When David Rockefeller pulled the plug on the gold-dollar on August 15th, 1971, the dollar fell against major currencies by 40%. Confidence is the name of the game. Without gold backing, the dollar was worthless. There was no confidence. It was only in 1975 that the Saudis agreed under pressure that the dollar would, henceforth, be sold only for dollars, and only for the dollar. Confidence returned. This gave birth to the Petro-Dollar. These 5 decades of the petro-dollar tyranny has now come to an end. We shall now explain how this has come about. The Financial Crash that occurred in 2008 has slowly led to the implosion of the global financial western system.
East vs West, ‘Stuff’ vs ‘Finance’
It is apparent that the focus on “finance” will be less rewarding and the focus on “stuff” will become more important to the nations of the world. In advanced countries, the percentage of the total economy devoted to services has long exceeded that devoted to goods. All service industries remain completely
dependent on the raw materials and manufactured goods sectors to function.
As a military conflict rages in Ukraine between Russia and what the Russian government calls “the West” (apparently meaning NATO allies and particularly the United States), there is a parallel economic battle between “stuff” and “finance.” But there is a striking difference in what each side has to sell. In advanced countries, the percentage of the total economy devoted to services has long exceeded that devoted to goods. This is a reflection of the increasing productivity of those working in manufacturing, mining, agriculture, forestry and fishing who make it possible for so many people to work in service industries. These raw materials and goods industries provide all the stuff those of us in the service economy require to stay alive and perform our services. It is a testament to the remarkable rise in productivity of the raw materials and goods industries that in the United States, for example, the service sector accounts for almost 77 percent of all economic activity. In France, the percentage is about 70 percent. In Russia the percentage is a little lower, about 68 percent, which may reflect Russia’s relatively large mining, forestry, and agriculture inputs to its economy. But regardless of the percentage, all service industries remain completely dependent on the raw materials and manufactured goods sectors to function. That has become even more apparent in the wake of price increases on essential goods and disruptions of trade that have resulted from the Russia-Ukraine conflict due to economic sanctions by both sides in the contest.
Western economies these days are dominated by finance and real estate. In the United States, for instance, the sectors which provide “stuff” to the economy-the physical economy (manufacturing, mining, agriculture, forestry and fishing) make up 19.4 percent of the economy while the finance, insurance and real estate (FIRE) sector make up 17.8 percent. But this underestimates the importance of finance as sector after sector of the economy is turned into a financial asset ruled by the imperatives of finance rather than the logic of service to customers.
Those who are looking at their utility bills worldwide, but especially in Europe, are feeling the extreme impacts we are experiencing in the energy market.
All of this is leading to devastating closures of energy-intensive industrial operations in Europe due to high energy prices that make their products uncompetitive. These industries include steel, fertilizer, aluminum, and some manufacturing such as glass-making. Of course, energy-intensive retail operations such as bakeries which require large amounts of heat may simply fail because they cannot move their operations elsewhere.
Compare Britain to Norway
And, we have an almost perfect experiment regarding this British approach versus the Norwegian approach to governing. Both the United Kingdom and Norway were assigned areas of the North Sea to explore for oil and natural gas, areas with roughly the equivalent endowment of hydrocarbons.
The United Kingdom decided that the best way to exploit that oil and gas was to let private companies do it. Those companies did bring the oil and gas up from the seabed and made it available to the U.K. and to Europe. The U.K. became a substantial exporter of energy. But since the incentive for private companies is to produce as much oil and gas as quickly as possible to benefit shareholders, the U.K. has been a net importer of petroleum products since 2013 and an importer of natural gas for even longer.
Norway decided to manage its part of the North Sea through its state-owned oil company and through careful supervision of private companies. Monies derived from the government’s share of the revenues were directed into a sovereign wealth fund for supporting the needs of the people of Norway. Today, Norway has the largest such fund in the world. And, the country continues to export vast amounts of natural gas to Europe and large amounts of oil as well.
To be fair, the population of the U.K. is over 68 million and that of Norway is about 5.5 million. Still, the difference in approach and results provides a good illustration of what happens when one country emphasizes turning “stuff” into money as quickly as possible and another focuses on maximizing the well-being of its people long term by husbanding carefully both the “stuff” it has at its disposal and the financial rewards that “stuff” produces.
Russia by happenstance is a country with huge natural resources: oil and gas, huge fertile lands for agriculture—it is the world’s third largest wheat producer and the largest wheat exporter—metals, gems, and vast forests. Russia is probably not managing those resources in the way the Norway has managed its oil and gas resources. But the Russians have a lot of “stuff” still in the ground and annually available from their farm fields. All this bounty appears to have shielded the country somewhat from sanctions.
It seems increasingly apparent that the focus on “finance” will be less rewarding and the focus on “stuff” will become more important to the nations of the world. The trend toward bringing manufacturing back home; producing more energy locally; and growing more food and fiber for domestic consumption will get a boost from those countries wise enough to see the change in trend.
Integration of the world economy favors those who control finance and can therefore extract ever larger payments from centralized systems under their ownership or authority. Deglobalization—which was already underway due to the effects of the pandemic on supply lines and is now speeding up due to the war—will increasingly favor those who control stuff. And, it turns out that stuff is far more important to supporting our daily lives than the manipulations of the titans of finance. Statistics report the highest annual increase in food prices since the 1970s, with the cost of food rising 10.9% in the last 12 months. Overall, energy prices have seen the highest increases, rising by 41.6% between June 2021 and June 2022. For comparison, the Federal Reserve’s annual inflation target is 2%. As bad as the economic trend appears, that’s not all we have to contend with. Several crises may converge over the next six to 18 months, including food crises, energy crises, pandemic outbreaks, stagflation, a Eurozone sovereign debt crisis and potential nuclear war
Our current situation is not accidental. It’s not even the result of pure ineptitude. Once you understand the globalist cabal’s plan for a Great Reset, you realize that all of these things need to happen in order for The Great Reset to be implemented. The rational conclusion, then, is that our food, energy, medicine and financial systems are being dismantled and hobbled on purpose.We can’t stop these crises from happening, but we can prepare to survive the destruction and then rebuild systems to our own liking, rather than accept their slave systems. While the White House administration has tried to downplay the seriousness of inflation, reality has a stubborn way of paying no attention to fantasies and make-believe.
The 2 Families Miscalculated In Their Plan to Take-Down Russia
After the collapse of the bond markets (as per the September repo crisis on Wall Street), the Rockefeller Empire decided to lockdown the global economy in order to save the financial system. This was the reason for the unleashing of the Covid scam. It was also the reason to make a final push for the de-construction of Russia, in order to bring its wealth under the family’s control.
In their panning for this move, the West would provoke Russia to invade Ukraine. This would then provide the pretext to impose sanctions, cut Russia from swift, freeze its assets and ban Russian energy exports. Putin did a judo move by turning these against the West. First, Putin said that Russian energy exports would be sold for rubles. The second was that the ruble would, henceforth, be backed by gold. This, last, was the game-changer in the world of international finance. It was the first time since 1971 that any currency was now backed by gold; unlike the dollar. This was the game-changer. Add to this the fact that the Global South relies on physical goods as against the Collective’s Wests virtual economy (services, IT, and FIRE). The people are not stupid. They all know that energy is the most important and strategic commodity in today’s modern economy. Plus, the fact that the West is heavily indebted, and its financial sector is hopelessly insolvent. It just needed a push. Putin’s gold-backed ruble was the push.
Prior to this, the dollars dominant role relied on the military fist of NATO. With Putin’s initial success in the war in Ukraine, the myth of the West’s military might evaporated. With the gold-backed ruble now in play, the “confidence” factor took over. Just like a repeat of the dollar’s fall by 40% in the period from September 1971 to September 1973. The dollar would fall like a stone. To avoid this scenario, the US Fed moved to raise interest rates. Many were dumping the dollar, as all the factors supporting the dollar were vanishing: military might, dollar strength, and social values. New York now knew that confidence in the dollar was ending. There was only one option left- to raise interest rates. The pursuit of this course of action would bring about even greater problems for the 2 families.
For the past 14 years, global interest rates were very low, and negative in some cases. By raising interest rates, the FED was hoping to do 2 things; first, was to stop the outflow of money from the dollar, and the second, to attract international funds into the dollar system. The crazy thing here is that, try as they might, the FED’s strategy was not working as intended. Every victory for Russia, China and Saudi Arabia was hurting the myth of American and the West’s invincibility- be it in the military, economic and financial areas. Panic and desperation was enveloping them. This is one of the reasons we see decisions on many issues and decisions emanating from the political class of the Collective West. Now, let’s see the catastrophic results of the FED’s rising interest rates.
The Fed Tightens
As a result of the Fed’s relentless tightening blitz, both US capital markets (the S&P 500 is down -24%, and 10Y TSYs are down -17% and bonds were down -10%) and the US economy have been left reeling.
However, the damage in the US – whose economy is relatively isolated from the knock-on effects of the soaring global reserve currency – are nothing compared to the devastation unleashed by the Fed in the form of the soaring dollar and exploding interest rates.
At least that was the case until now: because today, in a startling outcry breaching the unspoken protocol of “no dissent, never dissent”, Josep Borrell, the high representative of the 27-member EU bloc, lashed out all too publicly at the Fed when he said that central banks (across Europe where the recession will be far, far worse than in the US) are being forced to follow the Fed’s multiple rate rises to prevent their currencies from slumping against the dollar, and compared the US central bank’s influence to Germany’s dominance of European monetary policy before the creation of the euro.
This time however, there is no simple solution taking advantage of gullible states, instead now that they’ve broken the seal of silence, the “leaders” of Europe admit to just how powerless they truly are when the custodian of the world’s reserve currency has to do what’s best only for itself, allies and friends be damned:
“Everybody has to follow, because otherwise their currency will be [devalued], everybody is running to increase interest rates, and this will bring us to a world recession.”
Yes, the artificial façade of calm agreement propping up the world’s most aggressive tightening cycle in history is starting to crack and quite violently at that. The alternative, the Euro was an even worse disaster: at least in the pre-days, European countries could devalue their way out of a fiscal crisis; with the common currency they all have to beg the ECB for bond-buying mercy or else be forced to install another pro-European puppet prime minister. Does the Fed want to slow the economy, or have it come to a crashing halt?
While Cabana’s warning – which will come true, it’s just a matter of time – has yet to manifest itself in a breach of the US Treasury market, it is effectively describing the slow-motion collapse in the European government bond market to a T. And not just today’s latest collapse in UK bonds: as Asia Times’s David Goldman writes overnight, risk gauges in Germany’s government debt market rose last week to levels higher than recorded in the 2008 world financial crash, “as margin calls forced the liquidation of derivatives positions held by banks, insurers and pension funds.”
Picking up on what we observed two weeks ago when we noted the dislocation in US SOFR swap spreads, which just experienced the largest one-day moves in either direction on record for the index, which was rolled out in October 2020….
… Goldman writes a key measure of German market risk – the spread between German government bonds (Bunds) and interest rate swap agreements – jumped above the previous record set in 2008. At the same time, the cost of hedging German government debt with interest-rate options, or option-implied volatility, meanwhile rose to the highest level on record. Goldman then goes into a bit of brief tangent into what happened with UK pension fund derivatives which
- “Real” yields, namely the yield on inflation-indexed government bonds, went deeply into negative numbers in Germany and the UK, followed by the US market. That pulled the rug from under insurance companies and pension funds, which invest pension payments and insurance premiums to provide for future income.
- To compensate, European and UK institutions locked in long interest rates with derivative contracts, or interest-rate swaps that receive a long-term interest rate while paying a short-term interest rate. Swaps are a leveraged position that requires collateral worth a fraction of the notional amount of the contract.
- When the Fed jacked up interest rates in late 2021, the value of interest rate swaps that pay fixed and receive floating imploded. Pension funds and insurers were stuck with the equivalent of a ten-to-one margin position in long government bonds. The price of long government bonds fell by nearly 20% across the Group of Seven countries, and the value of derivatives contracts evaporated.
And, as we reported two weeks ago, that left UK institutions facing a tsunami of margin calls that they could meet only by liquidating assets. That in turn led to a run on the UK government bond market, followed closely by the rest of European bond markets. The Bank of England’s emergency bond-buying delayed a market crash, but the UK gilts market remains on a knife edge, with option hedging costs at an all-time high. A portfolio manager at one of Germany’s largest insurance companies who summarized recent events: “It’s a global margin call. I hope we survive”…or precisely what we warned would happen just a few weeks ago.
Since then it’s gotten from bad to worse as weaker European banks suddenly have trouble finding short-term funding, or at least that’s what the market thinks, in the process sending the cost of Credit Suisse CDS higher than it was in 2008, at nearly 400 basis points (4 percentage points) above the cost of interbank funding, prompting even more questions about European bond market stability and speculation that the ECB will be the next to capitulate and bail out markets.
Meanwhile, after the UK bond market stabilized two Fridays ago when the BOE capitulated and restarted QE, things today broke again with yields again soaring in anticipation of Friday’s scheduled end of the BOE’s “temporary” QE (spoiler alert: it won’t end).
What about the US? So far, American pension funds and insurers haven’t faced the same kind of margin calls, but they stand to suffer painful losses. As interest rates fell, they shifted to real income-earning assets like commercial real estate. The value of commercial real estate investment companies on the US stock market has fallen by 35%, about the same amount as the Nasdaq. If that’s any indication, the $20 trillion value of the commercial real estate market has lost about $7 trillion this year, in addition to losses of nearly 20% on corporate bond and stock portfolios. Stocks and bonds, the largest components of pension portfolios, are down about 20% during 2022. All in – depending on which survey of pension fund asset allocation you believe – the average US pension has probably lost more than 20% of its asset value this year.
Indeed, pensions don’t even need to have a near-death experience like in the UK: if the value of underlying assets drops enough, the forced selling will begin sooner or later. And once the capitulation really kicks in – as even formerly bullish Goldman strategists warn – followed closely by mass layoffs, only then will we find just how determined Powell is to pull a Volcker 2.0 and blow up the US economy and markets before he is fired by the president as his parting gift for unleashing the worst recession since the global financial crisis.
When Financial Systems Fail…
Oct 5th – Financial systems are man-made. History has shown, time and again, that all financial bubbles eventually pop. And that is what is happening right now. The biggest bubble in known human history, the parasitical, financial system of the Western oligarchy, which has dominated the globe for centuries, is popping, and we are headed for a major financial collapse in the short-term.
The financier “boys in the back room “are now openly discussing the likelihood of imminent systemic financial breakdown. Risks to the financial stability of the EU banking system may materialize simultaneously, thereby interacting with each other and amplifying each other’s impact. Only once did they mention the elephant in the room: the nearly $2 quadrillion in pure financial gambling debts upon gambling bets, which is now blowing out. They offered no solution.
The Rothschilds are very worried that the financial system cannot simultaneously bail out their financial system AND carry out its strategy of bringing down hyperinflation by raising interest rates, restricting money printing and crushing economic activity at the same time. So, rather than give up their oligarchic system, as has often also happened in history, today’s financial oligarchy – the interests grouped around the two families – are all-in on a high-risk gamble that their control can be saved through global war, “democratic dictatorship”, and mass starvation.
What is happening is so unbelievable, that the idea that “all of that is going smoothly, that continue with operations as they are”, is ludicrous. What we see is the unraveling of almost everything, and at the same time, the formation of a completely new system.
Oct 6th – London trying to pull the fuse out of Swaps Time Bomb
THE BOE acknowledged that a systemic financial crisis was beginning, triggered by interest rate derivatives, when on Sept 28th the Bank announced a return to QE with more than $70 billion to buy long-term British government bonds from big banks. The testimony described these stages of the crisis :
- British government bonds (gilts) suddenly plunged in value (their interest rates spiked) after the Truss government made completely incompetent energy-bailout and tax-cut announcements;
- Large number of pension funds were “hours from collapse” late on Sept 27;
- Complete panic hit the $1.69 trillion so called “liability –driven investment(LDI) pension funds ;
- The BOE was informed by a number of LDI fund managers – – – that these funds would have to begin the process of winding up the following morning ;
- A “large quantity of gilts, held as collateral by banks that had lent to these LDI funds, was likely to be sold on the market, driving a potentially self-re-inforcing spiral and threatening severe disruption of core funding markets and consequent widespread financial instability “; the BOE worked through the night on Tuesday 27th – – to achieve this potential crisis;
- The London Rothschilds (the City of London, BOE, and the ECB are escalating the demand that the Rockefellers (the Federal Reserve) join the return of QE before its too late. The financial system blowout threat they are warning of, requires the control of derivatives, now particularly interest rate derivatives.
- Interest rate derivatives make up 82 % (as of end 2020) of all OTC derivatives globally, $495 trillion out of $600 trillion. But to trigger the 2007-2008 global financial crash, “just “
$65 trillion in credit derivatives (CDS) exposure was sufficient. The central counterparty in 90% of current interest rate derivative exposure is a bank or non-bank financial instition. Because of the Fed, the margin calls for collateral which wiped out liquidity in the commodity trading-producing sector in March-April (war and sanctions), has now spread to the far, far larger sector of institutions and funds which use interest rate swaps, and their banks.
The BOE returned to QE in order to bail out more than $2 trillion in pension funds’ assets of “liability-driven investing” in the UK alone. LDO consists in making pension fund “assets” out of interest rate derivatives. So, the Fed, which led the central banks in creating runaway inflation from September 2019 onward in order to write off unpayable debt, to trigger a deep global recession, crush developing economies, and light a time bomb in at least $500 trillion at risk in interest rate derivatives.
The BOE has acted to bail out the derivative fake values of Brits’ pension funds, while the UK government wipes out their living standards and savings by war and financial war on Russia. LDI “asset building” has also been sweeping by big US firms’ pension strategies since 2015.
Credit Suisse ironically was just named (sept 27) “derivatives house of the year” in the 2022 Asia Risks Awards. It has taken its third big derivatives bath in 2 years –Archegos liquidation; Greensill liquidation; now interest rate derivatives losses. Its CDS now cost nearly $400 per $1,000 in credit, but it’s been worse, and Deutsche Bank still is worse. Remember we’re in a case of a $500 trillion in derivatives, meaning at least $5-10 trillion is immediately at risk of loss, and there 100s of major counterparties in the financial system.
The Federal Reserve recently ordered another “super-sized interest hike” — the fifth rate hike this year — in what appears to be a hopeless effort to contain runaway inflation. Additional rate hikes are also anticipated. Some fear the Federal Reserve may be pushing us too hard, which could bring us from recession into deflation. As reported by several news outlets in recent days,1 the Federal Reserve (which is not federal at all but rather a private entity that prints and lends fiat currency to the government) has ordered another “super-sized interest hike” — the fifth rate hike this year — in what appears to be a hopeless effort to contain runaway inflation. As reported by NPR, September 21, 2022:2
“Markets stop panicking when central banks start panicking.”
Central banks are starting to panic more with every passing day. First it was the BOJ, then the BOE and now, for the second week in a row, it’s Switzerland’s turn.
Recall that three weeks ago after the (first) panicked pivot by the BOE, when global markets were in freefall, we said that markets desperately needed some words of encouragement from the Fed, or failing that – and with the dollar soaring to new all time highs every day – the Fed had to make some pre-emptive announcement on USD Fx swap lines, if only to reassure global markets that amid this historic, US dollar short squeeze, at least someone can and will print as many as are needed to avoid systemic collapse. So fast forward two weeks to October 5, when there still hasn’t been any formal announcement from the Fed, but ever so quietly the Fed shuttled $3.1 billion to the Swiss National Bank to cover an emergency dollar shortfall.
Remarkably, this was the first time the Fed sent dollars to the SNB this year, and the first time the Fed used the swap line in size (besides a token amount to the ECB every now and then)! But it certainly won’t be the last time – as we have warned, expect far wider use of Fed swap line usage as the world chokes on the global dollar shortage – and sure enough overnight the Fed announced that as of Thursday it doubled the size of its USD swap with the world’s most pristine economy and its central bank, the Swiss National Bank, sending some $6.27 billion to avoid an emergency funding crunch.
Fed has Pulled the Plug
With the 0.75% Fed rate hike, largest in almost 30 years, and promise of more to come, the US central bank has now guaranteed a collapse of not merely the US debt bubble, but also much of the post-2008 global debt of $303 trillion. Rising interest rates after almost 15 years mean collapsing bond values. Bonds, not stocks, are the heart of the global financial system. US mortgage rates have now doubled in just 5 months to above 6%, and home sales were already plunging before the latest rate hike. US corporations took on record debt owing to the years of ultra-low rates. Some 70% of that debt is rated just above “junk” status. That corporate non-financial debt totaled $9 trillion in 2006. Today it exceeds $18 trillion. Now a large number of those marginal companies will not be able to rollover the old debt with new, and bankruptcies will follow in coming months. The cosmetics giant Revlon just declared bankruptcy.
The highly-speculative, unregulated Crypto market, led by Bitcoin, is collapsing as investors realize there is no bailout there. Last November the Crypto world had a $3 trillion valuation. Today it is less than half, and with more collapse underway. Even before the latest Fed rate hike the stock value of the US megabanks had lost some $300 billion. Now with stock market further panic selling guaranteed as a global economic collapse grows, those banks are pre-programmed for a new severe bank crisis over the coming months.
The Federal Government will now find its interest cost of carrying a record $30 trillion in Federal debt far more costly. Unlike the 1930s Great Depression when Federal debt was near nothing, today the Government, especially since the Biden budget measures, is at the limits. The US is becoming a Third World economy. If the Fed no longer buys trillions of US debt, who will? China? Japan? Not likely.
Deleveraging the Bubble
With the Fed now imposing a Quantitative Tightening, withdrawing tens of billions in bonds and other assets monthly, as well as raising key interest rates, financial markets have begun a deleveraging. It will likely be jerky, as key players like BlackRock and Fidelity seek to control the meltdown for their purposes. But the direction is clear.
By late last year investors had borrowed almost $1 trillion in margin debt to buy stocks. That was in a rising market. Now the opposite holds, and margin borrowers are forced to give more collateral or sell their stocks to avoid default. That feeds the coming meltdown. With collapse of both stocks and bonds in coming months, go the private retirement savings of tens of millions of Americans. Credit card auto loans and other consumer debt in the USA has ballooned in the past decade to a record $4.3 trillion at end of 2021. Now interest rates on that debt, especially credit card, will jump from an already high 16%. Defaults on those credit loans will skyrocket.
Outside the US what we will see now, as the Swiss National Bank, Bank of England and even ECB are forced to follow the Fed raising rates, is the global snowballing of defaults, bankruptcies, amid a soaring inflation which the central bank interest rates have no power to control. About 27% of global nonfinancial corporate debt is held by Chinese companies, estimated at $23 trillion. Another $32 trillion corporate debt is held by US and EU companies. Now China is in the midst of its worst economic crisis since 30 years and little sign of recovery. With the USA, China’s largest customer, going into an economic depression, China’s crisis can only worsen. That will not be good for the world economy.
Italy, with a national debt of $3.2 trillion, has a debt-to-GDP of 150%. Only ECB negative interest rates have kept that from exploding in a new banking crisis. Now that explosion is pre-programmed despite soothing words from Lagarde of the ECB. Japan, with a 260% debt level is the worst of all industrial nations, and is in a trap of zero rates with more than $7.5 trillion public debt. The yen is now falling seriously, and destabilizing all of Asia.
The heart of the world financial system, contrary to popular belief, is not stock markets. It is bond markets—government, corporate and agency bonds. This bond market has been losing value as inflation has soared and interest rates have risen since 2021 in the USA and EU. Globally this comprises some $250 trillion in asset value a sum that, with every fed interest rise, loses more value.
As bond prices fall, the value of bank capital falls. The most exposed to such a loss of value are major French banks along with Deutsche Bank in the EU, along with the largest Japanese banks. US banks like JP MorganChase are believed to be only slightly less exposed to a major bond crash. Much of their risk is hidden in off-balance sheet derivatives and such. However, unlike in 2008, today central banks can’t rerun another decade of zero interest rates and QE. This time, as insiders like ex-Bank of England head Mark Carney noted three years ago, the crisis will be used to force the world to accept a new Central Bank Digital Currency, a world where all money will be centrally issued and controlled. This is also what Davos WEF people mean by their Great Reset. It will not be good. A Global Planned Financial Tsunami Has Just Begun. “Markets stop panicking when central banks start panicking.”
Well, in what may be the best news to shellshocked bulls after the worst September and worst Q3 in generations, in a harrowing year for markets, central banks are starting to panic. First it was the BOJ, then the BOE and now, it’s Switzerland’s turn. Two weeks ago after the (first) panicked pivot by the BOE, when global markets were in freefall, we said that markets desperately needed some words of encouragement from the Fed, or failing that – and with the dollar soaring to new all time highs every day – the Fed had to make some pre-emptive announcement on USD Fx swap lines, if only to reassure global markets that amid this historic, US dollar short squeeze, at least someone can and will print as many as are needed to avoid systemic collapse. Fast forward two weeks when there still hasn’t been any formal announcement from the Fed, but every so quietly – and just as we expected – the Fed shuttled $3.1 billion to the Swiss National Bank to cover an emergency dollar shortfall. Remarkably, this was the first time the Fed sent dollars to the SNB this year, and the first time the Fed used the swap line in size (besides a token amount to the ECB every now and then)!
The next logical question obviously is: why does Switzerland suddenly have a financial institution needing $3 billion in cheap (3.33%) overnight funding. We don’t know the answer, but have a pretty good idea of who the culprit may be.
“The relentless dollar could forge a path to the next market upheaval.” Here’s how it could happen: Foreigners have snapped up dollar-denominated assets for higher yields, safety, and a brighter earnings outlook than most markets. A big chunk of those purchases are hedged back into local currencies such as the euro and the yen through the derivatives market and it involves shorting the dollar. When the contracts roll, investors have to pay up if the dollar moves higher. That means they may have to sell assets elsewhere to cover the loss.
“I get concerned that a much stronger dollar will create a lot of pressure, particularly in hedging US dollar assets back to local currencies,”. “When the central bank steps on the brakes, something goes through the windshield. The cost of financing has gone up and it will create tension in the system.”
The market probably saw some of that pressure already: as we noted at the time, investment-grade credit spreads spiked close to 20 basis points toward the end of September. That’s coincidental with a lot of currency hedges rolling over at the end of the third quarter, he said — and it may be just “the tip of an iceberg.” So far so good: and where we agree especially with Michele is what he thinks happens next: as Bloomberg writes, “the central bank will be so committed to combating inflation that it will keep raising rates and won’t pause or reverse course unless something really bad happens to markets or the economy, or both. If policy makers pause in response to market functionality, there has to be such a shock to the system that it creates potential insolvencies. And a rising dollar might do just that.” And the fact that the Fed is already quietly shuttling billions of dollars to various central banks to plug dollar overnight funding holes, confirms that the rising dollar has already done just that.
The great reset envisages a transformation of capitalism, resulting in permanent restrictions on fundamental liberties and mass surveillance as livelihoods and entire sectors are sacrificed to boost the monopoly and hegemony of pharmaceutical corporations, high-tech/big data giants, Amazon, Google, major global chains, the digital payments sector, biotech concerns, etc.
Under the cover of COVID-19 lockdowns and restrictions, the great reset has been accelerated under the guise of a ‘Fourth Industrial Revolution’ in which smaller enterprises are to be driven to bankruptcy or bought up by monopolies. Economies are being ‘restructured’ and many jobs and roles will be carried out by AI-driven technology. And we are also witnessing the drive towards a ‘green economy’ underpinned by the rhetoric of ‘sustainable consumption’ and ‘climate emergency’.
Essential (for capitalism) new arenas for profit making will be created through the ‘financialisation’ and ownership of all aspects of nature, which is to be colonised, commodified and traded under the fraudulent notion of protecting the environment. But why is this reset required?
Capitalism must maintain viable profit margins. The prevailing economic system demands ever-increasing levels of extraction, production and consumption and needs a certain level of annual GDP growth for large firms to make sufficient profit. But markets have become saturated, demand rates have fallen and overproduction and overaccumulation of capital has become a problem. In response, we have seen credit markets expand and personal debt increase to maintain consumer demand as workers’ wages have been squeezed, financial and real estate speculation rise (new investment markets), stock buy backs and massive bail outs and subsidies (public money to maintain the viability of private capital) and an expansion of militarism (a major driving force for many sectors of the economy). We have also witnessed systems of production abroad being displaced for global corporations to then capture and expand markets in foreign countries.
However, these solutions were little more than band aids. The world economy was suffocating under an unsustainable mountain of debt. Many companies could not generate enough profit to cover interest payments on their own debts and were staying afloat only by taking on new loans. Falling turnover, squeezed margins, limited cashflows and highly leveraged balance sheets were rising everywhere.
The global economy was stuck in a low growth trap and recovery from the crisis of 2008 was weaker than that after the Great Depression.
In the repurchase agreement (repo) market, interest rates soared on 16 September. The Federal Reserve stepped in by intervening to the tune of $75 billion per day over four days, a sum not seen since the 2008 crisis. At that time, the Fed began an emergency monetary programme that saw hundreds of billions of dollars per week pumped into Wall Street.
Over the last two years or so, under the guise of a ‘pandemic’, we have seen economies closed down, small businesses being crushed, workers being made unemployed and people’s rights being destroyed. Lockdowns and restrictions have facilitated this process. These so-called ‘public health measures’ have served to manage a crisis of capitalism.
Neoliberalism has squeezed workers income and benefits, offshored key sectors of economies and has used every tool at its disposal to maintain demand and create financial Ponzi schemes in which the rich can still invest in and profit from. The bailouts to the banking sector following the 2008 crash provided only temporary respite. The crash returned with a much bigger bang pre-Covid along with multi-billion-dollar bailouts.
Let’s shed light on the role of the ‘pandemic’ in all of this. Some may have started wondering why the usually unscrupulous ruling elites decided to freeze the global profit-making machine in the face of a pathogen that targets almost exclusively the unproductive (over 80s). In pre-Covid times, the world economy was on the verge of another colossal meltdown and chronicles how the 2 families and their institutions such as the Swiss BIS, BlackRock , G7 central bankers and others worked to avert a massive impending financial meltdown.
Lockdowns and the global suspension of economic transactions were intended to allow the Fed to flood the ailing financial markets (under the guise of COVID) with freshly printed money while shutting down the real economy to avoid hyperinflation. The stock market did not collapse (in March 2020) because lockdowns had to be imposed; rather, lockdowns had to be imposed because financial markets were collapsing.
With lockdowns came the suspension of business transactions, which drained the demand for credit and stopped the contagion. In other words, restructuring the financial architecture through extraordinary monetary policy was contingent on the economy’s engine being turned off. It all amounted to a multi-trillion bailout for Wall Street under the guise of COVID ‘relief’ followed by an ongoing plan to fundamentally restructure capitalism that involves smaller enterprises being driven to bankruptcy or bought up by monopolies and global chains, thereby ensuring continued viable profits for these predatory corporations, and the eradication of millions of jobs resulting from lockdowns and accelerated automation. Ordinary people will foot the bill for the ‘COVID relief’ packages and if the financial bailouts do not go according to plan, we could see further lockdowns imposed, perhaps justified under the pretext of ‘the virus’ but also ‘climate emergency’.
It is not only Big Finance that has been saved. What we are seeing is many millions around the world being robbed of their livelihoods. With AI and advanced automation of production, distribution and service provision on the horizon, a mass labour force will no longer be required.
It raises fundamental questions about the need for and the future of mass education, welfare and healthcare provision and systems that have traditionally served to reproduce and maintain labour that capitalist economic activity has required. As the economic is restructured, labour’s relationship to capital is being transformed. If work is a condition of the existence of the labouring classes, then, in the eyes of capitalists, why maintain a pool of (surplus) labour that is no longer needed?
At the same time, as large sections of the population head into a state of permanent unemployment, the rulers are weary of mass dissent and resistance. We are witnessing an emerging biosecurity surveillance state designed to curtail liberties ranging from freedom of movement and assembly to political protest and free speech.
In a system of top-down surveillance capitalism with an increasing section of the population deemed ‘unproductive’ and ‘useless eaters’, notions of individualism, liberal democracy and the ideology of free choice and consumerism are regarded by the elite as ‘unnecessary luxuries’ along with political and civil rights and freedoms.
The austerity measures that followed the 2008 crash were bad enough for ordinary people who were still reeling from the impacts when the first lockdown was imposed. The authorities are aware that deeper, harsher impacts as well as much more wide-ranging changes will be experienced this time around and seem adamant that the masses must become more tightly controlled and conditioned to their coming servitude.
Governments are now under the control of global creditors and the post-COVID era will see massive austerity measures, including the cancellation of workers’ benefits and social safety nets. An unpayable multi-trillion-dollar public debt is unfolding: the creditors of the state are Big Money, which calls the shots in a process that will lead to the privatisation of the state.
Energy Drives the Collapse
Sadly, the Fed and other central bankers lie. Raising interest rates is not to cure inflation. It is to force a global reset in control over the world’s assets, its wealth, whether real estate, farmland, commodity production, industry, even water. The Fed knows very well that Inflation is only beginning to rip across the global economy. What is unique is that now Green Energy mandates across the industrial world are driving this inflation crisis for the first time, something deliberately ignored by Washington or Brussels or Berlin.
The global shortages of fertilizers, soaring prices of natural gas, and grain supply losses from global draught or exploding costs of fertilizers and fuel or the war in Ukraine, guarantee that, at latest this September-October harvest time, we will undergo a global additional food and energy price explosion. Those shortages all are a result of deliberate policies.
What You Can Do to Prepare
The central banking cabal and its many allies have infiltrated governments and institutions across the world for many decades, slowly turning the systems against us. We are now in the final chapter of their technocratic, takeover. They’ve told us their plans. It’s all spelled out in white papers, reports, books and on websites. The Great Reset is the overarching plan for the global takeover, previously referred to as the New World Order, and the Green Agenda is the piece that will usher in essential control mechanisms.
Without a doubt, they wield formidable weapons. But before you drown in despair, remember that we still outnumber these megalomaniacs by 100’s of millions to one, if not more. And, believe it or not, they need our cooperation. If enough of us withhold our cooperation, their plans start falling apart. I’m not saying it will be easy. It’ll require sacrifice. But that’s nothing new. Freedom has always required sacrifice.
Two of the most important things everyone can do right now is 1) prepare ourselves and our families for hard times (if you were not a prepper before, now’s the time), and 2) start building parallel structures and systems to replace the ones that are being dismantled. The idea is to survive and rebuild a world of our own choosing rather than being forced to accept theirs out of sheer desperation.
Also prepare yourself mentally, emotionally and spiritually for what could be stressful and challenging times as the globalist cabal continues to push The Great Reset forward, which will require more “emergencies.”
These Crises Are Not Accidental
What’s perhaps most infuriating about our current situation is that it’s not accidental. It’s not even the result of pure ineptitude. Once you understand the globalist cabal’s plan for a Great Reset, you realize that all of these things need to happen in order for The Great Reset to be implemented. Since the reset can’t happen unless all of the old systems are first destroyed, the rational conclusion is that they’re being dismantled and hobbled on purpose.
The global economic system is being dismantled to bring in a programmable central bank digital currency (CBDC), so they can monitor and control your spending from a centralized location.
The energy grids of the Western world are being dismantled and incapacitated in order to justify a new “green” economy based on carbon credits. It will also push people to the brink of despair, which makes them more likely to accept “solutions” that would normally be rejected as unacceptable. A “green” all-electric vehicle society — were it even possible, which it’s not — would also dramatically limit your ability to travel and, in fact, all travel could then be monitored and restricted from a central location, just like your bank account. Both CBDCs and electric vehicles are tools through which a centralized cabal can control your every move.
Agriculture and the food industry, meanwhile, are being crippled in part by irrational nitrogen reduction laws that will result in less food being grown and fewer livestock being raised, and in part by no longer coincidental fires, so that a new food system can be introduced — one based on “micro livestock,” i.e., insects, cultured meat, plant-based meat alternatives and GMO plant foods. The common denominator is that all foods need to be patentable. Lack of food, like lack of energy, also makes people more “malleable” and willing to give up rights and liberties to survive.
Health care is also being undermined and getting more dangerous by the day as doctors are being muzzled through new laws, and the WHO is pushing — using biosecurity as its justification — to grant itself the power to dictate and control health care worldwide.
The breakdowns we’re experiencing are not by chance. They’re intentional.
The goal is to break everything apart, and then roll out a “new and improved” society consisting of a ruling class, and disposable masses that will be controlled through technology-driven social engineering and control mechanisms like surveillance, “biosecurity,” CBDCs, electric cars, gene therapies, carbon credits and social credit scores.
‘Exceptional Level of Economic Uncertainty’ Ahead
Higher interest rates, of course, increase the cost of borrowing, making home mortgages, car loans and credit card balances more expensive and, for many, unaffordable. The housing and stock markets are reeling. As bad as the economic trend appears, that’s not all we have to contend with in coming days.
Global citizens are currently facing a whole host of intersecting and interconnected crises. It’s a situation … where the whole is even more dangerous than the sum of the parts. These crises are hitting us all at once, and several of them reinforce and worsen each other. Also notable is the fact that there’s great uncertainty associated with some of them, making it extremely difficult to make predictions; such as the weaponization of the U.S. dollar, which is encouraging countries to de-dollarize and create alternative reserve currencies, NATO and U.S. meddling in the Russia-Ukraine conflict, the push to expand NATO, and allowing health agencies to dictate economic policy, just to name a few.
Hi, Where is part 2 please? Also would like to point out that although written last year this has only just been uploaded and is not exactly “news” although gives the reader more insight. I realise you often have technical difficulties but notice there are new posts marked as Dec 2020 so I am thinking an oversight in not uploading part 2 or there is no part 2 and title needs amending