The sky is not falling. I’m not here to sell you gold.
This isn’t a rant about the eye floating above the pyramid on the reserve currency note of the global financial system.
None of that. But there is something that the media and politicians should be warning us about that they’re not.
For the next month, the United States Federal Reserve will flood an unprecedented 500 billion dollars into the short-term debt markets which international banks use to fund their operations.
The announcement by the Fed last Friday followed on from several months of highly unusual interventions in those markets also totalling hundreds of billions of dollars.
Before we delve into the nitty-gritty of these bankster shenanigans and try to understand what all this means for us debt slaves here in the outer provinces, let’s first get a sense of the scale of these numbers.
Back when I used to teach impressionable young high schoolers about their glorious history as inheritors of Western civilisation, I used to use the following explanation to help them grasp just how big a trillion is. I used time.
A million seconds is about 11 days. A billion seconds is about 30 years. A trillion seconds is 30,000 years, or about how long it took to develop the woomera. That’s the difference between a million and a trillion.
The US Federal Reserve has announced they’ll be pumping half a trillion dollars into an obscure debt market over the next month.
They are doing it, apparently, in order to “mitigate the risk of money market pressures that could adversely affect policy implementation”.
That seems to mean they’re doing it to prevent the S from Hitting The Fan.
The market which the Federal Reserve is pointing a firehose of funny money at is called the repo market.
No, it’s not the one in which large trucks pull up and tow away your V8 ute because you missed a loan repayment.
The repo market is the place where banks go to fund large transactions by putting up collateral for funding and then buying back, or repurchasing, that collateral a few days later.
Think of it as the lubricant which keeps the engine of the global financial system operating.
Central banks use funds they create from thin air to set the interest rates in this market, which in turn sets short-term interest rates for the broader economy.
The Fed has had a target rate of around 2% for this market this year, but on September 15 the unexpected and unthinkable happened. Rates in the repo market suddenly spiked to 10%.
The Fed was able to get the rate back under control, but only by pumping in mind-bending sums of money. Which they’ve been continuing to do since; and will now continue to do for the foreseeable future.
I have a mate who’s a surgeon. He told me a story once about a clamp being removed too soon while a patient was on the table. Blood started gushing out.
He had to make an emergency incision and grab the artery with his hand. He managed to do it, but if he’d taken 20 seconds longer the patient would have died.
That’s what happened in September in the repo market. The patient was the global financial system.
It was a re-run of 2007 and the lead-up to the Global Financial Crisis. The first signs of crisis during the GFC also showed up in the repo market.
Back then, the problem was that political pressure had led to dodgy mortgage debt being bundled up with government bonds and used as collateral during repo market trades.
When the mortgages blew up, no-one knew who was holding what and so stopped putting up funds for repo because they didn’t trust each other.
Within a year, two of the biggest banks on Wall St were gone and the economic hangover from decades of debt-fuelled fake prosperity began.
We managed to avoid that reckoning here because China fired up the debt disco to an extent never before seen in history, which in turn flooded Australia with Chinese money and China with Australian dirt to build empty cities.
From 2010 to 2013, China consumed more cement than America did in the entire 20th century. All to keep the global debt Ponzi going.
Their millionaires then used the money they gained from the binge to buy up the best dirt in Sydney.
A decade on from the GFC, none of the structural problems in the global monetary and financial system have been addressed. The elites kept partying.
Now, something is making the banks not trust each other again. Something is causing GFC 2.0.
But so far, we’re not being told what that something is.
After the Global Financial Crisis hit and bailouts of the order of trillions of dollars were handed to the banksters by the West’s corrupt politicians, the problem still wouldn’t go away.
Europe in particular hasn’t recovered. In order to try and get the dancefloor going again, the Fed began pouring vodka into the punch bowl in the form of Quantitative Easing, or QE, in 2010.
QE is basically a central bank operation in which the bank buys toxic debt as well as government bonds from the private banks in order to make the banks flush with cash, so they’ll lend more.
It never works, because rather than lending – the banks just hoard the cash like Smaug. The elites do it though because it keeps the cogs turning in the financial system and enables asset owners to feel flush while screwing savers and wage earners.
We’re about to get a lot more familiar with QE here in Australia, because our elites seem to have decided to bring it in if and when the next financial crisis hits.
They started talking about it in the second half of this year, just prior to the crisis beginning in the US repo market. Do they know something we don’t?
Surely, they’d tell us, wouldn’t they? If they knew?
Of course, they would. Don’t be paranoid. Trust the TV.
The mainstream and financial alt-media are calling the Fed’s 500 billion dollar operations in the repo market another round of QE.
This is misleading. What the Fed is doing in the repo market is much more concerning.
QE is a strategy the central banksters use to keep down long-term interest rates. What the Fed is doing in the repo market is much more like a panic than a debt swap.
That’s because the repo market is where short-term interest rates are set. These are the money market rates, which impact upon the rates consumers pay for debt.
If central bankers lose control of these rates, interest rates paid for car loans and student loans and mortgages around the world will break out. It’ll be pandemonium.
The crisis is not dying down, either. This week, the latest round of tens of billions of dollars pushed into the repo market by the Fed wasn’t enough to meet demand. Something has broken somewhere, and the Fed can’t fix it.
Maybe that’s why Fed Chair Jerome Powell had an unscheduled meeting with President Trump last month at the White House.
The fact that the crisis has shown up in the US repo market and that the Fed seems unable to fix the problem is an indication that the cause of the crisis is elsewhere.
Looking around the world, there are multiple candidates. Everywhere you look, the same pattern prevails. Too much debt. Too much corruption.
Too much power in the hands of crooked oligarchs and their bankster buddies who use the power of the state to farm the people.
Financial imbalances – which is a euphemism for elite corruption – have built up everywhere over the decades and only accelerated since the Global Financial Crisis.
Wiser heads than mine are warning that we are close to a global currency crisis, and the case they make for it is compelling.
All of these points of economic failure are part of one megatrend: The end of a century-long project of using the power of the state and the alchemy of central banking to engineer utopia.
The European Central Bank (ECB), for example, owns 40% of all government debt in the Eurozone worth a total of $2 trillion.
That debt is never going to be paid back; and is a burden on the unborn placed there by generations alive today who got to enjoy the wealth long before it ever got the chance to be created in the real world.
This is the alchemy of debt. It enables present consumption at the expense of future production.
Well, the future is here, and once the young realise we blew their birthright on bigger houses and lavish social welfare programs, they’re going to be righteously pissed.
It’s just a matter of time before the whole house of cards comes down, bringing with it the government programs, pension entitlements, tax break arrangements and public sector jobs our nation has become dependent on. The left will call it the collapse of capitalism. It won’t be.
It will be the collapse of socialism.
Like I said though, the sky isn’t falling. If you’re a person who wants to take care of yourself and support your family, what’s ahead will be positive. In the short term however, it’s probably going to get rough.
I’d recommend looking into how this will impact you and your family and keeping an eye on it. While you’re at it, look into that eye floating above the pyramid.
Like seriously, what is that thing?
Originally published at Pickering Post.