November 9, 2022 • 47 mins
This week’s picks from our YouTube channel feature a look at the housing bubbles that are looking increasingly shaky in a number of countries and a little tale of what happened when Instagram fact-checked a meme I posted about CBDCs.
A home of one’s own is a big deal for many people, especially in my native UK and elsewhere. This fact, coupled with years of near-zero interest rates, have meant that housing prices in many countries have been rising for a long time. The so-called ‘race for space’ triggered by the pandemic lockdowns only exacerbated this upward trend, but this may now be about to change.
In short, inflation and the rising interest rates deployed against it mean that the era of cheap money is coming to an end. Mortgages are going to become more expensive, meaning fewer people are going to be buying homes. Rising prices mean many people will be less able to save for a deposit. And, as many current homeowners who aren’t on fixed-rate mortgages find themselves unable to make their monthly payments, they may be forced to sell. All of which will put heavy downward pressure on home prices. In countries like the UK, USA and Canada, where housing markets have long been overheated, this could spell yet more economic pain.
Next up, find out what happened when a meme I recently posted on Instagram got fact-checked. The meme in question related to central bank digital currencies, or CBDCs, which are going to become a reality for many countries very soon. The meme highlighted how the convenience of CDBCs will blind many to their failings and it seemed this fact was a little too close to the truth for some people’s liking.
So, listen in and find out why what the meme says is in fact correct, and why it seemed to trigger the fact-checkers. Make no mistake, CBDCs pose an enormous threat to financial freedom and the more people who know about this, the better. They may be inevitable, but that doesn’t mean they can’t be resisted.
We hope you enjoy the show.
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Transcript
Episode Transcript
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Speaker 1 (00:00):
Hello everyone, and welcome to the latest episode from the
midweek edition of the coin Bureau podcast. Every week, I
pick out two of my favorite videos from coin Bureau's
YouTube channel to present to you in podcast form. The
audio you're about to hear is from those videos I've
chosen this week, and I hope you enjoy listening. So
today you'll hear our videos on the housing bubbles that
(00:22):
are threatening to burst in a number of countries, and
the intriguing tale of what happened when a meme I
posted on Instagram about central bank digital currencies got fact checked.
As inflation continues to wreak havoc across global asset markets
and central banks hike interest rates in response, housing markets
in a number of countries are now coming under strain.
(00:44):
The pandemic and its attendant lockdowns supercharged home prices in
many countries, but this conceals the fact that they had
been climbing for a long time before COVID nineteen appeared.
The pull of a place of one's own is a
strong one in many places, but global macro e can
comics are making it increasingly difficult for people to turn
their dreams into reality. As interest rates rise, so to
(01:07):
do the costs of mortgages while increases in the cost
of living I mean people have less and less to
save for a deposit. In places like the USA, Canada,
and the UK, housing prices are now expected to fall
in the coming months, and this could have dire consequences
for the economies of these countries. Find out why in
(01:27):
the first part of today's episode Next up. Not long ago,
I posted a meme on Instagram which was critical of
central bank digital currencies or CBDCs. In a nutshell, it
highlighted all the negative consequences of CBDCs while also pointing
out that many, perhaps most people would only focus on
(01:48):
their perceived convenience. Well. To my surprise, the post was
fact checked by Instagram, so I decided to analyze the
contents of the meme and show why they are factually correct,
look into why it was fact checked, and examine what
the fact checkers said. It was an interesting look into
both c b d c s and the whole concept
(02:09):
of fact checking too, So have a listen and enjoy.
Thanks for listening to today's episode, and there'll be more
coming your way soon. And if you want even more
content from Coin Bureau, be sure to subscribe to our
YouTube channel and visit us on social media too. The
(02:44):
long anticipated housing market crash may be upon US. Prices
and sales in some of the world's hottest property markets
are beginning to fall. Mortgage rates are at multi year highs,
and market analysts are wondering whether this has any power
arallels with two thousand and eight. So where are we
(03:04):
going and what should you be looking out for? Well,
that's exactly what I'll be covering today, So don't go anywhere.
Given that it's the largest property market in the world,
let's start off with the good old U S of A.
It's pretty clear that America's pandemic price boom is long over.
(03:24):
For example, according to the SNP Case Shiller Index for
the twenty largest U S cities, prices fell one pree
on a month on month basis in August. This was
below expectations, and it was the largest fall since March
of two thousand and nine. Not only that, but home
(03:46):
sales are also on the decline. New home sales decreased
ten point nine to a seasonally adjusted annual rate of
six hundred and three thousand units in September. This is
down from six hundred and seventy seven thousand in August.
There are many factors that have been driving this slowdown,
(04:06):
but perhaps one of the biggest appears to be the
high cost of buying a home, not in terms of
actual home prices themselves, but in terms of the cost
of getting a mortgage on those homes. That's because the
rate on a thirty year mortgage, at over seven percent,
is the highest it's been in twenty years. What's even
(04:27):
crazier than this, however, is the fact that the monthly
mortgage on a median priced home with a twenty percent
down payment went from thirteen hundred dollars a year ago
to over twenty three dollars. Now, that's an eight percent
increase in payments to give you an idea of how
unaffordable this is. On an annual basis, this equates to
(04:50):
about forty of the median pre tax household income according
to this i n G report. To put that into context,
this was about twenty six percent in the fourth quarter
of ten and thirty seven percent at the peak of
the two thousand and six housing market boom. This has
forced some buyers to consider adjustable rate mortgages as well
(05:14):
as loans that have lower rates for the first two
to three years, called one to buy downs. Needless to say,
the exorbitant cost of taking out these mortgages means that
the demand for them appears to be cratering. Demand is
half what it used to be a year ago, and
it is at its lowest level since These higher mortgage
(05:37):
rates are of course due to the monetary policies of Jerome,
Powel and Co. As the Federal Reserve aggressively increases interest rates.
It's been one of the fastest periods of rate hiking
in recent history. As you can see in this chart
over here. In each of its last three meetings, the
Fed has increased its funds rate by seventy five basis points.
(06:01):
It's not as if Jerome and Co. Are really that
concerned about a correction either. In a press conference back
in September, Jerome stated, quote, we probably in the housing
market have to go through a correction, and quote the
deceleration in housing prices that we're seeing should help bring
prices more closely in line with rents and other housing
(06:23):
market fundamentals. And that's a good thing. Now. Whether you
agree with him or not, the fact of the matter
is that the Fed is not slowing those hikes anytime soon,
and the overwhelming consensus is that we will see another
seventy five bibs At the meeting tomorrow. The FEDS fundrate
is expected to peek at between four point five and
(06:46):
four point seven five. The last time rates were at
this level was between October and December of two thousand
and seven, the start of the Great Financial Crisis. It's
not only the fact that taking out a loan is
a lot more expensive. However, first time buyers may also
struggle to source the funds required for a down payment
(07:07):
on many properties. Surging inflation is destroying purchasing power and
making it a lot harder for many to save. Now.
That is all on the demand side, but we also
have some troubling statistics over on the supply side. For example,
the National Association of home Builders's sentiment index has fallen
(07:28):
for ten straight months. The slowdown in sales at a
time of widespread construction means that the inventory of new
homes is near all time highs. In this chart over here,
you can see the months housing supply i e. The
months required to clear the housing infantry. This is at
the highest level it's been since. So how low could
(07:52):
house prices fall in the US. Well, let's see what
analysts on Wall Street are saying. At the lower end
of the estimates, we have Morgan Stanley who are now
expecting house prices to fall by about seven percent next year.
While that may indeed be less than the twenty seven
percent we saw in the peak to trough of the
(08:13):
two thousand and eight housing crash, it is still a
sizeable fall and would be one of the largest ones
since the Great Depression. According to Morgan Stanley's analysts quote,
if we assume a seven percent mortgage rate, affordability looks
materially worse than today, and the pace of its deceleration
(08:33):
has already more than doubled compared to almost any time
in history. They do note, however, that even with this
price decline of seven percent, house prices would still be
about thirty two percent higher than they were back in
March of Morgan Stanley has a bull and a bear
case as well. This all depends on how interest rates
(08:55):
progress over the next few months. For example, in their
bull case, they assume that interest rates start coming back
down next year. If this were to happen, they assume
a price increase of five. However, if the US falls
into recession next year, then we're looking at potential falls
of ten percent or more. According to the analysts quote,
(09:18):
affordability is already challenged, exposing would be homeowners to an
increasing rent environment that erodes their ability to save for
a down payment. If that were to be combined with
increasing unemployment, we could imagine a scenario in which existing
home sales continue to outpace the Great Financial Crisis to
(09:39):
the down side. In other words, a worrying state of affairs.
Moving on, though, another bank that had a change in
their view of the US housing market was Goldman Sachs.
Let's not forget that as recently as last month they
were predicting a modest one point eight percent rise in prices. Well,
(09:59):
they're current and estimates are for a fall of five
to ten quote. We view the risks to these estimates
as tilted to the downside because of a sharp deterioration
in our descriptive home price outlook scores and evidence of
strong mean reversion in regional data. Meanwhile, on the ratings
(10:20):
agency side, Moody's Analytics is predicting a drop off between
five and ten percent, although they don't seem to think
that we will see a two thousand and eight style
housing crash. Their chief economist Marks Andy stated that plain
vanilla lending, good mortgage underwriting, and low vacancy will be
enough to stave off the crash. However, as I noted earlier,
(10:43):
housing supply is at a high level, and even Zandy
admits that these factors aren't sufficient to stave off an
inevitable correction. Moody's analytics actually draws up a quarterly index
that looks at local fundamentals such as income levels, etcetera,
that helps determine whether house prices are over or undervalued
(11:05):
in the regions being examined. You can see what this
regional index looks like over here in this Fortune article.
This shows the over and undervalued regions for Q two.
If we were to compare this to the index for
Q one, you can see the deterioration. I can't wait
to see what it looks like for Q three. Any
(11:26):
who in those housing markets that Moody's views as quote
significantly overvalued housing prices should see declines of ten to
fifteen percent. However, if we do indeed hit a recession,
then these could even fall by twenty to twenty five.
That will hurt like heck anyway. Getting the perspective of
(11:48):
another ratings agency, Fitch Ratings, seems to think that we
could see prices fall by between ten and fifteen percent. Quote.
The likelihood of a severe downturn in US housing has increased. However,
our rating case scenario provides for a more moderate pullback
that includes a mid single digit decline in housing activity
(12:09):
in twenty three and further pressure in four now. One
final analyst with a prediction for housing prices next year
is Paul Shepherdson, the chief economist of Pantheon macro Economics.
He expects housing prices in the US to fall by
as much as twenty in twenty three. He said, quote,
(12:30):
we expect home sales to keep falling until early next year.
By that point, sales will have fallen to the incompressible
minimum level, where the only people moving home are those
with no choice due to job or family circumstances. Shepherdson
also thinks that the supply of homes available for sale
will shrink next year and that prices will have to
(12:52):
fall much more to restore equilibrium. So those are the
estimates for the US housing market, not exactly two thousand
and eight level armageddon, but disconcerting nonetheless. But that is
only the US. Are there any other housing markets that
are at risk of two thousand and eight type collapses? Well,
(13:14):
there is one, and it's just north of the US border.
That's right. Canada's housing market appears to be one of
the biggest property bubbles in the world. In fact, according
to ubs is recent Global Real Estate Bubble Index, Toronto
is the city that scores the highest on the list.
(13:34):
Vancouver isn't too far behind at number six. You can
also see how this has progressed for the cities over
the years. Ever since, it's been an upward march from
overvalued to bubble risk territory. It's not as if this
is a new phenomenon either. There have long been many
analysts ringing the alarm bells about the risks facing the
(13:57):
Canadian housing market, and there are several factors which have
been driving demand in these cities. They include high immigration levels,
falling mortgage rates, and high investment demand. Now, the most
recent housing frenzy actually began back in and only accelerated
during the pandemic. Much like central banks in other countries
(14:20):
around the world. The Bank of Canada dropped its benchmark
interest rate to near zero. This made it a lot
cheaper for people to take out mortgages and gave those
first time buyers who had been waiting an opportunity to
get on the housing ladder. During the pandemic, property prices
in Vancouver and Toronto accelerated to their highest levels in
(14:42):
five years, at fourteen percent and seventeen percent, respectively. This
drove housing affordability in these key metros to levels that
were last seen during the nine eighties real estate bubble.
In this RBC research note, for example, you can see
ownership costs as a percentage of household income. Houses are
(15:04):
much less affordable in Canada than they are in the US,
and if you speak to any Canadian you'll know how
much of an issue housing affordability is. But beyond affordability concerns,
there's also the risk posed by bad debts. Something that
is a lot more prevalent in Canada than in the
US is the use of variable or adjustable rate mortgages
(15:29):
or arms. These are essentially mortgages that lock in a
lower rate of interest for an initial fixed period, but
will then adjust up to a market rate after a
certain number of years. In Canada, about a third of
all mortgages are variable rate. That's about three times the
amount in the US, where the share of ARM activity
(15:50):
is about eleven. Those borrowers that took out arms to
buy a home in Canada between May and July two
could sue and see their monthly mortgage payments start to skyrocket.
That's because the Bank of Canada has been following the
FED in its aggressive rate hiking policy. What may have
(16:11):
seemed like a good mortgage deal when rates were near
zero percent could become exorbitantly expensive when they adjust up.
This has already started happening, and according to Royce Mendez,
managing director and head of macro strategy at djadon Quote,
banks are already sending out lessers to clients whose variable
(16:32):
rate mortgages owe more interest than their fixed monthly payment obligation.
And that's just the tip of the iceberg. As these
homeowners face higher mortgage payments, some of them may be
forced to make the ultimate decision and sell their homes.
This could only precipitate a broader price crash as people
see the value of the equity in their homes plummet.
(16:55):
It's a de leveraging cycle of lower prices, more sales
and lower prices. Again, so those are homeowners, But you
also have to consider the investors who are snapping up
this housing in the hope of making generous yields on
their properties. Well, as interest rates are going up, the
cost of servicing their debts mortgages is going up to
(17:18):
This means that they have to rely on rising rental
rates to make up for the lost yield. While rental
rates are still red hot, they could easily turn down
in much the same way as they're now doing in
the US. Now, if you were to combine all of
these factors, you can see why housing prices are on
the decline. Here you can see the steep drop in
(17:41):
the price of an average home in the g T
A Greater Toronto area. Overall prices in Toronto are down
seventeen percent as sales plunge. Now, this is something that
one of the Coin Bureau team members actually witnessed firsthand
when he visited his family in Canada a few weeks ago.
The number of for sales signs in his neighborhood was alarming. Now,
(18:06):
this is of course anecdotal, evidence, but I would be
interested to hear the experience of some of my other
Canadian viewers, so let me know in the comments down below.
The point is that Canada, and especially Toronto and Vancouver
are due for a pretty nasty and long overdue correction. Okay,
on to our next hot housing market, and this one
(18:28):
is a little closer to home for me, the good
old United Kingdom. The UK housing market is also starting
to face downward pressure. House prices fell by zero point
one in August and by the same amount in September.
This left the annual growth at nine which is the
weakest it's been since January. What these figures suggest is
(18:52):
that the housing market was already cooling long before the
disastrous budget from Liz Trust and Code. For those not
fully clued up, the shortest serving prime minister in our
history and her chancellor released a budget that would have
made Iron rand All misty eyed. The only problem was
that they didn't think about how they could pay for
(19:13):
it all, and it's sent the market into turmoil. I've
done a separate video on this disastrous episode, which I
will leave linked to below not for the faint hearted.
If you watch that video, you'll know that one of
the side effects of that budget was that UK government
bond yields went soaring. These are the interest rates that
(19:35):
mortgage providers used to price their fixed rate offerings. Therefore,
in the wake of that chaotic budget, these mortgage products
were left in turmoil. Buyers were scrambling to see whether
they could secure mortgages before their prices reset. In the
midst of the chaos, banks and building societies withdrew around
(19:55):
sevre mortgage products in the space of a week. Now,
while the mayhem appears to have calmed down since the
budget was pulled and a new PM installed, the mortgage
rates themselves have been slow to adjust back down. For example,
although interest rate swaps have fallen between one point three
and one point four, average rates on two and five
(20:18):
year fixed rate mortgages have only fallen zero point one six.
You can see what that looks like over here. Quite simply,
lenders are not passing on the lower interest rates to
those taking out the mortgages. These higher mortgage rates are
causing a great deal of uncertainty for homeowners and prospective
(20:40):
buyers in the UK. This is especially the case for
those who took out fixed rate mortgages Now this may
sound counterintuitive, but in the UK fixed rate is more
akin to adjustable rate in the United States, i e.
There is a fixed term that is for a limited
(21:01):
period of time, usually two to five years, after which
they will adjust up. Think of it as in the
same way our public schools are in fact fee paying
and therefore nothing of the sort. Makes you wonder how
we ever ruled over a third of the globe, doesn't it? Anyway?
For those who took out these loans in the period
when mortgage rates were low, the costs of servicing them
(21:24):
are suddenly looking much higher. Over here you can see
what that looks like. In London, for example, mortgage payments
make up over fifty percent of first time buyers take
home pay. Now, this is something that I myself and
worrying about with my mortgage in the UK, as it's
coming up for refinancing in the next couple of years.
(21:45):
That's because I know that interest rates are only going
in one direction up. The Bank of England is also
widely expected to raise interest rates by seventy five basis
points this Thursday. That's the largest hike by the BOE
since nine Beyond that, interest rate futures currently predict that
(22:08):
the b o E rate is likely to tap out
at almost five percent next year. That's all the more
pain for borrowers already on the edge. If we were
to add this to the pressures of inflation and writing
energy costs. This is all a bit too much to
bear for the average UK homeowner. Some may decide to
(22:28):
sell and this will of course have a negative impact
on prices. As a result, analysts are predicting steep falls
in UK house prices next year. For example, Credit Suee
analysts are predicting a fall of between ten and fifteen percent. Meanwhile,
Andrew Wishart, senior property economist at Capital Economics, also predicts
(22:49):
similar falls in prices. Quote the rise in market interest
rates that has already happened will push up mortgage rates
to at least six percent and reduce the size of
loans that lenders can offer and Quote, the resulting drop
in buying power makes a significant drop in house prices inevitable. Ouch. Okay,
(23:12):
time for a few of my closing thoughts. It's clear
that the global housing market is heading for some turbulence.
E's the era of pandemic fuel cheap credit is coming
to an end, and that means a reckoning for those
trying to secure a mortgage. All eyes are on the
US housing market as a number of the hottest metros
(23:33):
start to cool. Housing supply is on the rise and
prices are on the decline. While a two thousand and
eight style housing crash is unlikely, analysts are predicting pretty
nasty falls which are likely to put a massive dent
in consumer confidence. Perhaps this is what Jerome Powell always
intended when he wanted to quote bring housing prices back
(23:55):
in line with fundamentals. But it's a bitter pill to
swallow for all those who have a great deal of
their wealth tied up in their homes. However, such worries
are perhaps even more acute for Canadian homeowners, as concerns
about a massive correction ripple through the air waves. While
this has been a long time coming, it appears as
(24:18):
if the dominoes are beginning to fall. This could be
Canada's version of the two thousand and eight housing collapse
in the US, at least according to the pundits. If
that is the case, it could do significant damage to
the country's GDP, given that so much of household wealth
is again tied up in housing. That said, it could
(24:41):
prove a silver lining for those Canadians who have given
up on the dream of owning a home. Indeed, many
younger people in the country are secretly hoping for a correction,
anything for them to be able to eventually afford a
place to call their own. When it comes to my
native UK, things aren't looking two pretty there either. While
(25:02):
the housing market in Britain is slightly more resilient than
those in North America, it's the overall economic picture that
has me most worried. Inflation is over ten per and
the recent snaffoo with the budget has thrown the country's
finances into disarray. The cost of living is only likely
to get higher for those homeowners who may have to
(25:22):
refinance their mortgages at higher rates. So let's hope that
our new PM can help steer the ship. Two Calma sees.
Last week, a meme I posted to Instagram about Central
Bank digital currencies or CBDCs was fact checked. This came
(25:47):
as a shock because everything the meme says about CBDCs
is factually correct. It also came as a shock because
it suggests that governments are slowly starting to clamp down
on narratives that go against their upcoming CBDCs. If this
is true, then it is flat out terrifying. That's why
today I'm going to analyze the CBDC meme I posted,
(26:10):
explain why it's accurate, summarize what the fact checkers said,
and assess whether this is an anomaly or the beginning
of a bigger trend. Let's start by taking a closer
look at that CBDC meme. As you can see, it
features a gray NPC all excited that the government is
rolling out a CBDC. This is because the only thing
(26:33):
the NPC can see is the convenience of a CBDC.
The NPC doesn't see all the dystopian attributes that CBDC
will have. Now As a fun fact, the NPC meme
has its origins in psychological research, which found that many
people have no inner monologue. In other words, there's a
(26:53):
substantial percentage of people who do not reflect on their past,
present and future emotions, decide, et cetera. NPC stands for
nonplayer character, and any gamers in the crowd will know
that this term refers to any video game character that
isn't controlled by a real person. In other words, NPCs
are robots that just go along with the programming. The
(27:16):
more you know now, you'll notice there is a social
media handle on the bottom left of the CBDC meme.
It reads the Freethought Project, which appears to be an
alternative media website. I reckon it's safe to assume that
this is the creator of this meme, and it would
actually explain a lot. That's because when I searched for
(27:37):
the Freethought Project on Google, one of the first results
was from PolitiFact, an American fact checking website. PolitiFact notes
that the Free Thought Project has published two articles that
it takes issue with, one of which is mostly false
and another which is entirely false. This is significant because
it's possible that the mention of the Freethought Project in
(28:00):
the meme was why it was fact checked by Instagram.
In case you didn't know, Instagram's algorithm can read text
in images, it might have seen that content by the
Free Thought Project had been fact checked before to the
alternative media sites credit. It did issue a correction on
the article which was mostly false after getting called out.
(28:21):
The other one that was deemed entirely false hasn't been corrected,
and that's because it deals with a very contentious political
issue that I won't even try to discuss lest I
be fact checked. Two. I also can't help but find
it funny that Politi fact seems to take issue with
the fact that the Freethought Project's purpose is to quote
foster the creation and expansion of liberty minded solutions to
(28:45):
modern day tyrannical oppression. I suppose that tells you all
you need to know about these fact checkers. Note that
I'll break down the fact check on this CBDC meme
near the end of the video, but trust me when
I say you'll want to stick around until then. Now,
while it's possible that the CBDC meme was fact checked
(29:05):
because of its creator, it's equally, if not more, likely
that it was fact checked because of its contents. As
you can see, there are twelve statements made about CBDCs
in the meme. Before I unpack those, you should know
that there are two types of CBDCs, wholesale CBDCs and
retail CBDCs. Now, if you've watched any of our videos
(29:28):
about CBDCs, you'll know that wholesale CBDCs will be used
by select individuals and institutions, while retail CBDCs will be
used by regular folks like you and me. What this
means is that there will be two different digital currency systems,
one system for the elites, the corporations, and the governments,
(29:48):
and another system for everyone else. The statements about CBDCs
made in this meme, as well as others like it,
pertain to a retail CBDC, not a whole sales CBDC.
So the first statement is quote banks have full control
of every penny you own. Assuming other forms of fiat
(30:09):
currency like cash are phased out, then this is one correct.
Central banks will have total control over what you can buy,
when you can buy it, and even how much money
you can save. You might be wondering how this is
different from the current financial system. After all, we've seen
banks freeze bank accounts before. A recent example is Canadian
(30:33):
banks freezing the accounts of protesters back in February, something
that was truly unprecedented for a developed country. The difference
is that the existing financial system is still relatively decentralized.
For example, there are multiple banks and payment processes. If
one of them starts to limit what you can buy
(30:53):
and when, then you can take your business elsewhere in
a Canada type scenario, you can still use. More importantly,
there are many non bank entities, or so called shadow banks.
A great example is cryptocurrency platforms that offer visa debit cards.
These platforms don't always require extensive k y C, and
(31:15):
they can't be forced to comply with, say, in order
to freeze the bank accounts of protesters. In a CBDC system, however,
there won't be any competing banks, and there certainly won't
be any shadow banks. Instead, you will have an account
directly with the central bank. The commercial banks and payment
processes will only exist until the government has rolled out
(31:37):
its own infrastructure. Now, in theory, the central Bank is
independent of the government, but in practice it's not. I
would argue that the introduction of a CBDC would actually
cause the two to merge, as many are already predicting.
This means that it's really the government that will have
total control over what you can buy and when. If
(31:59):
that wasn't bad enough, The Bank for International Settlements or
b i S the Bank for Central Banks, recently published
a report detailing what it believes the future of the
financial system will look like. The t L d R
is that they see all assets being token ized on
a government and central bank blockchain. What this means is
that you will un ironically own nothing and be happy.
(32:23):
This is because you think you will own your assets,
when in reality, the government will have the ability to
turn your ownership off at the click of a button.
So be sure to keep physical documents proving your ownership
and your identity. Now, the second statement is quote vulnerability
to state and foreign actors. And this is a fact
(32:46):
about CBDC s that is often overlooked. It's also a
concern that's been mentioned in many CBDC reports, namely the
Federal Reserves report about a digital dollar from earlier this year.
You see, if every person in a country has their
bank account at the central bank, then this creates a
single point from which the entire financial system of a
(33:08):
country could be exploited or manipulated. History suggests that it's
not a question of if this will happen, but when
it will happen. This ties into the third statement, which
is quote social credit scores. Now, this is not actually
something I've seen discussed in any CBDC reports, at least
(33:29):
not yet. That probably has to do with the fact
that people associate the concept of social credit scores with
the Chinese Communist Party. Attempting to roll out such a
system would likely result in a revolution in most other countries.
That's why these other countries are taking a slightly different approach,
and that's to introduce a carbon credit system for their citizens.
(33:53):
Sounds environmentally friendly, doesn't it. An individual carbon credit system
is something I discussed at length in another the video,
which I'll leave in the description. The short of it
is that governments will create an elaborate incentive structure for
their citizens to emit less carbon a CBDC and centralized
digital I D will be required for this system. Now,
(34:16):
the fourth statement is quote every transaction is documented, which
is literally in every CBDC report. Obviously, the central banks
and governments are going to want to know about every
transaction that's ever happened. Something tells me that data protection
laws like g d p R won't apply with CBDCs.
The fifth statement is quote access to your money can
(34:39):
be turned off at any moment. This is essentially the
same statement as banks have full control of every penny
you own. And the sixth statement, which is quote frozen funds.
If you're skeptical, that CBDCs will have these restrictions. Consider
the following quotes from the b I S Quote Quantity
(35:00):
base safeguards would restrict the use of CBDC through imposing
hard limits on the transfers and or holdings of CBDC.
Quote limits could also be applied varyingly for different CBDC
account holders. And finally, quote such limits could be imposed
on a permanent basis or on a transitional basis. Now,
(35:22):
this actually reminds me of something that's important to point out.
Believe it or not, but the money you have in
your bank account technically doesn't belong to you. It belongs
to the bank. It just sits in its vault store
on its electronic ledgers under your name. The same is
true of any other asset you hold with a third party,
(35:44):
including any coins or tokens you have on a cryptocurrency exchange.
News flash, financial freedom doesn't mean having lots of assets
in custody. It means owning your assets and deciding how
and when they are spent. The value of financial freedom
will become evident once central bank digital currencies are rolled out,
(36:06):
and this will lead to serious crypto adoption. Anyways, the
seventh statement is the one the NPC in the meme
is focused on, and that's the convenience of CBDCs. Funnily enough,
central banks, governments, and international organizations have held up the
convenience of CBDCs as the fundamental justification for their rollout.
(36:29):
They say that CBDCs will be faster, safer, and cheaper
than traditional banking. The irony is that they simultaneously admit
that existing financial technologies are evolving to become even faster,
safer and cheaper, including cryptocurrency. This just proves that CBDCs
are about control and nothing more. Now, this relates to
(36:52):
the eighth statement, and that's centralization. This one is admittedly
debatable because some countries want inactial banks and payment processes
to run notes on their CBDC networks, whereas others want
the central banks and the governments to be the only
CBDC notes regardless of the setup, though it's almost guaranteed
(37:14):
that the government will have a back door. This is
very bad because centralization is inherently unstable. This is because
any issue with or compromise of the core infrastructure means
that the entire financial system is pardon my French, now,
what's scary is that the financial system has been trending
(37:35):
towards increasing centralization for quite some time. This was revealed
in a twenty nineteen report by black Rock, which stated
that all the financial regulations we've seen since two thousand
and eight were implemented to further centralize the financial system.
The reason why the financial system is centralizing is because
(37:56):
its current iteration is collapsing. Central banks and governments are
desperately trying to keep the Ponzi from falling apart. Being
able to dictate every transaction in the economy with a
CBDC is the only solution as they see it. The
ninth statement is similarly scary, and that's quote all your
(38:16):
movements and actions are traceable. This is also something I
haven't seen in CBDC reports, and to be honest, I
think it borders on conspiracy. Then again, there is precedent
for it because of all the data collection by commercial
banking apps. As per reporting by the Telegraph and others,
many banks are now tracking their customers through their mobile apps.
(38:40):
This is supposedly being done to catch scammers and criminals,
but I suspect it has as much or more to
do with gathering data that can be sold to advertisers
for additional profits. As such, it's not far fetched to
think that the mobile app you'd use to access your
CBDC account would track your movements and location for similar reasons.
(39:01):
It's possible that it would even be required, as some
central banks have discussed to limit CBDC payments to merchants
within specific locations. The tenth statement is quote zero anonymity,
and this one is probably the most accurate and up
to date. That's because Federal Reserve Chairman Jerome Powell recently
(39:21):
specified that a digital dollar will be quote identity verified,
so it would not be anonymous. Similar statements can be
found in most CBDC reports now. The eleventh statement is
quote cyber security attacks, which is almost the same as
vulnerability to state and foreign actors. It goes without saying
that no central bank wants a cyber attack on its CBDC,
(39:45):
but this is something that all of them are again
extremely concerned about, and understandably so. In the case of
the United States, the Federal Reserve wants to make sure
that its digital dollar is resistant to cyber attacks from
quantum computers. Without getting two technical quantum computers will eventually
be able to crack any encryption that exists today, and
(40:07):
it's possible that they can already now. Although many are
worried about a cyber attack on a cryptocurrency, the fact
of the matter is that the existing financial system is
a much bigger and much more lucrative target. This is why,
according to PwC, the FED is working with m I
T to make its digital dollar resistant to quantum computers.
(40:30):
As I've mentioned before, Algorand recently achieved quantum resistance and
its founder, Sylvia McAuley is based at m I T.
Not saying that Algorand is going to be the blockchain
that powers a digital dollar, but it's max USDC supply
of eighteen point four trillion suggests that the crypto project
is trying to prepare for such a role. More about
(40:53):
Algorand in the description. I digress now. The final statement
in the CBDC mean is quote zero privacy, which sounds
the same as zero anonymity at first glance, but it's
actually not, at least not according to the Central banks.
It might sound strange, but CBDCs will in fact offer
(41:14):
privacy despite not offering any anonymity. Confused, well, consider that
the definition of privacy used by central banks means that
your information is not shared with any private entities, only
public entities such as the central bank and the government.
CBDCs will therefore be private according to that horrendous definition
(41:40):
of privacy. I can't wait until the fact checkers start
claiming missing context on that one, any who, in addition
to being private, CBDC transactions will apparently not contain any
personal information about senders and recipients by default. Instead, security
officials at central banks and governments will selectively reveal this
(42:02):
information on any transactions deemed to be suspicious. Given that
you will probably have no way of knowing when you're
being probed by some three letter agency, it's more than
likely that this power will be abused, assuming such a
restriction is even implemented at all to begin with. And finally,
(42:24):
we have the apparent inner monologue of the NPC, which reads, quote, hey, cool,
the government is trying to make my life easier with
the digital currency. I quickly want to comment on this
because convenience is probably not how governments and central banks
will sell their CBDCs. This is because their own statistics
suggest that between four and twelve percent of citizens in
(42:47):
g twenty countries would voluntarily adopt a CBDC. This means
that they must go down another route that's been actively discussed,
and that's to make CBDCs mandatory for the payment of
taxes and other forms of subtle theft. They will also
use CBDCs to distribute social benefits, pensions, and any emergency
(43:09):
stimulus in response to future financial shocks. This will force
most citizens to adopt CBDCs, which they won't like. Hence
why the governments and central banks want to get rid
of physical cash. As per the ECB's own admission, more
about the ECBs Digital euro aspirations using the link in
(43:29):
the description. This brings me to the moment you've all
been waiting for, and that's what the hell the fact
check on the CBDC meme said. Well, I'll start by
saying that the fact check was removed shortly before I
put together this video. This is possibly because my tweet
about it went viral, but it's more likely it was
an error. That's because the description of the fact check
(43:56):
reads quote. Social media posts claim an executive order from
Joe Biden eliminates cash and enables the government to monitor transactions.
This is misleading While the US President did call for
additional research on a central bank digital currency, the order
does nothing to limit cash use. The authors add that quote,
(44:18):
experts say any such system would be legally required to
include privacy protections and involve the independent Federal Reserve Banks
and Congress. By now you'll know what privacy means to
these people, and that the FED probably won't stay independent
with a CBDC. You'll also know that the CBDC meme
(44:38):
doesn't say anything about Joe Biden or eliminating cash, even
though that's something the central banks actually want. Even so,
I must admit that many of the examples of this
misleading information given by the fact checkers are as accurate
as the CBDC meme. What irks me is the fact
checkers claim that the US government is far away from
(45:00):
launching a digital dollar, when billions of de facto digital
dollars are already in circulation today. Circles USDC is the
elephant in the room here because the company is basically
looking to become a part of the FED. More about
that in the description now. As expected, the fact checkers
agree that quote it is probably better for privacy and
(45:24):
civil and human rights purposes for some pieces of information
to be collected by intermediaries rather than the central bank.
Whatever you do, don't forget that warped definition of privacy
in relation to a CBDC. The fact checkers even go
as far as insinuating that a CBDC on a public
and transparent blockchain is analogous to China's digital yue, which
(45:47):
is just insane. They also reaffirmed that the United States
CBDC network would be run by a collection of entities
in the private and public sector. The fact checkers finish
off the article implying that the rollout of a digital
dollar is justified because one d other countries are testing
CBDCs according to the International Monetary Fund or i m F.
(46:09):
This reminds me of what my mother used to say,
if everyone is jumping off a bridge, should you do
it too? In all seriousness, it's clear that this particular
fact check is related to the upcoming midterm elections in
the United States. Historical search trends for fact check reveal
that fact checks spike every time there is an election.
(46:31):
This makes sense given most of these fact checking websites
are politically oriented. That said, you might have heard about
the recently leaked documents which revealed that the Department of
Homeland Security, or DHS, has been asking social media companies
to suppress and take down any content that quote undermines
trust in financial systems. This CBDC meme certainly falls into
(46:56):
that category, and it begs the question of just how
much the DHS and others will start to censor social
media once CBDCs start being rolled out around the world.
Something tells me that this won't be the last time
that this crypto guy gets fact checked. Thank you so
much for listening to the coin Bureau podcast. If you'd
(47:18):
like to learn more about cryptocurrency, you can visit our
YouTube channel at YouTube dot com forward slash coin Bureau.
You can also go to coin bureau dot com for
loads more information about all things crypto. You can follow
me on Twitter at at coin bureau or one word,
and I'm also active on TikTok and Instagram too,
Hello everyone, and welcome to the latest episode from the
midweek edition of the coin Bureau podcast. Every week, I
pick out two of my favorite videos from coin Bureau's
YouTube channel to present to you in podcast form. The
audio you're about to hear is from those videos I've
chosen this week, and I hope you enjoy listening. So
today you'll hear our videos on the housing bubbles that
(00:22):
are threatening to burst in a number of countries, and
the intriguing tale of what happened when a meme I
posted on Instagram about central bank digital currencies got fact checked.
As inflation continues to wreak havoc across global asset markets
and central banks hike interest rates in response, housing markets
in a number of countries are now coming under strain.
(00:44):
The pandemic and its attendant lockdowns supercharged home prices in
many countries, but this conceals the fact that they had
been climbing for a long time before COVID nineteen appeared.
The pull of a place of one's own is a
strong one in many places, but global macro e can
comics are making it increasingly difficult for people to turn
their dreams into reality. As interest rates rise, so to
(01:07):
do the costs of mortgages while increases in the cost
of living I mean people have less and less to
save for a deposit. In places like the USA, Canada,
and the UK, housing prices are now expected to fall
in the coming months, and this could have dire consequences
for the economies of these countries. Find out why in
(01:27):
the first part of today's episode Next up. Not long ago,
I posted a meme on Instagram which was critical of
central bank digital currencies or CBDCs. In a nutshell, it
highlighted all the negative consequences of CBDCs while also pointing
out that many, perhaps most people would only focus on
(01:48):
their perceived convenience. Well. To my surprise, the post was
fact checked by Instagram, so I decided to analyze the
contents of the meme and show why they are factually correct,
look into why it was fact checked, and examine what
the fact checkers said. It was an interesting look into
both c b d c s and the whole concept
(02:09):
of fact checking too, So have a listen and enjoy.
Thanks for listening to today's episode, and there'll be more
coming your way soon. And if you want even more
content from Coin Bureau, be sure to subscribe to our
YouTube channel and visit us on social media too. The
(02:44):
long anticipated housing market crash may be upon US. Prices
and sales in some of the world's hottest property markets
are beginning to fall. Mortgage rates are at multi year highs,
and market analysts are wondering whether this has any power
arallels with two thousand and eight. So where are we
(03:04):
going and what should you be looking out for? Well,
that's exactly what I'll be covering today, So don't go anywhere.
Given that it's the largest property market in the world,
let's start off with the good old U S of A.
It's pretty clear that America's pandemic price boom is long over.
(03:24):
For example, according to the SNP Case Shiller Index for
the twenty largest U S cities, prices fell one pree
on a month on month basis in August. This was
below expectations, and it was the largest fall since March
of two thousand and nine. Not only that, but home
(03:46):
sales are also on the decline. New home sales decreased
ten point nine to a seasonally adjusted annual rate of
six hundred and three thousand units in September. This is
down from six hundred and seventy seven thousand in August.
There are many factors that have been driving this slowdown,
(04:06):
but perhaps one of the biggest appears to be the
high cost of buying a home, not in terms of
actual home prices themselves, but in terms of the cost
of getting a mortgage on those homes. That's because the
rate on a thirty year mortgage, at over seven percent,
is the highest it's been in twenty years. What's even
(04:27):
crazier than this, however, is the fact that the monthly
mortgage on a median priced home with a twenty percent
down payment went from thirteen hundred dollars a year ago
to over twenty three dollars. Now, that's an eight percent
increase in payments to give you an idea of how
unaffordable this is. On an annual basis, this equates to
(04:50):
about forty of the median pre tax household income according
to this i n G report. To put that into context,
this was about twenty six percent in the fourth quarter
of ten and thirty seven percent at the peak of
the two thousand and six housing market boom. This has
forced some buyers to consider adjustable rate mortgages as well
(05:14):
as loans that have lower rates for the first two
to three years, called one to buy downs. Needless to say,
the exorbitant cost of taking out these mortgages means that
the demand for them appears to be cratering. Demand is
half what it used to be a year ago, and
it is at its lowest level since These higher mortgage
(05:37):
rates are of course due to the monetary policies of Jerome,
Powel and Co. As the Federal Reserve aggressively increases interest rates.
It's been one of the fastest periods of rate hiking
in recent history. As you can see in this chart
over here. In each of its last three meetings, the
Fed has increased its funds rate by seventy five basis points.
(06:01):
It's not as if Jerome and Co. Are really that
concerned about a correction either. In a press conference back
in September, Jerome stated, quote, we probably in the housing
market have to go through a correction, and quote the
deceleration in housing prices that we're seeing should help bring
prices more closely in line with rents and other housing
(06:23):
market fundamentals. And that's a good thing. Now. Whether you
agree with him or not, the fact of the matter
is that the Fed is not slowing those hikes anytime soon,
and the overwhelming consensus is that we will see another
seventy five bibs At the meeting tomorrow. The FEDS fundrate
is expected to peek at between four point five and
(06:46):
four point seven five. The last time rates were at
this level was between October and December of two thousand
and seven, the start of the Great Financial Crisis. It's
not only the fact that taking out a loan is
a lot more expensive. However, first time buyers may also
struggle to source the funds required for a down payment
(07:07):
on many properties. Surging inflation is destroying purchasing power and
making it a lot harder for many to save. Now.
That is all on the demand side, but we also
have some troubling statistics over on the supply side. For example,
the National Association of home Builders's sentiment index has fallen
(07:28):
for ten straight months. The slowdown in sales at a
time of widespread construction means that the inventory of new
homes is near all time highs. In this chart over here,
you can see the months housing supply i e. The
months required to clear the housing infantry. This is at
the highest level it's been since. So how low could
(07:52):
house prices fall in the US. Well, let's see what
analysts on Wall Street are saying. At the lower end
of the estimates, we have Morgan Stanley who are now
expecting house prices to fall by about seven percent next year.
While that may indeed be less than the twenty seven
percent we saw in the peak to trough of the
(08:13):
two thousand and eight housing crash, it is still a
sizeable fall and would be one of the largest ones
since the Great Depression. According to Morgan Stanley's analysts quote,
if we assume a seven percent mortgage rate, affordability looks
materially worse than today, and the pace of its deceleration
(08:33):
has already more than doubled compared to almost any time
in history. They do note, however, that even with this
price decline of seven percent, house prices would still be
about thirty two percent higher than they were back in
March of Morgan Stanley has a bull and a bear
case as well. This all depends on how interest rates
(08:55):
progress over the next few months. For example, in their
bull case, they assume that interest rates start coming back
down next year. If this were to happen, they assume
a price increase of five. However, if the US falls
into recession next year, then we're looking at potential falls
of ten percent or more. According to the analysts quote,
(09:18):
affordability is already challenged, exposing would be homeowners to an
increasing rent environment that erodes their ability to save for
a down payment. If that were to be combined with
increasing unemployment, we could imagine a scenario in which existing
home sales continue to outpace the Great Financial Crisis to
(09:39):
the down side. In other words, a worrying state of affairs.
Moving on, though, another bank that had a change in
their view of the US housing market was Goldman Sachs.
Let's not forget that as recently as last month they
were predicting a modest one point eight percent rise in prices. Well,
(09:59):
they're current and estimates are for a fall of five
to ten quote. We view the risks to these estimates
as tilted to the downside because of a sharp deterioration
in our descriptive home price outlook scores and evidence of
strong mean reversion in regional data. Meanwhile, on the ratings
(10:20):
agency side, Moody's Analytics is predicting a drop off between
five and ten percent, although they don't seem to think
that we will see a two thousand and eight style
housing crash. Their chief economist Marks Andy stated that plain
vanilla lending, good mortgage underwriting, and low vacancy will be
enough to stave off the crash. However, as I noted earlier,
(10:43):
housing supply is at a high level, and even Zandy
admits that these factors aren't sufficient to stave off an
inevitable correction. Moody's analytics actually draws up a quarterly index
that looks at local fundamentals such as income levels, etcetera,
that helps determine whether house prices are over or undervalued
(11:05):
in the regions being examined. You can see what this
regional index looks like over here in this Fortune article.
This shows the over and undervalued regions for Q two.
If we were to compare this to the index for
Q one, you can see the deterioration. I can't wait
to see what it looks like for Q three. Any
(11:26):
who in those housing markets that Moody's views as quote
significantly overvalued housing prices should see declines of ten to
fifteen percent. However, if we do indeed hit a recession,
then these could even fall by twenty to twenty five.
That will hurt like heck anyway. Getting the perspective of
(11:48):
another ratings agency, Fitch Ratings, seems to think that we
could see prices fall by between ten and fifteen percent. Quote.
The likelihood of a severe downturn in US housing has increased. However,
our rating case scenario provides for a more moderate pullback
that includes a mid single digit decline in housing activity
(12:09):
in twenty three and further pressure in four now. One
final analyst with a prediction for housing prices next year
is Paul Shepherdson, the chief economist of Pantheon macro Economics.
He expects housing prices in the US to fall by
as much as twenty in twenty three. He said, quote,
(12:30):
we expect home sales to keep falling until early next year.
By that point, sales will have fallen to the incompressible
minimum level, where the only people moving home are those
with no choice due to job or family circumstances. Shepherdson
also thinks that the supply of homes available for sale
will shrink next year and that prices will have to
(12:52):
fall much more to restore equilibrium. So those are the
estimates for the US housing market, not exactly two thousand
and eight level armageddon, but disconcerting nonetheless. But that is
only the US. Are there any other housing markets that
are at risk of two thousand and eight type collapses? Well,
(13:14):
there is one, and it's just north of the US border.
That's right. Canada's housing market appears to be one of
the biggest property bubbles in the world. In fact, according
to ubs is recent Global Real Estate Bubble Index, Toronto
is the city that scores the highest on the list.
(13:34):
Vancouver isn't too far behind at number six. You can
also see how this has progressed for the cities over
the years. Ever since, it's been an upward march from
overvalued to bubble risk territory. It's not as if this
is a new phenomenon either. There have long been many
analysts ringing the alarm bells about the risks facing the
(13:57):
Canadian housing market, and there are several factors which have
been driving demand in these cities. They include high immigration levels,
falling mortgage rates, and high investment demand. Now, the most
recent housing frenzy actually began back in and only accelerated
during the pandemic. Much like central banks in other countries
(14:20):
around the world. The Bank of Canada dropped its benchmark
interest rate to near zero. This made it a lot
cheaper for people to take out mortgages and gave those
first time buyers who had been waiting an opportunity to
get on the housing ladder. During the pandemic, property prices
in Vancouver and Toronto accelerated to their highest levels in
(14:42):
five years, at fourteen percent and seventeen percent, respectively. This
drove housing affordability in these key metros to levels that
were last seen during the nine eighties real estate bubble.
In this RBC research note, for example, you can see
ownership costs as a percentage of household income. Houses are
(15:04):
much less affordable in Canada than they are in the US,
and if you speak to any Canadian you'll know how
much of an issue housing affordability is. But beyond affordability concerns,
there's also the risk posed by bad debts. Something that
is a lot more prevalent in Canada than in the
US is the use of variable or adjustable rate mortgages
(15:29):
or arms. These are essentially mortgages that lock in a
lower rate of interest for an initial fixed period, but
will then adjust up to a market rate after a
certain number of years. In Canada, about a third of
all mortgages are variable rate. That's about three times the
amount in the US, where the share of ARM activity
(15:50):
is about eleven. Those borrowers that took out arms to
buy a home in Canada between May and July two
could sue and see their monthly mortgage payments start to skyrocket.
That's because the Bank of Canada has been following the
FED in its aggressive rate hiking policy. What may have
(16:11):
seemed like a good mortgage deal when rates were near
zero percent could become exorbitantly expensive when they adjust up.
This has already started happening, and according to Royce Mendez,
managing director and head of macro strategy at djadon Quote,
banks are already sending out lessers to clients whose variable
(16:32):
rate mortgages owe more interest than their fixed monthly payment obligation.
And that's just the tip of the iceberg. As these
homeowners face higher mortgage payments, some of them may be
forced to make the ultimate decision and sell their homes.
This could only precipitate a broader price crash as people
see the value of the equity in their homes plummet.
(16:55):
It's a de leveraging cycle of lower prices, more sales
and lower prices. Again, so those are homeowners, But you
also have to consider the investors who are snapping up
this housing in the hope of making generous yields on
their properties. Well, as interest rates are going up, the
cost of servicing their debts mortgages is going up to
(17:18):
This means that they have to rely on rising rental
rates to make up for the lost yield. While rental
rates are still red hot, they could easily turn down
in much the same way as they're now doing in
the US. Now, if you were to combine all of
these factors, you can see why housing prices are on
the decline. Here you can see the steep drop in
(17:41):
the price of an average home in the g T
A Greater Toronto area. Overall prices in Toronto are down
seventeen percent as sales plunge. Now, this is something that
one of the Coin Bureau team members actually witnessed firsthand
when he visited his family in Canada a few weeks ago.
The number of for sales signs in his neighborhood was alarming. Now,
(18:06):
this is of course anecdotal, evidence, but I would be
interested to hear the experience of some of my other
Canadian viewers, so let me know in the comments down below.
The point is that Canada, and especially Toronto and Vancouver
are due for a pretty nasty and long overdue correction. Okay,
on to our next hot housing market, and this one
(18:28):
is a little closer to home for me, the good
old United Kingdom. The UK housing market is also starting
to face downward pressure. House prices fell by zero point
one in August and by the same amount in September.
This left the annual growth at nine which is the
weakest it's been since January. What these figures suggest is
(18:52):
that the housing market was already cooling long before the
disastrous budget from Liz Trust and Code. For those not
fully clued up, the shortest serving prime minister in our
history and her chancellor released a budget that would have
made Iron rand All misty eyed. The only problem was
that they didn't think about how they could pay for
(19:13):
it all, and it's sent the market into turmoil. I've
done a separate video on this disastrous episode, which I
will leave linked to below not for the faint hearted.
If you watch that video, you'll know that one of
the side effects of that budget was that UK government
bond yields went soaring. These are the interest rates that
(19:35):
mortgage providers used to price their fixed rate offerings. Therefore,
in the wake of that chaotic budget, these mortgage products
were left in turmoil. Buyers were scrambling to see whether
they could secure mortgages before their prices reset. In the
midst of the chaos, banks and building societies withdrew around
(19:55):
sevre mortgage products in the space of a week. Now,
while the mayhem appears to have calmed down since the
budget was pulled and a new PM installed, the mortgage
rates themselves have been slow to adjust back down. For example,
although interest rate swaps have fallen between one point three
and one point four, average rates on two and five
(20:18):
year fixed rate mortgages have only fallen zero point one six.
You can see what that looks like over here. Quite simply,
lenders are not passing on the lower interest rates to
those taking out the mortgages. These higher mortgage rates are
causing a great deal of uncertainty for homeowners and prospective
(20:40):
buyers in the UK. This is especially the case for
those who took out fixed rate mortgages Now this may
sound counterintuitive, but in the UK fixed rate is more
akin to adjustable rate in the United States, i e.
There is a fixed term that is for a limited
(21:01):
period of time, usually two to five years, after which
they will adjust up. Think of it as in the
same way our public schools are in fact fee paying
and therefore nothing of the sort. Makes you wonder how
we ever ruled over a third of the globe, doesn't it? Anyway?
For those who took out these loans in the period
when mortgage rates were low, the costs of servicing them
(21:24):
are suddenly looking much higher. Over here you can see
what that looks like. In London, for example, mortgage payments
make up over fifty percent of first time buyers take
home pay. Now, this is something that I myself and
worrying about with my mortgage in the UK, as it's
coming up for refinancing in the next couple of years.
(21:45):
That's because I know that interest rates are only going
in one direction up. The Bank of England is also
widely expected to raise interest rates by seventy five basis
points this Thursday. That's the largest hike by the BOE
since nine Beyond that, interest rate futures currently predict that
(22:08):
the b o E rate is likely to tap out
at almost five percent next year. That's all the more
pain for borrowers already on the edge. If we were
to add this to the pressures of inflation and writing
energy costs. This is all a bit too much to
bear for the average UK homeowner. Some may decide to
(22:28):
sell and this will of course have a negative impact
on prices. As a result, analysts are predicting steep falls
in UK house prices next year. For example, Credit Suee
analysts are predicting a fall of between ten and fifteen percent. Meanwhile,
Andrew Wishart, senior property economist at Capital Economics, also predicts
(22:49):
similar falls in prices. Quote the rise in market interest
rates that has already happened will push up mortgage rates
to at least six percent and reduce the size of
loans that lenders can offer and Quote, the resulting drop
in buying power makes a significant drop in house prices inevitable. Ouch. Okay,
(23:12):
time for a few of my closing thoughts. It's clear
that the global housing market is heading for some turbulence.
E's the era of pandemic fuel cheap credit is coming
to an end, and that means a reckoning for those
trying to secure a mortgage. All eyes are on the
US housing market as a number of the hottest metros
(23:33):
start to cool. Housing supply is on the rise and
prices are on the decline. While a two thousand and
eight style housing crash is unlikely, analysts are predicting pretty
nasty falls which are likely to put a massive dent
in consumer confidence. Perhaps this is what Jerome Powell always
intended when he wanted to quote bring housing prices back
(23:55):
in line with fundamentals. But it's a bitter pill to
swallow for all those who have a great deal of
their wealth tied up in their homes. However, such worries
are perhaps even more acute for Canadian homeowners, as concerns
about a massive correction ripple through the air waves. While
this has been a long time coming, it appears as
(24:18):
if the dominoes are beginning to fall. This could be
Canada's version of the two thousand and eight housing collapse
in the US, at least according to the pundits. If
that is the case, it could do significant damage to
the country's GDP, given that so much of household wealth
is again tied up in housing. That said, it could
(24:41):
prove a silver lining for those Canadians who have given
up on the dream of owning a home. Indeed, many
younger people in the country are secretly hoping for a correction,
anything for them to be able to eventually afford a
place to call their own. When it comes to my
native UK, things aren't looking two pretty there either. While
(25:02):
the housing market in Britain is slightly more resilient than
those in North America, it's the overall economic picture that
has me most worried. Inflation is over ten per and
the recent snaffoo with the budget has thrown the country's
finances into disarray. The cost of living is only likely
to get higher for those homeowners who may have to
(25:22):
refinance their mortgages at higher rates. So let's hope that
our new PM can help steer the ship. Two Calma sees.
Last week, a meme I posted to Instagram about Central
Bank digital currencies or CBDCs was fact checked. This came
(25:47):
as a shock because everything the meme says about CBDCs
is factually correct. It also came as a shock because
it suggests that governments are slowly starting to clamp down
on narratives that go against their upcoming CBDCs. If this
is true, then it is flat out terrifying. That's why
today I'm going to analyze the CBDC meme I posted,
(26:10):
explain why it's accurate, summarize what the fact checkers said,
and assess whether this is an anomaly or the beginning
of a bigger trend. Let's start by taking a closer
look at that CBDC meme. As you can see, it
features a gray NPC all excited that the government is
rolling out a CBDC. This is because the only thing
(26:33):
the NPC can see is the convenience of a CBDC.
The NPC doesn't see all the dystopian attributes that CBDC
will have. Now As a fun fact, the NPC meme
has its origins in psychological research, which found that many
people have no inner monologue. In other words, there's a
(26:53):
substantial percentage of people who do not reflect on their past,
present and future emotions, decide, et cetera. NPC stands for
nonplayer character, and any gamers in the crowd will know
that this term refers to any video game character that
isn't controlled by a real person. In other words, NPCs
are robots that just go along with the programming. The
(27:16):
more you know now, you'll notice there is a social
media handle on the bottom left of the CBDC meme.
It reads the Freethought Project, which appears to be an
alternative media website. I reckon it's safe to assume that
this is the creator of this meme, and it would
actually explain a lot. That's because when I searched for
(27:37):
the Freethought Project on Google, one of the first results
was from PolitiFact, an American fact checking website. PolitiFact notes
that the Free Thought Project has published two articles that
it takes issue with, one of which is mostly false
and another which is entirely false. This is significant because
it's possible that the mention of the Freethought Project in
(28:00):
the meme was why it was fact checked by Instagram.
In case you didn't know, Instagram's algorithm can read text
in images, it might have seen that content by the
Free Thought Project had been fact checked before to the
alternative media sites credit. It did issue a correction on
the article which was mostly false after getting called out.
(28:21):
The other one that was deemed entirely false hasn't been corrected,
and that's because it deals with a very contentious political
issue that I won't even try to discuss lest I
be fact checked. Two. I also can't help but find
it funny that Politi fact seems to take issue with
the fact that the Freethought Project's purpose is to quote
foster the creation and expansion of liberty minded solutions to
(28:45):
modern day tyrannical oppression. I suppose that tells you all
you need to know about these fact checkers. Note that
I'll break down the fact check on this CBDC meme
near the end of the video, but trust me when
I say you'll want to stick around until then. Now,
while it's possible that the CBDC meme was fact checked
(29:05):
because of its creator, it's equally, if not more, likely
that it was fact checked because of its contents. As
you can see, there are twelve statements made about CBDCs
in the meme. Before I unpack those, you should know
that there are two types of CBDCs, wholesale CBDCs and
retail CBDCs. Now, if you've watched any of our videos
(29:28):
about CBDCs, you'll know that wholesale CBDCs will be used
by select individuals and institutions, while retail CBDCs will be
used by regular folks like you and me. What this
means is that there will be two different digital currency systems,
one system for the elites, the corporations, and the governments,
(29:48):
and another system for everyone else. The statements about CBDCs
made in this meme, as well as others like it,
pertain to a retail CBDC, not a whole sales CBDC.
So the first statement is quote banks have full control
of every penny you own. Assuming other forms of fiat
(30:09):
currency like cash are phased out, then this is one correct.
Central banks will have total control over what you can buy,
when you can buy it, and even how much money
you can save. You might be wondering how this is
different from the current financial system. After all, we've seen
banks freeze bank accounts before. A recent example is Canadian
(30:33):
banks freezing the accounts of protesters back in February, something
that was truly unprecedented for a developed country. The difference
is that the existing financial system is still relatively decentralized.
For example, there are multiple banks and payment processes. If
one of them starts to limit what you can buy
(30:53):
and when, then you can take your business elsewhere in
a Canada type scenario, you can still use. More importantly,
there are many non bank entities, or so called shadow banks.
A great example is cryptocurrency platforms that offer visa debit cards.
These platforms don't always require extensive k y C, and
(31:15):
they can't be forced to comply with, say, in order
to freeze the bank accounts of protesters. In a CBDC system, however,
there won't be any competing banks, and there certainly won't
be any shadow banks. Instead, you will have an account
directly with the central bank. The commercial banks and payment
processes will only exist until the government has rolled out
(31:37):
its own infrastructure. Now, in theory, the central Bank is
independent of the government, but in practice it's not. I
would argue that the introduction of a CBDC would actually
cause the two to merge, as many are already predicting.
This means that it's really the government that will have
total control over what you can buy and when. If
(31:59):
that wasn't bad enough, The Bank for International Settlements or
b i S the Bank for Central Banks, recently published
a report detailing what it believes the future of the
financial system will look like. The t L d R
is that they see all assets being token ized on
a government and central bank blockchain. What this means is
that you will un ironically own nothing and be happy.
(32:23):
This is because you think you will own your assets,
when in reality, the government will have the ability to
turn your ownership off at the click of a button.
So be sure to keep physical documents proving your ownership
and your identity. Now, the second statement is quote vulnerability
to state and foreign actors. And this is a fact
(32:46):
about CBDC s that is often overlooked. It's also a
concern that's been mentioned in many CBDC reports, namely the
Federal Reserves report about a digital dollar from earlier this year.
You see, if every person in a country has their
bank account at the central bank, then this creates a
single point from which the entire financial system of a
(33:08):
country could be exploited or manipulated. History suggests that it's
not a question of if this will happen, but when
it will happen. This ties into the third statement, which
is quote social credit scores. Now, this is not actually
something I've seen discussed in any CBDC reports, at least
(33:29):
not yet. That probably has to do with the fact
that people associate the concept of social credit scores with
the Chinese Communist Party. Attempting to roll out such a
system would likely result in a revolution in most other countries.
That's why these other countries are taking a slightly different approach,
and that's to introduce a carbon credit system for their citizens.
(33:53):
Sounds environmentally friendly, doesn't it. An individual carbon credit system
is something I discussed at length in another the video,
which I'll leave in the description. The short of it
is that governments will create an elaborate incentive structure for
their citizens to emit less carbon a CBDC and centralized
digital I D will be required for this system. Now,
(34:16):
the fourth statement is quote every transaction is documented, which
is literally in every CBDC report. Obviously, the central banks
and governments are going to want to know about every
transaction that's ever happened. Something tells me that data protection
laws like g d p R won't apply with CBDCs.
The fifth statement is quote access to your money can
(34:39):
be turned off at any moment. This is essentially the
same statement as banks have full control of every penny
you own. And the sixth statement, which is quote frozen funds.
If you're skeptical, that CBDCs will have these restrictions. Consider
the following quotes from the b I S Quote Quantity
(35:00):
base safeguards would restrict the use of CBDC through imposing
hard limits on the transfers and or holdings of CBDC.
Quote limits could also be applied varyingly for different CBDC
account holders. And finally, quote such limits could be imposed
on a permanent basis or on a transitional basis. Now,
(35:22):
this actually reminds me of something that's important to point out.
Believe it or not, but the money you have in
your bank account technically doesn't belong to you. It belongs
to the bank. It just sits in its vault store
on its electronic ledgers under your name. The same is
true of any other asset you hold with a third party,
(35:44):
including any coins or tokens you have on a cryptocurrency exchange.
News flash, financial freedom doesn't mean having lots of assets
in custody. It means owning your assets and deciding how
and when they are spent. The value of financial freedom
will become evident once central bank digital currencies are rolled out,
(36:06):
and this will lead to serious crypto adoption. Anyways, the
seventh statement is the one the NPC in the meme
is focused on, and that's the convenience of CBDCs. Funnily enough,
central banks, governments, and international organizations have held up the
convenience of CBDCs as the fundamental justification for their rollout.
(36:29):
They say that CBDCs will be faster, safer, and cheaper
than traditional banking. The irony is that they simultaneously admit
that existing financial technologies are evolving to become even faster,
safer and cheaper, including cryptocurrency. This just proves that CBDCs
are about control and nothing more. Now, this relates to
(36:52):
the eighth statement, and that's centralization. This one is admittedly
debatable because some countries want inactial banks and payment processes
to run notes on their CBDC networks, whereas others want
the central banks and the governments to be the only
CBDC notes regardless of the setup, though it's almost guaranteed
(37:14):
that the government will have a back door. This is
very bad because centralization is inherently unstable. This is because
any issue with or compromise of the core infrastructure means
that the entire financial system is pardon my French, now,
what's scary is that the financial system has been trending
(37:35):
towards increasing centralization for quite some time. This was revealed
in a twenty nineteen report by black Rock, which stated
that all the financial regulations we've seen since two thousand
and eight were implemented to further centralize the financial system.
The reason why the financial system is centralizing is because
(37:56):
its current iteration is collapsing. Central banks and governments are
desperately trying to keep the Ponzi from falling apart. Being
able to dictate every transaction in the economy with a
CBDC is the only solution as they see it. The
ninth statement is similarly scary, and that's quote all your
(38:16):
movements and actions are traceable. This is also something I
haven't seen in CBDC reports, and to be honest, I
think it borders on conspiracy. Then again, there is precedent
for it because of all the data collection by commercial
banking apps. As per reporting by the Telegraph and others,
many banks are now tracking their customers through their mobile apps.
(38:40):
This is supposedly being done to catch scammers and criminals,
but I suspect it has as much or more to
do with gathering data that can be sold to advertisers
for additional profits. As such, it's not far fetched to
think that the mobile app you'd use to access your
CBDC account would track your movements and location for similar reasons.
(39:01):
It's possible that it would even be required, as some
central banks have discussed to limit CBDC payments to merchants
within specific locations. The tenth statement is quote zero anonymity,
and this one is probably the most accurate and up
to date. That's because Federal Reserve Chairman Jerome Powell recently
(39:21):
specified that a digital dollar will be quote identity verified,
so it would not be anonymous. Similar statements can be
found in most CBDC reports now. The eleventh statement is
quote cyber security attacks, which is almost the same as
vulnerability to state and foreign actors. It goes without saying
that no central bank wants a cyber attack on its CBDC,
(39:45):
but this is something that all of them are again
extremely concerned about, and understandably so. In the case of
the United States, the Federal Reserve wants to make sure
that its digital dollar is resistant to cyber attacks from
quantum computers. Without getting two technical quantum computers will eventually
be able to crack any encryption that exists today, and
(40:07):
it's possible that they can already now. Although many are
worried about a cyber attack on a cryptocurrency, the fact
of the matter is that the existing financial system is
a much bigger and much more lucrative target. This is why,
according to PwC, the FED is working with m I
T to make its digital dollar resistant to quantum computers.
(40:30):
As I've mentioned before, Algorand recently achieved quantum resistance and
its founder, Sylvia McAuley is based at m I T.
Not saying that Algorand is going to be the blockchain
that powers a digital dollar, but it's max USDC supply
of eighteen point four trillion suggests that the crypto project
is trying to prepare for such a role. More about
(40:53):
Algorand in the description. I digress now. The final statement
in the CBDC mean is quote zero privacy, which sounds
the same as zero anonymity at first glance, but it's
actually not, at least not according to the Central banks.
It might sound strange, but CBDCs will in fact offer
(41:14):
privacy despite not offering any anonymity. Confused, well, consider that
the definition of privacy used by central banks means that
your information is not shared with any private entities, only
public entities such as the central bank and the government.
CBDCs will therefore be private according to that horrendous definition
(41:40):
of privacy. I can't wait until the fact checkers start
claiming missing context on that one, any who, in addition
to being private, CBDC transactions will apparently not contain any
personal information about senders and recipients by default. Instead, security
officials at central banks and governments will selectively reveal this
(42:02):
information on any transactions deemed to be suspicious. Given that
you will probably have no way of knowing when you're
being probed by some three letter agency, it's more than
likely that this power will be abused, assuming such a
restriction is even implemented at all to begin with. And finally,
(42:24):
we have the apparent inner monologue of the NPC, which reads, quote, hey, cool,
the government is trying to make my life easier with
the digital currency. I quickly want to comment on this
because convenience is probably not how governments and central banks
will sell their CBDCs. This is because their own statistics
suggest that between four and twelve percent of citizens in
(42:47):
g twenty countries would voluntarily adopt a CBDC. This means
that they must go down another route that's been actively discussed,
and that's to make CBDCs mandatory for the payment of
taxes and other forms of subtle theft. They will also
use CBDCs to distribute social benefits, pensions, and any emergency
(43:09):
stimulus in response to future financial shocks. This will force
most citizens to adopt CBDCs, which they won't like. Hence
why the governments and central banks want to get rid
of physical cash. As per the ECB's own admission, more
about the ECBs Digital euro aspirations using the link in
(43:29):
the description. This brings me to the moment you've all
been waiting for, and that's what the hell the fact
check on the CBDC meme said. Well, I'll start by
saying that the fact check was removed shortly before I
put together this video. This is possibly because my tweet
about it went viral, but it's more likely it was
an error. That's because the description of the fact check
(43:56):
reads quote. Social media posts claim an executive order from
Joe Biden eliminates cash and enables the government to monitor transactions.
This is misleading While the US President did call for
additional research on a central bank digital currency, the order
does nothing to limit cash use. The authors add that quote,
(44:18):
experts say any such system would be legally required to
include privacy protections and involve the independent Federal Reserve Banks
and Congress. By now you'll know what privacy means to
these people, and that the FED probably won't stay independent
with a CBDC. You'll also know that the CBDC meme
(44:38):
doesn't say anything about Joe Biden or eliminating cash, even
though that's something the central banks actually want. Even so,
I must admit that many of the examples of this
misleading information given by the fact checkers are as accurate
as the CBDC meme. What irks me is the fact
checkers claim that the US government is far away from
(45:00):
launching a digital dollar, when billions of de facto digital
dollars are already in circulation today. Circles USDC is the
elephant in the room here because the company is basically
looking to become a part of the FED. More about
that in the description now. As expected, the fact checkers
agree that quote it is probably better for privacy and
(45:24):
civil and human rights purposes for some pieces of information
to be collected by intermediaries rather than the central bank.
Whatever you do, don't forget that warped definition of privacy
in relation to a CBDC. The fact checkers even go
as far as insinuating that a CBDC on a public
and transparent blockchain is analogous to China's digital yue, which
(45:47):
is just insane. They also reaffirmed that the United States
CBDC network would be run by a collection of entities
in the private and public sector. The fact checkers finish
off the article implying that the rollout of a digital
dollar is justified because one d other countries are testing
CBDCs according to the International Monetary Fund or i m F.
(46:09):
This reminds me of what my mother used to say,
if everyone is jumping off a bridge, should you do
it too? In all seriousness, it's clear that this particular
fact check is related to the upcoming midterm elections in
the United States. Historical search trends for fact check reveal
that fact checks spike every time there is an election.
(46:31):
This makes sense given most of these fact checking websites
are politically oriented. That said, you might have heard about
the recently leaked documents which revealed that the Department of
Homeland Security, or DHS, has been asking social media companies
to suppress and take down any content that quote undermines
trust in financial systems. This CBDC meme certainly falls into
(46:56):
that category, and it begs the question of just how
much the DHS and others will start to censor social
media once CBDCs start being rolled out around the world.
Something tells me that this won't be the last time
that this crypto guy gets fact checked. Thank you so
much for listening to the coin Bureau podcast. If you'd
(47:18):
like to learn more about cryptocurrency, you can visit our
YouTube channel at YouTube dot com forward slash coin Bureau.
You can also go to coin bureau dot com for
loads more information about all things crypto. You can follow
me on Twitter at at coin bureau or one word,
and I'm also active on TikTok and Instagram too,
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