending

12:35-16:03 the week’s economic numbers are discussed and the spin that the media lays on them. Discussion of food costs and the CPI. Poorer people don’t have cars, so lower gas prices don’t help nor do rising stock prices as they don’t own stocks either. Poorer people who receive inflation adjusted benefits are dicsussed. If there is deflation, they may have their benefits cut.

Real Estate

16:03-25:10 Low pending home sales are discussed despite record low interest rates. Discussion of the persistent housing recovery narrative despite a plunging home ownership rate and decades low new home sales. The housing “recovery” has been in price alone. Rising home prices are bad for the housing market as they make homes unaffordable and dampen sales. Manipulating the real estate market is a lot harder than rigging the stock or precious metals markets.

Discussion of new home sales and new home construction impact on the existing home market.

St. Louis Fed President James Bullard and The Fed’s View on the Economy

25:10-27:35 Discussion of the Fed’s interpretation of the supposed improvement in the labor market. Discussion of the media’s incessant use of the word “solid” when describing the economy. Indeed the most recent Fed minutes also contained the word “solid”. If the economy is solid it can withstand a rate increase. People will eventually realize that the economy is not solid.

Housing Recovery

Discussion of the slowing of the rise in home prices and new programs designed to boost home sales. The 3% down mortgage program will most likely result in increased foreclosures. QE has only boosted the prices of existing assets (existing homes and stocks through stock buybacks), it has not engendered new assets (lagging new home sales) and new production.

25:10-36:00 Discussion of the Fed’s interpretation of the supposed improvement in the labor market. Discussion of the false signal that home builders received that perhaps caused them to over build.

Impact of Lower Gas Prices on Consumers

36:00 – 40:00 Discussion of the lack of consumer spending on consumer goods and homes, despite low interest rates and low gas prices. New car sales, however, have been strong. Low gas prices are a warning that there is a massive distortion in the economy and lower demand and will lead to job, bond and derivative losses. The supposed positive of more money for consumers to spend has not materialized in the consumer spending numbers.

Swiss Francs, Danish Krone and Greece

40:00-41:50 the Swiss and Danish central bank .actions are discussed. A potential Greek default is also discussed. The impact of these actions is discussed. If Greece gets a deal done, the other countries will line up for their debt relief. If QE extends to buying distressed Greece and other sovereign bonds, the Fed won’t be able to raise rates.

Fed and Infrastructure? Central Bank Interventions

41:50- discussion of the possibility of the Fed buying U.S. infrastructure bonds. Discussion of what would happen if the Fed and other central banks stopped stimulus and market interventions. Collapse in certain stocks and assets and reallocation of capital to profitable endeavors.

Anti- Gold and Silver Propaganda

45:35- discussion of the discrediting of gold and silver and price manipulation. Discussion of low American Gold Eagle sales vs. soaring sales of gold on the Shanghai Gold Exchange.

The Fed has stopped QE and markets forget that the United States has an $18 trillion deficit and hundreds of trillions of dolllar in unfunded liabilities. The dollar has gone higher because the Fed is talking about raising interest rates.

Will a bridge collapse prompt demand for infrastructure bonds?

Discussion of reckless borrowing patterns and their justifications. Speculation on future housing programs. Lending public housing residents money to purchase their homes or simply handing them the deeds.

The potential impact of QE4 is discussed-higher stock market prices and gold prices smashed down. Gold is not popular in the United States. There is no CNBC equivalent for precious metals investors. People who want to hold precious metals do not generally trade gold and silver paper contracts on Comex.

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Are U.S. Infrastructure Bonds The Next Stimulus