Sunday, February 14, 2021

👉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

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“Control oil and you control nations; control food and you control the people.” Henry Kissinger

once a standing army is established, in any country, the people lose their liberty.”
George Mason

“Military men are dumb, stupid animals to be used as pawns for foreign policy.”
Henry Kissinger

“If you are an ordinary person, then you can prepare yourself for war by moving to the countryside and building a farm, but you must take guns with you, as the hordes of starving will be roaming. Also, even though the elite will have their safe havens and specialist shelters, they must be just as careful during the war as the ordinary civilians, because their shelters can still be compromised.”
Henry Kissinger

"We don't let them have ideas. Why would we let them have guns?" Joseph Stalin

The people who cast the votes decide nothing. The people who count the votes decide everything.
Joseph Stalin

Governments keep a lot of secrets from their people . . .
Why aren't the people in return allowed to keep secrets
from the government?


“Some call it Communism, I call it Judaism.”

Rabbi Stephen Weiss

“Anti-Communism is Anti-Semitism.”
Jewish Voice, July - August 1941

Taxing People is Punishing Success

There's the rich, the poor, and the tax payers...also known as the middle class. Robert Kiyosaki

The Tax you pay is The Bill for Staying Stupid

Stefan Molyneux

“The modern banking system manufactures money out of nothing. The process is, perhaps, the most astounding piece of sleight of hand that was ever invented. Banks can in fact inflate, mint and un-mint the modern ledger-entry currency.” Major L L B Angus

The few who understand the system will either be so interested in its profits or so dependent on its favours that there will be no opposition from that class, while on the other hand, the great body of the people mentally incapable of comprehending the tremendous advantage that capital derives from the system will bear its burdens without complaint and perhaps without even suspecting that the system is inimical to their interests.
The Rothschild Bros

"Debts must be collected, bonds and mortgages must be foreclosed as rapidly as possible. When, through a process of law, the common people lose their homes they will become more docile and more easily governed through the influence of the strong arm of government, applied by a central power of wealth under control of leading financiers.

This truth is well known among our principal men now engaged in forming an imperialism of Capital to govern the world.

By dividing the voters through the political party system, we can get them to expend their energies in fighting over questions of no importance. Thus by discreet action we can secure for ourselves what has been so well planned and so successfully accomplished."

USA Banker's Magazine, August 25 1924

Cutting Tax Rates stimulates Economic Growth creates more Profit , more Jobs and therefore The Treasury ends up with more Tax Money

Taxation is legalized Theft

"The Objective of the Bank is not the control of a conflict , it's the control of the debt that a conflict produces . The real value of a conflict , the true value is in the debt that it creates . You control the debt , you control everything . this is THE VERY ESSENCE OF THE BANKING INDUSTRY , to make us all , whether we be nations or individuals , SLAVES TO DEBT " An UNKNOWN Banker

Patriotism is the last refuge... to which the scoundrel clings .... Steal a little and they throw you in jail ..steal a lot and they make you king ....

Bob Dylan

"Corporations are stealing billions in tax breaks, while the confused, screwed citizenry turn on each other. International corporations have no national allegiance, they care only for profit." Robert Reich

There is NO political answer to a spiritual problem!
Steve Quayle

litical Correctness is a Political Stand Point that does not allow Political Opposition , This is actually The Definition of Dictatorship
Gilad Atzmon

The modern definition of racist is someone who is winning an argument with a liberal
Peter Brimelow

When People lose everything and have nothing left to lose , They Lose It !


Your Greatest Teacher is Your Last Mistake

The one who Controls the Education System , Controls Perception

"The world will not be destroyed by those who do evil, but by those who watch them without doing anything."

Albert Einstein

In The Left Nothing is Right & in The Right nothing is Left

No man escapes when freedom fails; The best men rot in filthy jails. And those that cried 'Appease! Appease!' Are hanged by those they tried to please

Freedom is not Free

Don't Steal The Government Hates The Competition

Ron Paul

"Buy The Rumor , Sell The Fact " Peter Schiff

You can love your Country and not your Government

Jesse Ventura

" The Government Works for ME , I do not answer to them They Answer to ME "
Glenn Beck

"Tyranny will Come to Your Door in a Uniform "
Alex Jones

"The Government is not The Solution to our Problems , The Government is The Problem "

Ronald Reagan

"The price good men pay for indifference to public affairs is to be ruled by evil men." Plato

The world is a tragedy to those that feel, and a comedy to those that think...Beppe Grillo

"The people should not fear the government for it is the government who should fear the people" UNKNOWN

"If You are looking for solutions to the world's problems , look in the Mirror , You Are The Solution , You have the power as a human being on this planet " UNKNOWN

"They don't control us , We empower them " UNKNOWN

"Serial Killers do on a Small Scale What Governments do on a large one..."

Serial Killer Richard Ramirez

There is a Class War going on in America, & unfortunately, my class is winning." Warren Buffet

"When the people fear their government, there is tyranny; when the government fears the people, there is liberty."

Thomas Jefferson

"College is a waste of Money"
Albert Einstein

Schools manufacture people who think that they're smart but they're not.
Robert Kiyosaki

Education is what you learn after you leave School
Robert Kiyosaki

" ‏Schools were designed to create employees for the big corporations."
Robert Kiyosaki

"If a law is unjust, a man is not only right to disobey, he is obligated to do so" Thomas Jefferson

Dissent is the highest form of patriotism
Thomas Jefferson

“True education makes you feel stupid. It makes you realize you have so much more to learn.” Robert Kiyosaki

"One day your life will flash before your eyes. Make sure it's worth watching." - Gerard Way

"Aspire not to have More but to be More "

The losers in life think they have all the answers. They can’t learn because they’re too busy telling everyone what they know.
Robert T. Kiyosaki ‏

"Failure is simply the opportunity to begin again. -This time more intelligently." Henry Ford

What You Own Owns You

If you expect the government to solve your problems, you have a problem. Robert Kiyosaki

"Those who give up their liberty for more security neither deserve liberty nor security." Benjamin Franklin

"None are more hopelessly enslaved than those who falsely believe they are free.” -
Johann Wolfgang von Goethe

"Always trust someone who is seeking the truth , never trust someone who found it" Jordan Maxwell

Be The Change you want to see in The World

Failure inspires winners but defeats losers
Robert Kiyosaki ‏

“If you are planning for a year, sow rice; if you are planning for a decade, plant trees; if you are planning for a lifetime, educate people” A Chinese Proverb

"First they came for the Socialists, and I did not speak out--
Because I was not a Socialist.

Then they came for the Trade Unionists, and I did not speak out--
Because I was not a Trade Unionist.
Then they came for the Jews, and I did not speak out--
Because I was not a Jew.
Then they came for me--and there was no one left to speak for me." UNKNOWN