👉Fed Stress Test 2021- Is The Fed Preparing for a Massive Market Crash & Hyperinflation ?

👉Fed Stress Test 2021- Is The Fed Preparing for a Massive Market Crash & Hyperinflation ? The Federal Reserve has unveiled the 2021 stress-testing scenarios that it will use to evaluate the safety and soundness of 19 of the largest U.S. banks. Preparing for the day, someone pulls the plug in the bathtub. The next round of U.S. stress testing for big banks will examine the impact of a severe global downturn, a spike in unemployment, and plunging equity markets. The scenario also includes a 55% plunge in equity prices amid falling GDP and rising unemployment. “Banks with large trading operations will be tested against a global market shock component that stresses their trading, private equity, and other fair value positions,” the Fed noted. “Additionally, banks with substantial trading or processing operations will be tested against the default of their largest counterparty. Stress test the banks, yes, but why not also ask Janet Yellen to stop asking for even more stimulus when it is just going to further inflate the bubble. They'd be better off posting checks than doing more rounds of QE. The top 19 US banks will have to prove they can withstand a 55% collapse in stock markets in this year’s stress tests, regulators said on Friday, outlining the parameters for an exercise that decides how much banks can pay out to their shareholders. A 55% contraction! Is this a fair value signal from the Fed on the level of US indices? Wonder. It does seem quite a random number. It's also probably the closest the Fed will get to admitting we are in the midst of an enormous asset bubble waiting to be popped. A 55 percent drop is a walk in the park. How about a real stress test at 85 percent, which would replicate the 1929 crash and the continued market decline through to 1933. Given the S&P 500 has gone up more than fivefold since the lows of the 2008/09 financial crisis, a 55 percent decline from its current level of 3,915 to 1,760, while extreme could not be completely ruled out. The S&P 500 bottomed out at 676.53 on March 9, 2009. Maybe the Fed can also include a much, much broader range of both banks and non-banks in the test. Then we can see what would really happen in tomorrow’s increasingly likely scenario. What about stress-testing the large fund managers, private equity shops, non-bank financiers, and insurance companies too! Maybe throw in the already-underfunded pension systems too! In such circumstances, we know all asset classes tend to correlate and collapse. That means US Treasuries will also take a bath. Have the Fed thought about what their own portfolios will look like following such an event? In 2008 bad practices were rewarded with a bailout. The can have run out of road. It will be crushed. Eventually, it might be recycled. The markets may be like the can. Some banks, including JPMorgan Chase and Morgan Stanley, have chafed at their inability to return more cash to shareholders, given they have enjoyed record profits despite the pandemic. When banks and the shadow banking system are enjoying historic profits during a pandemic that shuts down the normal working on the economy, the Time is out of Joint. They should rather test banks on their ability to face massive haircuts on debt that cannot be ever reimbursed! Deutschebank is the Godzilla of derivatives. Test all they want but a schizo rise in interest rates will sink all Deutschbank's counterparty boats.... most big global banks. The domino theory. A sharp fall in equity would most probably trigger significant margin calls, which would, in turn, see non-banks draw down massively on their liquidity lines. This could have a severe impact on banks and the financial system as a whole. US equities go down 5% (let alone 55%), and the Fed will increase asset purchases. Signaling again. Thank you Fed, please just let all assets float freely, bug out of the markets, and focus on the coming stag-hyperinflation. Okay, now try a replay of 1929-1932 and test an 85% drop. I'll wait. It will be like in March 2020 and will be quicker and more violent. Risks never disappear; they just get moved around and stored in the system. LTCM cost tens of billions. 2008 was hundreds of billions. 2020 was trillions. The next one will involve many more digits in order to prevent nominal SPX from falling too far. The banks under Federal Reserve supervisory rules will be fine in the stress test. The quasi-banks (i.e., shadow banks that have gained market share from the handcuffed supervised banks) will fail. This will precipitate more emergency QE activity to fix the broken and collapsing markets. It's like a perpetual groundhog day. The system is flawed. A negative mindset is the new normal now. Get rich quick and beat the system. This is the trend now. Numerous citizens feel that the system is not working for them. However, it works for the bankers. I do not trade the bubble. I am in hard assets. Real assets are best. The elites are like me. The system is failing. Red handbags became the norm at the fall of Berlin. History repeats. It is grim. Pensions will fail too. I am positioned. Most are lost. The elite will leave the titanic shipwreck that is getting worse by the day. Welcome back to The Atlantis Report. You are here for your daily dose of the truth, the whole truth, and nothing but the truth. Please take a second to hit the like button, hit the subscribe button, and don't forget to also hit the notification bell. At the end of the 1920s, the US was a Ponzi scheme of inflated asset prices. The use of neoclassical economics and the belief in free markets made them think that inflated asset prices represented real wealth accumulation. 1929 – Wakey, wakey time What is the fundamental flaw in the free market theory of neoclassical economics? The University of Chicago worked that out in the 1930s after last time. Banks can inflate asset prices with the money they create from bank loans. Henry Simons and Irving Fisher supported the Chicago Plan to take away the bankers' ability to create money. “Simons envisioned banks that would have a choice of two types of holdings: long-term bonds and cash. Simultaneously, they would hold increased reserves, up to 100%. Simons saw this as beneficial in that its ultimate consequences would be the prevention of "bank-financed inflation of securities and real estate" through the leveraged creation of secondary forms of money.” The IMF re-visited the Chicago plan after 2008. It looks like they did have some idea what the problem was. Why did it cause the US financial system to collapse in 1929? Bankers get to create money out of nothing through bank loans and get to charge interest on it. What could possibly go wrong? Bankers do need to ensure the vast majority of that money gets paid back, and this is where they get into serious trouble. Banking requires prudent lending. If someone can’t repay a loan, they need to repossess that asset and sell it to recoup that money. If they use bank loans to inflate asset prices, they get into a world of trouble when those asset prices collapse. As the real estate and stock market collapsed, the banks became insolvent as their assets didn’t cover their liabilities. They could no longer repossess and sell those assets to cover the outstanding loans, and they do need to get most of the money they lend out back again to balance their books. The banks become insolvent and collapsed, along with the US economy. When banks have been lending to inflate asset prices, the financial system is in a precarious state and can easily collapse. If you don’t bail out the banks, you get a Great Depression. An inflationary cycle is the only thing that can kick the legs out from under the stock market. Most of the money in the US is created by banks when they make loans. The only way to get extra money into the economy is to borrow it from banks, leaving us all trapped under a mountain of personal debt and mortgages. When you take out a loan, new money is created. As people borrow more, more new money comes into the economy. All the extra spending this newly created money funds gives people the impression the economy is doing well, A 20% saving rate means the economy is headed towards 1929 debt crisis scenario or hyperinflation. A 25% saving rate to GDP for EU and 15% for the USA means that this money is used for paying the huge household debt and do not go into someone’s income and hence GDP declines. There is stress from the pandemic that increases fixing of balances that will persist after the vaccine, and there is a huge segment of Americans and Europeans with huge debt and savings below 1000 Dollars. So the Governments of the USA and EU will increase correspondingly some 15-20% budget deficits in 2021 to provide incomes that debt servicing cancels as Dalio shows, as long as saving persist or 1929 debt crisis GDP depression follows. This debt will be monetized by FED and ECB as otherwise, yields will increase. For the 15% saving rate in the USA, 5% goes to investment, but 10% is servicing huge debts of households to shrink their balances . 10% monetized debt per year over 3 trillion in 2020 is some 25% to GDP monetized debt in a year only, that is 70% sure hyperinflation as Peter Bernholz shows that 40% monetized debt to GDP is 100% sure hyperinflation in a year. Debt in 2021 will be 2 trillion for savings and 2 trillion to stimulate to 2019 level of GDP after double dip lockdown recession so the even higher probability of hyperinflation in 2022. There is still too much cash setting on the sidelines waiting for a small pullback to get in. If we see a dip, buy into it. The path of least resistance is higher, folks. I understand our old fashioned metrics indicate an overvalued market, but metrics have changed. As the market evolves, so do the metrics by which we measure its performance. I strongly believe the current stock market is extremely overvalued based on all of the indicators, i.e., Buffet Indicator, Schiller P/E ratio, etc. NASDAQ Composite BUBBLE got PUMPED by 1400%, from 1k in 2008, to 14K in 2021 with nominal average corporate revenue growth of 3-5%!!! What kind of FRAUD is the US Market! The US Government has turned the Market to the PONZI SCHEME! How long these ABSURD Valuations, this TULIP MANIA BUBBLE in the US Stock Market will Last! But Powell says QE until we have consistent 500,000 positive jobs per month. This has never happened before in the history of the US job market. Translation? Unlimited QE forever! Biggest wealth transfer in history to holders of stocks. Jerome is more powerful than God. Turning water into wine. Fiat into Apple stock! Boom...The new all-time high, because, well, why not? Looks like 4k next week and then higher and higher and higher. All funded with debt and our kids' futures. What could go wrong? This is history in the making folks. Not since Venezuala or Zimbabwe! The greatest bubble of all time. Lessons learned in the past - never, never fight the Fed. This was The Atlantis Report. Please Like. Share. Leave me a comment. Subscribe. And please take some time to subscribe to my backup channels; I do upload videos there too. You'll find the links in the description box. You will also find a PayPal link if you want to make a donation. Thank you wholeheartedly to all those of you who have already donated. Stay safe and healthy friends! The Financial Armageddon Economic Collapse Blog tracks trends and forecasts , futurists , visionaries , free investigative journalists , researchers , Whistelblowers , truthers and many more