Barnhardt Podcast #014: Interest Rate Manipulation: The Stealth Weapon of Mass Destruction

July 21, 2017

In this inaugural Barnhardt Financial Podcast, we address two main topics. First, we discuss the wisdom of the 7 year mortgage as a maximum loan term on a home, and walk through examples and consequences of the responsible use of debt. Next, we delve into the use of interest rates as literal weapons of mass destruction, the silent and extremely coercive "nuclear weapon" being held over every economy by the Deep State via central banks. Specifically, we look at the current threat of economic Armageddon being held over Italy as it is being coerced via threats of interest rate manipulation into importing and quartering the very islamic invasion force that was repelled at Lepanto in 1571 and Vienna in 1683.

Feedback: send your questions, comments, or suggestions for paying off debt in seven years to: podcast@barnhardt.biz

This week's Financial Math Example:

If you pay $100,000 for a bond position and its yield is 2%, it will pay $2000 per year in interest regardless of market price changes so long as you hold it and do not sell it.

If a bond issuer is likely to default (that is, risk increases), the yield goes up and the market price goes down. If yield goes up to 10%, what is the price such that 10% of that price is $2000?

P x 0.10 = $2000
P = $2000/0.10
P = $20,000

If yield goes from 2% to 10%, yield has increased by a factor of 5.
0.10 / 0.02 = 5

Therefore, market price must DECREASE by same factor:

$100,000 / 5 = $20,000

QED

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