“Whatever It Takes”; Mass Mind Control – German Bond Yields Rising Fast – Can Deficit Reduction Cause a Deep US Recession? – Tesla Shares Falling – US Dollar Falls – Rare Earths not Rare - [03-11-25]

Direct from BOOM Finance and Economics

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BOOM EDITORIAL THIS WEEK

“WHATEVER IT TAKES” – IN EUROPE — AND IN AUSTRALIA — BEWARE — “WHATEVER IT TAKES” IS A SIGN OF MASS MIND CONTROL. Recently, the defeated German government is now attempting to push a Bill through the German Parliament to fund its activities with €500bn into the distant future. Is this democratic? Of course not.

The Bill is colloquially being called the “Whatever it Takes” Bill. All elements require a two-thirds constitutional super majority. The proponents of the Bill want to pass the agreed measures in the old 20th Bundestag parliament before the newly elected 21st Bundestag is convened on March 25, 2025. Why? Because, after that date, the AfD Party (Alternative for Deutschland) will have a potential blocking minority position having achieved substantial voter support in the recent Federal election.

The various other Party leaders, especially the Conservatives, explicitly refer to this decision as a “whatever it takes” moment and a determination to “re-arm completely”. And it is all in the name of German “democracy” — whatever that is. The new incoming Prime Minister of Germany, Friedrich Merz, wanted to make his view plain. He made this statement last week: “In view of the threats to our freedom and peace on our continent, the rule for our defence now has to be “whatever it takes”.

Meanwhile, Ursula Von der Leyen, the unelected President of the European Commission, launched her “Re-Arm Europe” Plan. In the Commission’s “European rearmament plan”, she announced additional military spending of up to €800bn over the next 10 years. She said, “We are in an era of rearmament, and Europe is ready to massively boost its defence spending”. Does that sound like — “Whatever it takes”?

Joe Biden has also used the term, US President Joe Biden has pledged to do “whatever it takes, as long as it takes”. And during a trip to the White House in June last year, former President Barack Obama made it clear that he was committed to doing whatever it takes. There it is again.

The current Australian Prime Minister, Anthony Albanese, has also frequently used the phrase in many instances since he took office three years ago. Just last week he stated publicly, “We will continue to stand with Ukraine for as long as it takes “. BOOM must ask the key question here. For as long as what takes?

In January, Albanese said, “We’ll continue to take whatever action is necessary.” And two years ago, this report appeared in the Australian Financial Review: “Taxpayers have been warned to brace for a massive increase in defence costs with Anthony Albanese saying he will spend whatever it takes”.

“WHATEVER IT TAKES” — WHY DOES DERREN BROWN USE IT? – IS THIS MIND CONTROL? Derren Brown is an English super-expert in mind control. In fact, his very first television show produced 25 years ago was titled “Mind Control”. Wikipedia describes him well: Derren Brown (born 27 February 1971) is an English mentalist, illusionist, and writer. He is a self-described “psychological illusionist”. His live performances, which incorporate audience participation, often include statements describing how his results are achieved through a combination of psychology, showmanship, magic, misdirection, and suggestion.

Derren Brown in his now famous film, THE PUSH, has his actors repeat this phrase – “whatever it takes” over and over again in order to coerce the victims of the scam to take bold actions. The actors in the film frequently say to the unwitting victims of the scam – “You must do whatever it takes”. The victims are coerced into acting against all of their innermost morals and ethics to the extent of actually killing a person they don’t know. This is Mind Control par excellence.

The Psychology of Compliance. The film is all about the psychology of compliance. First, get the subject to comply with a seemingly small trivial thing, perhaps even an apparently sensible thing, that they may not fully agree with. The rest flows from there. In The Push, Derren Brown exposes the psychological secrets of obedience and social compliance. He expertly lifts the lid on the terrifying truth that, when confronted with authority, the natural instinct of most people is to unflinchingly obey without question, to such an extent, that even the most moral people can be made to commit the most horrendous acts (even murder), simply because they are being told to do so by an authority figure.

The methodology employed by the actors in the film is to get someone to COMPLY morally (and physically) with increasingly challenging commands and suggestions. “You must do whatever it takes”. There is always an implied threat contained and it is this: “or else something bad will happen.” In the film, the actors are all conspiring to confuse the unwitting victims about what is happening and to coerce them to make decisions under pressure (anxiety) which they feel they must make in order to comply socially.

Politicians in the West have become masters of this methodology over the last 30 years. They use threat ideology frequently to induce anxiety in the population. We have all heard of the “China Threat”, the “Russia Threat”, the “Covid Virus Threat”, the “Climate Change Threat”, the “Bird Flu Threat”, “the Hurricane Threat”, the “Influenza Threat”, the “Crime Threat”, the “Dirty Coal Threat”. All these threats are being used to control populations and to coerce them into doing “whatever it takes” to remove the “threat” and thereby release mass anxiety, the fear.

In the June 30^th, 2024 editorial, BOOM made the following observations about Power and Threat Ideology. Quote: “Keir Starmer, the new Prime Minister of the UK has illustrated the theme very clearly indeed. But he is just the latest in a conga line of politicians in the advanced Western economies who see “Threats” as the way to solidify their positions of power.” June 30^th 2024 – BOOM on Threat Ideology:

Almost all politicians now use Threat Ideology to subdue and control the voting public. They see The People as the enemy and they seek to control that enemy. Why? The question is easy to answer. Their goal is to maintain their privileged positions of power and influence, not to mention their lavish life styles, fame, and compensation packages. After all, as Lord Acton, the 19^th century British politician once observed, “power corrupts and absolute power corrupts absolutely”.

In BOOM’s view, this has happened because politicians who stand for nothing and who have no coherent philosophy of thought and coherent plans for the future must ultimately stand for only one thing, and one thing alone, and that is their quest for power above all else. Their 'modus operandi' is to endlessly identify threats and bring them forward to the public one after another. They do not allow a pause for calm reflection or reasoned debate.”

NB: If you hear a politician justify what he or she is doing by saying “we must do whatever it takes”, be wary because there is almost certainly a hidden agenda.

GERMAN, FRENCH, AND ITALIAN BOND YIELDS RISING. The leaders of Western Europe met last week and decided to embark on joint massive new expenditure programs into the future to boost their defences. They made “whatever it takes” statements, to indicate their determination. Clearly, they see “threats” everywhere and they are determined to go ahead without the well-established US umbrella of protection.

However, as soon as these “whatever it takes” statements erupted, the financial markets realised that someone, somewhere will have to fund these crazy dreams of expenditure. The Bond markets responded immediately. German, French, and Italian Bond Yields exploded to the upside for three fundamental reasons:

• Who will want to invest in Bonds from politicians who use the slogan “whatever it takes” to justify their decisions based on a rejection of peace and a forever war?

• Will all the nations of Europe agree to cooperate in this grand quest?

• Will CPI inflation rise as a result, leaving the European economy crippled?

If private investors don’t buy German, French, and Italian Bonds to fund a “forever war” approach, then who will? Surely not the European Central Bank (ECB) which is committed to backing away from QE? And surely not an independent, sane Bundesbank?

Readers might take a good hard look at what happened in the European Bond markets last week. The dramatic surges in Yield occurred right across the board but let’s look at German Bond Yields as a prime example. German Bond Yields exploded upwards during the week.

BOOM can confidently predict more of the same in the future. This is political, societal ,and economic suicide. With bond yields rising throughout Europe, interest rates that directly impact citizens and companies will soon begin to rise such as mortgage rates, corporate bond rates, and credit card rates. European stock markets will fall and any economic recovery will be crushed. Sustained economic contraction, coupled with CPI and asset price inflation, will become the norm. Stagflation writ large will emerge and stay.

VON DER LEYEN’S DREAMS OF THE FUTURE. Is this what the unelected Ursula Von der Leyen wants? She is the most powerful person in the European Union. Is she desperately trying to destroy Europe? Does she want a forever war with a vast Pan European Army, Air Force, Nazi-directed from Brussels? With millions of soldiers' lives on the line and millions of citizens put at risk? With the nation of Ukraine reduced to a destroyed battlefield strewn with the bodies of young Ukrainian men? And for what? Her “vision” (whatever that is) of democracy? BOOM must ask the key question here: WHO is directing Von der Leyen?

CAN DEFICIT REDUCTION CAUSE A DEEP RECESSION IN THE USA? — NO – THERE IS NO NEW MONEY SUPPLY (MOSTLY) IN FUNDING A DEFICIT AND IT CANNOT BE REDUCED QUICKLY. Elon Musk, Scott Bessent and Donald Trump are intent upon lowering America’s Budget Deficit. BOOM is not concerned about this. However, BOOM is now frequently being asked: can this cause a bad recession in the US economy?

The answer is definitively NO. Budget deficits are predominantly funded by Treasury Bond issuance to willing private investors. The money used by Bond investors to purchase Treasury Securities is NOT fresh new money. There is an exception to this and that is when a QE program (Quantitative Easing) is in place from the central bank (a rare circumstance when CPI Deflation looms). Thus, it is almost always OLD money being used by Bond investors to fund the deficit. That old money has previously been in circulation for some time or has been trapped in the trading of assets. This is very important to understand.

BOOM stated this last week and will do so again to drive the point home:

NO NEW MONEY IS (GENERALLY) CREATED TO FUND A BUDGET DEFICIT. There is a very importantbservation to be made about where the money comes from to fund the purchase of US government Treasury Securities (which funds the US Federal Deficit). In almost all circumstances, it is NOT new money. It is old money that has been created some time previously and has either been in circulation or trapped in holding and trading real and financial assets. There is one exception to this and that is when a QE Program is in place from the central bank. But that is a rare situation, not common at all.

NO NEW MONEY is created to fund the Budget Deficit (except in QE). The lesson here is that Budget Deficits cannot and do not increase the supply of fresh new money (the Money Supply) and are, therefore, NOT inflationary. However, they do assist in supporting the circulation of money in the economy because they are mediated by Government expenditures.

Expanding the deficit quickly is an especially useful tool during an economic contraction (a recession). A government can stimulate the economy by increased spending both in a volume sense and in a time sense. However, the overall volume of money in the system is not increased when a government spends more via their expansion of a Budget Deficit program. Thus, CPI inflation is not a significant risk.

When the time comes to reduce the size of the deficit, a sizeable deficit reduction cannot be achieved quickly because the government is withdrawing their support to the economy. Voters will notice if it is done too quickly. Any old money that is then not being used in governmental deficit spending will find another destination (hopefully productive) within the private sector of the real economy.

To assist in understanding money, always think of it as a water supply for the economic garden. That will help you grasp the key elements without having to read any complex books on money and money supply. Farmers have crops, irrigation systems, stores of water (dams) and rain from the heavens. They manage these various elements to get the best outcome for their farm. Governments do the same with money and their spending programs.

Meanwhile, as bank loans are paid off, the commercial/retail banks create the bulk of the new money supply via collateralised loans to willing borrowers. The volume and speed of that process depends upon the willingness of borrowers and the cost of borrowing (the interest rate).

TESLA SHARES ARE FALLING BACK TO WHERE THEY WERE FOUR YEARS AGO. As loyal readers will know, BOOM is not a fan of alternative energy investments because they appear to have no long-term commercial viability. That includes the electric car industry (EVs) which is fraught with long term uncertainty. Problems include buyer resistance, range anxiety, further anxiety concerning the possibility of health problems from sitting on a giant battery (a source of electromagnetic radiation) and huge competition from China.

Tesla is the only EV company in the West that has any chance of survival in BOOM’s opinion. But it seems to be vastly overvalued by the market. Tesla sales across the EU, EFTA (European Free Trade Association), and the UK fell more than 45% in January and more than 50% in the EU alone. This is a disastrous result. Tesla Registrations in January were only 9,945, down from 18,161 in January a year ago, according to the European Automobile Manufacturers’ Association. But, as Tesla sales plunged, overall EV sales gained by 37% because the Chinese EV’s are taking the market.

According to Gordon Johnson of GLJ Research, 90% of Tesla’s revenue in the 4th Quarter of 2024 came from its core car sales. So, any significant fall in car sales will dramatically impact its financial performance

In Norway, where the government strongly favours EV car buyers and where new EV’s make up more than 90% of new car sales, Tesla registrations in February fell 50% compared to February 2024, and are down 44.4% across the first two months of the year. Tesla sales in Spain in January fell by 75%, followed by France with a 63% fall. In France, EV’s made up only 22% of all new car sales. In Sweden, sales of new EVs accounted for almost 70% of total car sales. However, despite this, Tesla sales fell by 42% compared to February 2024. In Denmark, new Tesla registrations fell by 48% in February.

In Australia, the Electric Vehicle Council showed January 2025 Tesla sales in Australia fell 33% to 739 compared to 1107 in January 2024. While January is typically a slow sales month for new vehicles, the result is the lowest figure for Tesla in Australia since July 2022. The plunge in Tesla EV sales in Australia has continued into February, according to the latest official data, with combined sales of the Model Y and Model 3 EVs plunging almost 72% in February, compared to the same month a year earlier.

TESLA SHARE PRICE OVER 5 YEARS IS BACK TO WHERE IT STARTED. So, for anyone who bought Tesla shares in the last four years and held, there has been zero capital gain and zero dividends.

THE US DOLLAR HAS FALLEN AS PER BOOM’S EXPECTATIONS. On February 2, 2025 BOOM wrote this about the US Dollar: US DOLLAR STRENGTH HAS FALTERED SINCE DECEMBER. “Since Trump’s win in the election, the US Dollar initially strengthened from early November to December 20. However, since then, it has weakened significantly against other currencies but not dramatically. This weakening can be clearly seen in the chart for UUP, the US Dollar Index, the Invesco US Dollar Bullish Fund.

BOOM will watch closely from here for ongoing US Dollar weakness. At present, it looks like long-term holders are still not selling but new buyers are not bidding the price higher. Any significant weakness in the US Dollar is always a significant event. A change in long-term trend is very significant indeed.” That was 2 months ago. BOOM’s expectations of US Dollar weakness have emerged just as expected. Here is the chart that BOOM published then, on February 2, 2024, a Daily Chart over 12 months.

This is the latest daily chart of UUP (the US Dollar Index Bullish Fund) over 12 months. The fall has been dramatic; BOOM nailed it yet again. The short-term trend has decidedly turned bearish and the long-term, up-trend has weakened very significantly.

The gravity of this is underlined by the fact that the euro rose strongly against the dollar last week even as the European Bond prices collapsed. That is an extraordinary combination of events.

RARE EARTH MINERALS ARE NOT RARE, BUT DONALD WANTS THEM ANYWAY. Donald Trump has been making a big “deal” about Rare Earths in his dealings with Ukraine. They are also known as Rare Earth Elements (REE) or Rare Earth Minerals. He wants to gain access for the US to mine rare earth minerals that may be in Ukraine.

However, rare earth minerals are actually not rare. They are known as “rare” because it is very unusual to find them in a pure form. There are deposits of some of them all over the world. Cerium is the 25th most abundant crustal element on Earth and Lutetium, the scarcest rare earth element, and is about the 60th most abundant. However, it is not common for them to occur in concentrations sufficient to support commercial mining operations. And there is a problem with their extraction and refinement. Those processes cause a huge environmental pollution problem. To date, China alone has been willing to pay that environmental price to supply their domestic industries and for export.

BOOM covered this subject in the editorial dated June 25, 2023. This excerpt will explain why Mr Trump is keen to “do a deal” with Ukraine. He wants to mine the minerals there but he also (probably) wants to extract and refine them there as well, leaving the environmental consequences for the Ukrainian people to deal with. That would turn parts of Ukraine into an environmental disaster.

BOOM is a Trump fan but this “deal” stinks (in many ways). BOOM says, don’t do it, Donald. From BOOM June 25, 2023: What goods does the US desperately require from China that it cannot get from anywhere else? The answer is Rare Earth minerals. Rare Earths comprise 17 elements with names such as Scandium, Yttrium, Lanthanum, Cerium, Praseodymium, Neodymium, Gadolinium, Ytterbium (to name just a few). Over the last decade, these elements have become essential for the production of many devices used in modern life such as magnets, batteries, catalysers, computer and phone screens and much more. Thus, many industries in the Western advanced economies are now highly dependent on a reliable supply of Rare Earths. And China is that supplier.

Cerium is used in light bulbs, TVs and ovens. Dysprosium is mixed within alloys used in wind turbines, electric vehicles and nuclear reactors. Erbium is used in lasers and fibre optic cables. Europium is used in light bulbs, nuclear reactors and lasers. Gadolinium is used in magnets, nuclear reactors and magnetic resonance imaging (MRI). Holmium is used in magnets and nuclear reactors. Lanthanum is mixed within alloys that are used in batteries and hydrogen vehicles. Lutetium is used as a catalyst in refineries. Neodymium is used in magnets and lasers. Praseodymium is used in aircraft engines, fibre optic cables and magnets. Promethium is used in pacemakers and guided missiles. Samarium is used in microwave devices and magnets. Terbium is used in light bulbs, memory devices and x-rays. Thulium is used in lasers. Ytterbium is used in displays, x-ray machines and fiber-optic cables. Yttrium is used in radars and as an additive within alloys used in high tech devices. Scandium is used for fuel cells and alloys used in jet planes.

A recent estimation, published by a known authority on the subject, showed that China produces 70% of the world’s Rare Earths while the US produces 14.3%, Australia produces 6% and Myanmar produces 4%. The US must import Rare Earths to meet its needs. And the only place where such supply can be guaranteed is China.

COMING NEXT:

• The Financial Jigsaw Part 2 - Chapter 9 (41) – TIME TO HANG THEM? – Saturday, March 15, 2025

• BOOM Global Financial Review, Tuesday, March 18, 2025

In economics, things work until they don’t. Make your conclusions and do research. BOOM does not offer investment advice.

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BANKS DON’T TAKE DEPOSITS, THEY BORROW YOUR MONEY: LOANS CREATE DEPOSITS — this is how almost all new money is created in the economy (by commercial banks making loans). https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy. Watch the short 15-minute video and see Professor Richard Werner brilliantly explaining how global banking systems work.

In 2014, Richard Werner provided the first empirical evidence that banks create credit out of thin air. They do this whenever they issue a loan or, more specifically, purchase a promissory note. This is a walk-through of exactly how they do it.

Many economists are unaware of this and even ignore the banking & finance sectors in their econometric models. Prof Richard Werner explains how things are going now with CBDCs:

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