They kicked the can down the road by bailing out banks that were “too big to fail” and pushing catastrophic monetary policies. You see, this economic model of growth is like an opioid addict. He’s fine as long as you keep the fixes coming, another injection to keep the good times going. Heroin? Quantitative easing? It’s all the same. How many trillions are they going to have to print this time when heavyweights like Deutsche Bank collapse? Who ends up paying for it? You do! All of them and their big government promises keep taxes high, inflation high and unemployment high. What's good for politics is bad for economics and what's good for economics is bad for politics. Recall that in the Great Recession, the stimulus of low rates was countered by a tightening of lending standards as lenders feared rising default risk. Ultimately, the collapsing system was bailed out as a consequence. Even the rules regarding insolvency had to be changed since many financial organizations were technically insolvent, too many non-performing loans, bad derivative bets, overleveraging, etc. This time around, rates will move downward but will have a little stimulative effect since low rates cannot force borrowing if the borrower doesn’t want to borrow. The public is already overleveraged with mortgage, auto, school, and credit card debt. Thus, the negative wealth effect of housing price declines will be magnified. The trade war is the proverbial “straw that broke the camel’s back.” This is the setup for a self-reinforcing downward spiral. When chickens come home to roost, we’ll probably get a Zero interest-rate policy. We are almost there now, possibly even Negative Interest Rate Policy, government asset purchases, an even worse exploding deficit, and a move to use infrastructure spending and other “tools” to get things moving again. Debt wrecks everything. It created the 100 Years War and the War of the Roses going back when. Being underwater with debt meant WAR. Real history widescreens this quite elegantly. Most currencies in the world are based exclusively on debt. They all have to be loaned into existence. It is the craziest proposition the world has ever known, and its supporters are the quintessence of evil. Today the US total DEBT is over $206 Trillion. Let me just explain this to you. The primary dealers buy bonds from the treasury, thus funding the government with cash. The Fed buys bonds from primary dealers for money to primary dealers. It is a reimbursement tool since the first deal by law must purchase treasuries. This process doesn't increase liabilities against deposits. This does not cause monetary inflation. It only grows government agencies With bloated budgets, which in turn puts the brakes on economies. If this were not the case, the soviet union would still be here. The fractional reserve is what increases liabilities and deposits (monetary inflation) so long there is a high demand for loans. With low order, you have negative rates. The fractional reserve works in reverse. Unlike 2008, the Fed has insured the repo markets with An Unlimited supply of digital US dollars as insurance. When it comes to creating digital dollars versus people dying of mass default, who do you think will win? The US had abused a privileged position which no other country has had aside from perhaps the UK during the time of the British Empire and when it was at the top of the financial food chain. The only reason why deficits and debts don't seem to matter to the US is that the only way to change this destructive behavior now is to allow it to implode under its own weight. The rest of the world watches as all the rules that apply to it now all of a sudden don't apply to the US, and more and more countries are therefore starting to distance themselves from the US. The sound bytes coming from US officials, including Trump, sounds so arrogant and delusional that it is starting to anger everyone. Americans believe somehow that they are entitled to get a free ride from the rest of the world while claiming the rest of the world is taking advantage of the US. It is, in fact, the height of arrogance, and this will, at some point, swing back and hurt the US dramatically. The Fed is lending to the Federal govt by buying up its debt, hand over fist. Is new money created, not really? Bank A sells its Treasuries to the Fed. The Fed credits the bank's account at the Fed. What really happened is the Federal Government borrowing via Treasuries (and other paper) is off the market and sitting on the Fed's balance sheet. The market has been relieved of the burden of government borrowing. This smacks of MMT. The idea is hidden in the tactic, but it still seems to be in line with MMT, the more the government deficit spends, the more the money flows to the "People." And there is approval of this tact by two groups. Those long the stock market, those in government were doing the spending. Gone is the discussion of responsible debt ceiling management and concern over the deficit. This is not a coincidence. It seems to have been decided, all at once and by agreement, that these things no longer matter. Frightening. Why the name of the program/operation matters to so many only shows how we are in a phase of adamant denial. Finance and banking have come a long way from a century ago, and this industry will never admit that they are the problem. Today the notion of money/currency representing stored work and effort is completely gone, and the banker perspective that money/currency is nothing but debt has taken over. Without perhaps knowing what they've done, they have eroded or more aptly stated destroyed the very core idea that makes up a healthy and vibrant economy. Companies of medium and large scale no longer seek to expand and innovate but focus on how their stock price can be raised through all kinds of maneuvers like buybacks, alternative reporting, and corporate bond recycling programs. The financial industry, with its games of illusions and fakery, has metastasized into the real economy, and today nobody knows the actual value of anything anymore. It's all a gigantic Ponzi scheme or game of musical chairs where all participants know that they are only playing against the others, and the name of the game is just to stay alive longer than the other guy. From having been an industry that focused on screwing the little guy with absurd rates and fees, the financial industry today has all but abandoned this segment and instead are set on screwing each other. Anyone with a few working brain cells knows what this Repo program is really all about - it's about keeping assets and collateral hidden from each other. The fight or war now is between the most important financial institutions, and they know some of them will be culled to save the rest once the recession kicks in. The Trump administration used this to ensure all of them keep pushing the markets higher even when it is utterly clear to everyone that the whole thing is a gigantic theater. The big question we should ask now is just how fragile this entire arrangement really is because it will not take a lot to push it all over and have a recession that will dwarf the last. The level of recklessness and arrogance shown towards ordinary people, and the real economy is staggering, but then again, we all know what is at stake here - the very survival of the US Dollar. This was The Atlantis Report. Please Like. Share. Leave me a comment. Subscribe. 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