Canada's central bank led the charge in March, 2022 with its first of many successive rate hikes right up to January of this year bringing their key lending rate to 4.5% from near zero a year earlier. The FED followed suit a month later and has raised interest rates after every FOMC meeting in what is the most aggressive rate hike in the FED's 112 year history and like Canada, the key U.S. lending rate is around 4.5%.

As for every rate hike, there is a lag effect. It can take anywhere from 6 months to a year and a half to feel the full on effects of these rate hikes. It looks to me like we're feeling the effects of last spring's rate hikes now. Three regional U.S. banks including Silvergate, Silicon Valley Bank and Signature bank have crashed into oblivion along with one of the most systemically important banks in Europe, Credit Suisse. Mortgage applications are at 28 year lows. The car REPO market is in full swing as car owners default on their payments at increasing rates.

Four banks in less than one week have toppled with billions lost along with related jobs numbering in the thousands. Banks have parked their cash in long term 'hold to maturity' government securities, treasuries and bonds at near zero rates. Once the central banks started raising rates, these notes became a huge liability as depositors clamored to earn higher rates, sucking the juice out of the lemon.

It's very complicated and I'm trying to understand exactly what's going down. As it happens, banks (it could be any bank) purchased more notes last year as rates increased, believing the FED would pivot before things got out of hand, leaving them with notes earning higher rates as the FED lowered rates. Well, that hasn't happened. In fact, I still believe the FED will raise rates again tomorrow after their FOMC meeting, by how much I can't say but it will likely be 25 basis points, in an effort to cool things down a bit, a rate hike nonetheless.

Alas, things won't cool down, I'm afraid. We are now seeing the effects of last spring's rate hikes. What about last summer's rate hikes or last fall and winter? If things got this bad this spring from just a few rate hikes from spring of last year, how bad are things going to get this summer, fall and winter. As long as the FED continues to raise rates, we will continue to see bad things happen. More banks are likely to fail. Mortgage defaults are likely to increase, etc..

Here in Canada, the 'news' is telling us to remain calm, everything's fine. Remember, it was the Bank of Canada that hiked rates first, a full month before the FED did. I'm almost expecting a banking crisis to erupt in Canada by this summer or fall because Canada's banks are swimming in the same doodoo as every other bank around the world. Canada's banks too likely parked a lot of their holdings in low rate, hold to maturity notes. I can already see the headlines, 'Canada's truckers surround banking headquarters'.

That's right folks. We're just seeing the effects now of the first rate hikes from last year at this time and right on schedule. Unfortunately, we'll have to deal with more breakdowns as the rest of the rate hikes make their way down the pipe for at least another year.

I can only recommend to my readers to hold a bit of cash in their possession as well as a bit of silver and gold. Bitcoin is definitely good too but not everyone can transact in Bitcoin just yet. A silver coin though, is easily transferable.

Get ready, folks. We're in for a wild ride, maybe even wilder than the last 3 years. I hope this info helps you to understand and to prepare for what's coming. Stock up on the things you need now. Think of what's most important for you and your family. The going's going to get tough but for those of us that could see the train wreck headed for us will walk away from the wreckage with only minor scrapes and bruises.

Consider investing in gold and silver. Time is of the essence at this point.

Peace and love to everyone.

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