Interest rates are on the rise. The increase signals a trend reversal from recent historical lows. Dips on the way up will occur without affecting the overall trend higher. The higher cost of borrowing will have widespread repercussions for the world’s economic order. The realignment is expected to be twofold. The first is described as a world’s “decoupling”, the second, as a domestic decoupling: Both will unleash a dislocation with established political systems.

Fed’s interest rates hikes are the result of US’ exclusionary foreign policies like imposing economic sanctions on non-compliant countries. The cost of military intervention abroad is another factor that is pushing interest rates higher. Both factors are responsible for a world’s economic decoupling setting off a separation between major economic blocks, namely the collective West versus BRICS+ (Brazil, Russia, India, China & South Africa + other countries).

The economic separation between economic blocs is aggravated by US’ foreign policy of excluding nations from SWIFT. A worldwide money clearing system, that will further interrupt international free flow of money by erecting barriers to a global economy. Furthermore, Sanctions will inevitably increase de-dollarization from countries affected and put pressure on the Fed to raise interest rates to make the dollar attractive on foreign exchange markets.

Government spending to fund wars have increased the debt exponentially. And in order to sell unlimited amounts of government debt in foreign exchange market, higher interest rates become inevitable. Higher rates will in turn increase government borrowing costs: Interest expenditures on the US debt in 2023 will exceed $1 trillion dollars. The growing deficit will lead to higher taxes on working people while curbing entitlements and benefits for a majority of tax payers.

Dear money means a bigger chunk of money will go to pay for credits cards payments raising the cost of living for the poorer section of the population. Credit card balances in the US have surpassed $1 trillion for the first time, with balances up more ~20% from a year ago. The average credit card interest rate in the US at the end of 2022 was ~21.6%, a jump from about 18% in 2021. Keep in mind that rates are even higher for consumers with low credit ratings. In effect, credit cards provide a free service for richer people at the expense of an indebted serfdom.

Interest rates have increased from ~3 to 6% in the past fifteen years to ~6 to 12% currently. So far, higher rates had an effect on the number of US corporations filing for bankruptcies: In the first half of 2023, there were ~340 corporate bankruptcies, more than in the past 13 year. The reversal in the cost of borrowing will no longer keep unprofitable zombie companies alive. And will curb the past frenzy in stocks buy-backs that have propped up healthy companies’ stock valuations.

Foreign & Domestic Decoupling

The end of easy money also means a decrease in billionaires’ use of cheap money to fund their tax exempt “charitable” foundations. And to be less generous with NGOs to push their agendas on how to rule the world. George Soros’ Open Society Foundation (OSF) announced plans to cut approximately ~40% of its workforce and stop its operations in the European Union. Possibly to concentrate its political activism in the USA. Decisions that correspond with Georges Soros’ son Alexander taking over the reins of OSF.

Elitist organizations like the World Economic Forum (WEF) are also feeling the repercussions of dear money. The annual meeting this year was held in Tianjin, China. The obscure location is a step down from private-jet-setters’ hub of Davos, Switzerland. The location seemingly was chosen to isolate its members and keep out critics who have become increasingly skeptical about an apocalyptic Great Reset. The location ostensibly helped cut costs to match dwindling corporate funding affected by a reversal in trend in the cost of money.

WEF: Duh, we need to destroy everything first…

Klaus Schwab to his credit single-handedly built up WEF to become a powerful global organization. By all accounts WEF’s popularity peaked during its 2020 meeting. Whereas the popularity of Schwab imploded as soon has he revealed the Great Reset to the world. Since 2020 the high priesthood of corporate governance who embrace WEF’s 4th Industrial Revolution doctrine had to deal with shareholders’ backlash at home.

The revelation of the Great Reset unleashed shareholders to petition CEOs to stick to their core business to increase their market share and be profitable. And demand that management avoid any involvement in social and environmental policies like Environmental Social Governance (ESG) that are in violation of shareholders’ fiduciary duty.

Corporate management, or any NGO directorship, are for the most part MBA graduates. University-educated administrators have little to no experience with what it takes to create a business from scratch. Let alone the amount of sacrifice and dedication it takes to run it successfully. An entrepreneurial spirit generated by independent contractors, small and medium size businesses. A grassroots workforce that accounts for ~70% of job creation in the economy. In contrast to global corporations that merge with competition or buy new emerging companies/technologies and shed excess employees.

More so, these global administrative elites display an obvious disregard for how the US dollar became the reserve currency of the world. And how an open and interactive world economy works.

How settlers and immigrants created the world’s most powerful economy. Built by generations of people who tamed a fierce wilderness with their blood, sweat and tears. Immigrants who left everything behind to escape tyrannical elites in their country of origin. They toiled to make America the economic engine of the world by taking over and fructifying a vast, unspoiled land. A monetizing process that lifted the bulk of new comers out of Old World’s serfdom and gave them access to property rights.

Interest rates have a direct effect on property values. Until recently property values were lifted by speculative buying as a result of historical low mortgage rates. For the most part generated by investors buying but not living in the property. High property values stimulate consumer spending, benefit the economy and elevates a sense of well being for the majority of homeowners. Until recently, appreciating homes values have kept homeowners’ confidence in the government and its institutions unchallenged. Historically, higher mortgage rates have put a dent in property values. Any correction in home values will alter a “feel good” sentiment among citizens.

So, they seem to perceive the economy as a whole as doing less well than they are personally. But most Americans feel good about their own economic situation. Janet Yellen

Investor’s who bought homes as an investment will evaporate in a rising interest rate environment. Profit seekers now have a choice of investing their money in a low-risk one year T-bills at ~5.4% yield as opposed to about ~1% a few years ago. Investors can put their money in relatively safe money market accounts that surpasses current returns on real estate investment. As a result, a declining number of real estate investors in the market will inevitably contribute to a downward pressure on home sales and prices.

In most people’s minds, real estate equates with the improvement, meaning a home or any type of building on a site. However, buildings are only a portion of the value of real estate. The foundational value of real estate is land.

With the current rise in inflation the popular belief is that real estate values will continue to rise because of increasing costs of labor and material to build homes. This assessment is true for the improvement, but it does not apply to land values. During a market correction in a high inflation environment, it is land values that suffer losses. And decreasing land values have a negative impact on home prices.

The “feel good” euphoria generated by high property values will take some time to adjust to a change in trend in interest rates. Home value readjustments will not be uniform throughout all geographical areas. And property value correlates with property type. Condominiums are affected more because of their intangible property rights defined as air space. Bigger market correction will occur in big cities governed by incompetent politicians, burdened by high taxes and infested by rising crime rates. Small towns and mid sized cities ruled by governments in touch with its residents will decline the least and in some rural cases, property values will likely go up.

Mortgage rates are currently at their highest levels in 20 years. Interest rates are expected to remain high if military spending continues. And rates will likely creep higher if global economic decoupling increases de-dollarization.

As we stand now, the high cost of borrowing does not bode well for a “feel good” sentiment among homeowners. Tolerance for an established order will fade and citizens will begin to question the competence of their elected officials.

Some examples of domestic decoupling are: Former President Donald Trump’s vocal anti-war stance. Other examples consist of presidential candidates like Robert F. Kennedy Jr., Cornell West and Vivek Ramaswamy who are  voicing their opposing of the war and have critical view about a global corporate intrusion in US politics. Views that are not being widely reported by the corporate media. Regardless, critical  positions are being propagated by a growing alternative online media fomenting domestic political decoupling.

Tolerance among citizens with institutional corruption, the debasement of the justice system and of a global corporate subversion of politics will give way to deteriorating confidence in public institutions and morph into a decoupling with domestic and globalist political establishment.