The ticking time bomb of global financial markets continues. Here are just a few articles (of dozens) I’ve written over the past few months in which I’ve pointed out, despite narratives to the contrary being spread by the mass media, that explain why the global financial system has been continuing to fracture and why people should be preparing for a global financial meltdown that is coming: The USD is About to Breach the Point of No Return, The Chart that Explains Why Japanese Should Buy Gold Now, A Guide to Avoiding the Road to Serfdom: David Goggins v. FA Hayek, Why Tik Tok Millenials Should Stop Robinhood Day Trading, and Red Flags of a Complete Global Financial Meltdown Keep Appearing. In every instance in which I made predictions in the articles above of what would transpire next, every single one of my predictions came true, from gold exploding higher after I stated people should buy it, to Robinhood day traders getting savaged and destroyed in the markets within days of my warning that they were playing with fire by day trading stocks in which data regarding their trading behavior was being sold to big brokerage houses that employ HFT algorithms to trade stocks for huge profits.
In the past few weeks, I’ve observed more behavior in various markets, including commodity, stock and bond markets that point to a continuing erosion of stability in global capital markets, and I expect at some point over the next few months, massive price volatility to manifest. Believe it or not, even the unnecessary lockdowns that have had devastatingly life-changing economic consequences for billions of people around the world will have significant negative impact upon shrinking liquidity in the global banking system that will require constant attention. Allow me to explain. The politically imposed global economic lockdowns have negatively impacted the cash flow of the world’s biggest drug cartels, costing them estimated millions of dollars in lost revenues, though personally I believe their losses to be much greater, in the hundreds of millions. During the 2008 global financial crisis, Antonio Maria Costa, the head of the UN Office on Drugs and Crime revealed that a severe global banking liquidity crisis that manifested was solved with cash flow provided by drug cartels, and that only billions of laundered drug cartel money saved the global banking system from collapse back then. Recent FinCen (Financial Crime Enforcement Network) leaked documents, that I discuss in this podcast, revealed that many major global banks still launder billions of dollars of dirty money for drug cartels, meaning that the global banking system still depends on drug money to provide liquidity to the entire global banking system. It has been a well-known but little discussed fact that the global banking system has always relied upon drug cartels to provide liquidity to its system. In fact, this is the very reason why you may have heard that most US dollar notes have traces of cocaine on them. The reason is because this cash has been handled by drug cartel operations, not because people have rolled them up and snorted cocaine with them.
And as global drug cartel revenues dry up, so has the liquidity of the global banking system. One year ago, almost to the date, I discussed this tenuous parasitic but symbiotic relationship between violent drug cartels and global banking institutions, with each needing the other for survival. I also discussed last year the reasons why there was an explosion in liquidity provided by the US Central Bankers to major US banks through the overnight repurchase agreement (repo) markets that amounted to hundreds of billions of dollars weekly, and trillions of dollars monthly, that began at the end of 2019, and which the mass financial media never discussed fully as if such highly abnormal operations were completely “normal”. These abnormal emergency operations, undertaken by Central Bankers, became necessary due to the fact that the multi-billion dollar cash flow from drug cartels provided to the global banking system was drying up.
This past 17 March 2020, US Central Bankers released this statement:
“In accordance with the most recent FOMC directive, the Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York will conduct additional overnight repurchase agreement (repo) operations for same-day settlement each afternoon for the remainder of this week from 1:30 PM ET to 1:45 PM ET. These repo operations will be conducted for an aggregate offered amount of $500 billion. Additionally, the aggregate offered amount for the overnight repo operations conducted each morning for the remainder of this week will increase to $500 billion. All other previously planned repo operations will be conducted as scheduled.”
As of the period from 15 September to 14 October 2020, the rules still remain as follows:
“The Desk plans to conduct overnight repo operations on each business day and a series of term repo operations. The aggregate operation limit of each operation is $500 billion and proposition limits are $20 billion per bid. Each operation will settle the same day as the operation date unless otherwise noted.”
In the first two months of 2020, US Central Bankers reduced the aggregate operation limit of each operation to $30 billion to $120 billion, leading the mass financial media to falsely report that the US banking system had shored up its problems. However, by early March of this year, US Central bankers ramped up the aggregate operation limit of each operation back up to $500 billion, where it has since remained as of October 2020. These persistent operations that pump trillions of dollars into the overnight liquidity markets reveals that the global banking system is definitely not receiving the same levels of liquidity as they have in the past from drug cartel money laundering and that Central Banks have been required to step up and provide the gap in liquidity normally provided by drug cartels. It also reveals exactly why, when bank CEOs like Stuart Gulliver of HSBC are trotted out before the masses to publicly apologize for laundering billions of dollars of drug money when they are caught and regulators fine their banks billions of dollars, that this is all a public show of jokes and games and that no one in the operational chain of command ever intends for such crime to end. And when other aspects of the new world order, like globally enforced economic lockdowns, have unintended or unforeseen consequences, like drying up the major cash stream for the global banking system, when Central Bankers then have to step in to provide for this cash stream by creating trillions of dollars out of thin air and have to play a role normally fulfilled by druglords, these actions will eventually come home to roost in a devastating manner, though literally no one in the mass financial media has publicly contemplated the consequences of Central Banker actions that have been ongoing since the end of last year to provide liquidity to the global banking system.
The Consequences of Central Bankers Fulfilling a Role in the Global Banking System Normally Fulfilled by Druglords
Let’s look at how the need of Central Bankers to provide overnight liquidity in the trillions of dollars every month since the end of last year has affected the MZM base, MZM velocity and the SOFR (Secured Overnight Financing Rate). The SOFR is the interest rate at which banks lend money to one another overnight, in which the lent money is secured by pledge collateral, usually US Treasury bills. This interest rate should be nearly zero because, one, the lending period is extremely short so therefore should eradicate almost all risk from the loan, two, the loaned money is secured, not unsecured, and three, the collateral given is normally US Treasury bills or some other form of short-term paper that is supposed to be very “safe”. However, as you can see from the chart below of SOFR, something very peculiar happened in mid-September of last year when the rate soared to 5.25%.
Basically, the exploding SOFR that occurred last year meant that bankers did not trust other bankers to return the money they lent to other bankers, even if the lending period was for an extremely short duration. Furthermore, lending bankers in the overnight markets did not even trust the supposedly high quality of collateral pledged by the borrowing bankers, and therefore demanded to be compensated for this systemic risk in the form of ridiculously high interest rates. In other words, bankers themselves, by driving the SOFR rate way above the Fed Funds interest rate (the rate at which banks can borrow money from the Central Bank) indicated that they believed that the risk of a global banking systemic meltdown was very real. Since then, as you can see from the above chart, US Central Bankers have soothed such fears with promises of creating unlimited helicopter money, as required to support necessary liquidity within the global banking system. Of course, there are many questions that should follow from the knowledge of an SOFR that soared a year ago, but let’s delay those questions for now and take a look at how this incidence affected MZM base and velocity.
Money of zero maturity (MZM) is a measure of the liquidity that represents all money that is readily available or in a liquid state and would exclude non-liquid forms of money with longer-term maturities like 3-month or 12-month Certificates of Deposit (CDs). Of course, former US Central Bank Chairman Alan Greenspan told us decades ago that he no longer could even define money, so we always need to take all Central Bank reported data about all money supplies, whether M1, M2 or MZM with a grain of salt. Consequently, the MZM base is self-explanatory as it just reveals whether MZM supply is growing or shrinking. The velocity of money is the frequency at which one unit of currency is used to purchase domestically- produced goods and services within a given time period and represents the number of times a single unit of currency is spent to buy goods and services per unit of time. Another way to explain velocity is how many times the unit of currency is circulating in the economy. In a healthy economy, the velocity should be high, as a single unit of currency will be circulating through the economy multiple times over units of time as banks lend money to small businesses and small businesses sell goods and services to consumers and as consumers spend money. So let’s look at the charts for MZM base and velocity.
As is clearly evident at a quick glance, the MZM base has exploded, growing nearly five times in the past twenty years to $21.35 trillion. The big question that MBA and PhD trained economists always ask is if the monetary base is exploding, why is inflation not exploding as well? Well, to answer this question, we need to realize that the “official” inflation statistic that has been reported for decades underestimates real inflation by multiple times, so whenever they reference the “official” inflation rate in posing this question, this reflects the uselessness of their education because they are unable to understand reality. Secondly, even though real inflation is always multiple times higher than the “official” inflation State reported, politician/banker/corporate endorsed inflation rate, a low monetary velocity indicates that the increase in the monetary base is not being used in a manner to benefit and support the people but in a manner to just protect and grow the wealth of the 0.1% wealthiest oligarchs of the nation.
The reason the US dollar has not hyperinflated in the past twenty years (though certainly a greater than 98% devaluation in purchasing power since 1913 is worthy of a hyperinflation definition) can be due to a multitude of reasons, including bankers hoarding the cash and not lending it out due to cash liquidity crunches created by massively declining cash flows of drug cartels and black market sources, greater assessed risks of lending money to people and businesses in a terrible economy, better sources of return for the cash such as investing it in a bloated stock market that continues to run higher and many other similar types of decisions that will prevent circulation of a rapidly expanded monetary base within the economy for the benefit of the people.
So the trillion dollar question (as asking a million dollar or even a billion dollar question is no longer apropos in such an environment in which Central Bankers are continually devaluing fiat currencypurchasing power) is this: What will be the blowback of this explosion of MZM money stock, the lack of subsequent velocity, and the risk we saw manifest in soaring SOFRs last year that still remains unresolved to a large degree? The answer is that the timeline for the already guaranteed implosion of global financial markets has been expedited, which is the reason why the parasitic ruling class has expedited their timeline for absolute control over the global citizenry (partially manifested by the current global economic lockdowns as well as their hastening of their NWO global reset plans), because they need at least 90% of the population to be blindly compliant and obedient by the time the global financial meltdown precipitates, which will be an event much worse than 2008 for all the reasons I stated above and in the articles I linked at the start of this article. And this is also the reason to continue stacking physical gold and silver, as I have urged people to do since July 2019.
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