What I see on the horizon –

Impact on Depositors

1) During “economic stimulus” depositors in US debt have endured the the largest negative rates of return for the longest period of time in history. These depositors have been stripped of trillions in interest income to save the US Treasury the same amount in debt service costs. According to the Fed this translates into “economic stimulus”.

2) Deposit rates normally trade above the consumer price index in red below, any deposit rate below the red line represent a negative rate of return. 

Click here for a current chart and all supporting historical price data

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3) If the Fed makes good on their pledge to let rates rise it equates into a 300 billion dollar annual raise for depositors by the end of 2016.

4) 300 billion will provide true economic stimulus to the free market economy rather than “retained” by the US Treasury to reduce debt service costs.

5) The downside for these depositors is they will be impacted adversely once again when dollar devaluation engages as the US monetizes debt in an attempt inflate out of their current debt crisis.

Impact on Banks

Banks never lowered the prime rate it has remained unchanged at 3.25% since 2009.

6) The 60 year average spread between the Prime and Fed funds rate is 2.00%, it has remained unchanged at 3.10% since 2009 or 1.10% above the historical average.

Average credit card rates of 13.00% did not decline during “economic stimulus”  allowing banks the largest profit margins on their borrowing costs for the longest period of time in history. The Fed believes banks overcharging borrowers trillions also qualifies as “economic stimulus”,

Below the Fed funds borrowing rate in red, Prime Rate in black. Unless Bankers grown a conscience I believe this 3.10% spread will be the new norm.

7) Click here for the chart and all supporting historical data

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Impact on traders

For Traders the first rate hike since 2006 will generate unprecedented trading opportunities.

8) “Economic stimulus” by the numbers was the most costly economic failure in history. The US’s numbers are currently far worse than at the start of “economic stimulus”

US’s numbers in 2015

9) The US currently has the worst debt to tax revenue ratio in US history

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10) The worst debt rating in history.

12 countries now have higher debt ratings than the U.S.

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11) The worst debt to personal income ratio in history

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12) The worst debt to the employed population ratio in history

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13) The worst debt to earnings ratio in history

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14) The largest amount of US debt held by non US investors

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Breakdown of who owns US debt

Screenshot_102315) The worst debt held by non US investors to dollar index ratio in history

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16) The largest amount of debt purchased and held by Federal Reserve Banks in history.

The Federal Reserve has had to buy over 4 trillion in Treasuries and bad mortgages with money they created with keypunch entries back by no tangible asset or income flow. The creation of money backed by nothing will be eventually be inflationary.

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17) The worst national debt in history

Average annual budget deficits during “economic stimulus” 2008 to 2014 were 1.4506 trillion

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18) The worst debt service cost in history

During “economic stimulus” the US national debt increased by 93% with tax receipts increasing by only 28%.

2008 national debt = 9.4 trillion
2008 tax receipts = 1.4 trillion

2014 national debt = 18.1 trillion
2014 total US tax receipts = 1.8 trillion

Each 1% increase in rates now consumes over 10% of total US tax receipts

It’s become unsustainable and now irreversible without monetization of US debt

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19) The worst debt to GDP ratio in history

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20) The worst debt to GDP ratio relative to the world’s second largest economy China in history.

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21) The worst growth ratio relative to the world’s second largest economy in history

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22) The worst US trade deficits in history

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23) The worst negative rates of returns for depositors for the longest period of time in history

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24) The largest profit margins for banks on loans relative to bank borrowing costs in history

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25) The worst mortgage delinquency rates in history. Mortgage delinquency rates currently remain higher than at the start of “economic stimulus” and more than twice the historical average.

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26) The worst debt per US taxpayer in history.

Per capita taxpayer debt has skyrocketed from 67K to over 130K per taxpayer during “Economic Stimulus” This increase represents a debt service cost per US taxpayer when interest rates “normalize” of $6,630 annually or $552.50 monthly.

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27) The largest bank bailouts in history, over 7.7 Trillion was undisclosed until the Fed was orderd in court to disclose it plus an additional 700 billion during the Toxic Asset Relief Program (TARP)

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28) The worst Fed disclosure in history, below is the Fed Inspector General clueless about 9 trillion

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