Let's start immediately with a consideration: when have the media ever once told us the truth? I’m not talking about irrelevant facts, but serious things, such as: September 11th , the suicides of Davide Rossi, Raul Gardini, Roberto Calvi, Antonio Catricalà, etc., the murders of JFK and Aldo Moro, Mattei, diseases, global warming, terrorism, proper nutrition, the economic system which is actually a perpetual debt, and so on and so forth. Why should they tell us the truth right now? For facts that matter, they must lie. It is necessary to indoctrinate and not to inform.
Official information serves to create docile subjects.
This is why we cannot believe what they tell us, especially regarding the functioning of the economic system which is the basis of human survival. The current economic model is debt-based. Debt is the monopoly of the banks that call themselves CREDIT INSTITUTES, in fact, the credit is theirs and the debt is ours, which increases perpetually, with no way out, until it bursts in our faces.
We have now come to a time when the high-pressure steam-inflated debt bubble begins to signal cracks that we must keep under observation.
Commenting on all the interesting economic news would be an impossible job, but when events such as the failure of the Archegos investment fund occur, you can't help but raise your antennas and try to better understand what such episodes mean.
In short, the ways in which the Archegos fund broke out confirm what I have written so far in this newsletter, especially in the more technical articles dedicated to REPOs and derivatives (which I invite you to read and share):
So I won't go into commenting further on how Bill Hwang of Archegos was able to create a $ 100 million empire out of nothing, simply by building a gigantic betting house with borrowed money: practically the model on which the current financial economy is based.
The key word is: rehypothecated leverage! Placing as collateral something that you do not have but that you promise to have with the aim of obtaining loans with which to buy that thing that will again be pledged to guarantee other loans in a perpetual exponentially bogus scheme, is an insult to those who really work, in the real world.
The Archegos case represents on a small scale, how the entire economic world functions: borrowed money created out of thin air, or colossal pulverized debts, entrusted to algorithmic models managed by very powerful computers that carry out thousands of transactions per second on complicated schemes but of such size as to guarantee the multiplication of volumes thanks to the “Ponzi” effect of the continuous new injection of credit / debit into the system by central and commercial banks from all over the world, in unison.
An air pump that inflates the bubble in turbo mode hoping it does not explode. A dangerous game in which the operators rely on a very risky rule: constantly entering and exiting as if you going to steal from a burning building. You have to grab what you can and be very quick because the burning roof could collapse on your head at any moment, where you risk remaining under the rubble, as in the case of Archegos
The older Rothschild, on the other hand, liked to say that: investing in the stock market is like taking a shower with cold water, you have to get in and out very quickly! The meaning does not change.
The principle of "very fast" is now managed by algorithmic trading models entrusted to super computers that the programmers themselves admit they do not know for sure how they work and which therefore creates serious concerns that something might get out of hand:
“These software algorithms are becoming so complex even their creators don't always understand how they came up with the answers they did.”
The bankruptcy of the Archegos fund takes us back to spring, that of 2008, in which the Bear Sterns investment bank, the fifth largest American investment bank, went bankrupt, overwhelmed by the first signs of the subprime mortgage crisis that would later manifest all its virulent power, in the most famous episode of recent economic history, namely the bankruptcy of Lehman Brothers, in September of the same year.
Could it be that the collapse of Archegos is the first sign of a similar episode? The signal of spring which is a prelude to a hot autumn? One cannot know for sure. It is said that history repeats itself, but this time the central banks have "the tool", the famous Draghi’s bazooka or the now oiled practice of unlimited printing and throwing dollars on financial fires, with the intent to plug the gaps in the subtle layer of BIG BABOL bubble gum which, covered with patches of banknotes and abstruse promises of payment, continues to swell more and more. More air, still some more pressure. It swells, swells, swells until POP… it pops in your face.
The news media outlets don't talk about this. Just as they didn't talk about Bearn Sterns when it went bankrupt. The media is infallible in creating fear and instilling it in the public if it is a matter of useful arguments to direct the masses in the direction desired by the power, but not for the things that concern money.
For that, there is never alarmism, as long as the public finds himself with his pockets emptied by some bankruptcy, forced confiscation, like delisting of shares, operations called debt equity swaps, or the forced conversion of bonds into shares of the same company, often no longer liquid- able or sellable at a much lower value, as with the subordinated bonds of MPS
operations such as Bail In, with which the money on the banking account of savers is used to recapitalize the bank in which it is deposited, see Cyprus.
Another very subtle way of confiscating savings is that of inflation.
Michael Burry, famous for having warned everyone in time of the imminent bursting of the subprime mortgage bubble, has raised a new alarm. This time on inflation. After doing this, he received a visit from, SEC and cancelled his twitter account.
On the other hand, if the program is to eliminate the middle class by destroying savings, what better method than inflation? "Crush the middle class between the grinding stones of taxes and inflation".
We live in a consumer-based society. If people have no money to consume, the money is loaned to them. The constant increase in the money supply added to the multiplier effect of the financial leverage of the algorithmic world of betting, are two other crushing millstones.
Inflation is now masked within the cost of energy. Don't be fooled. Energy is essentially oil. The "unholy trinity" is made up of
1) OIL - 2) DOLLAR - 3) 10 YEAR TREASURY RATE
We need to keep an eye on these three components with great attention. They are closely related and are the basis of the system's tightness. Loretta Mester (see photo),
of the Federal Reserve, made it known without equivocation that low interest rates are here to stay. Low interest rates don't pay off savings and creeping inflation, hidden within the rising cost of oil, erodes the value of money one bite at a time. This is how people are robbed without them even noticing. If this is combined with unemployment and wage deflation, the jaws of the trap tighten around the neck of the average citizen who will be forced to spend his or his family's savings to survive.
The price of oil is also pushed up with episodes provoked on command, such as bombing of oil wells or cases such as the blockade of the Suez Canal. High oil prices drive stock exchanges up. The ten-year title, on the other hand, must be kept in balance. Signs of its sudden increase would be considered the beginning of the end, so watch out.
When the inflation announced by Michael Burry, which is already warming up, starts, the social gap represented in the two branches of the letter K will definitely amplify.
The price of inflation will be paid by the descending part of K.
That is, the wealth subtracted from the savings and the standard of living of the middle class will be transferred to the receiving party, or the super rich class. The more the middle class sinks to the bottom, the more wealth is transferred to the upper class.
I repeat: The price of inflation will be paid by the descending part of K.
Here's what inflation means and we're already seeing this:
Grocery shopping can also be used as a comparison.
In conclusion, e are approaching the dawn of a new monetary system that will be implemented in various stages and managed by supranational bodies, such as the International Monetary Fund.
On the other hand, they have already accustomed us to blindly obeying supranational dictates, such as those of the W.H.O. in terms of health.
The IMF has opened a lending facility. In fact, IMF has already lent money on other occasions. $ 650 million is little compared to the quadrillion shadow banking system entangled in algorithmic derivatives. It is money that the current US Treasury Secretary, former Federal Reserve Chairman Janet Yellen, has promised money to the IMF by putting the American people in debt. In double entry, a creditor and a debtor are always required. Money is created only after you put someone in debt:
• A state
• A company
• A person
However, I think the transition to a supranational institution is inevitable to maintain confidence and continue the accounting system trying to prevent the systemic explosion.
The IMF will be like the dialysis machine, where the dirty blood of the petrodollar is spun and then "cleaned" and digitized blood comes out with another name and is put into circulation. Mark Carney has already announced the end of the Petrodollar system. So yes! The system is changing and we need to be ready. Mark Carney is a former Goldman Sachs, I don't think he has an atom of goodness in him towards us poor humans, but it is the bankers who decide, and sometimes, when the previous systems are exhausted, they have to agree to the new scenarios.
Every few years the monetary system needs to find new balances. A new, more central and global system, such as one based on gold, will serve to give a sense of trust. The gold base is necessary because since gold is scarce by nature, bubbles due to excess debt can be avoided and growth can return to the limit of real resources that are combined with the "green" agenda. Even in previous monetary resets in history, the value of gold has been increased by indexing it to the natural level of the economy, with the aim of reabsorbing excesses. It would not be surprising if gold, which is considered a Tier 1 value in the assets of banks, was revalued in order to return solvent entities that are now zombified in a swamp of inextinguishable and no longer expandable exponential debt.
No financial adviser would tell you to buy gold. The powers that be are not happy when people have gold . Indeed, people have always been encouraged to sell it. Banks want to maintain the perception of confidence in their paper currency, so the price of gold is kept artificially low through the manipulation of futures. Manipulation that exists and that has cost the JP Morgan bank a severe sentence:
Probably, when gold goes up, it will do so suddenly and those who have not bought it will no longer find it available. It will be too late. There is not enough gold for everyone. There is very little of it and the price will be prohibitive.
The International Monetary Fund has the third largest gold reserve in the world.
Banks do not buy gold to resell it. They buy it to be in command.
Each of us should have a minimum of personal gold reserves, coins or bars, in order not to sink into the terminal phase of this deadly economic reset and to save part of our savings, in the event of catastrophic monetary scenarios, so that we can have something available to start over again when this bubble will burst in our faces.