A Perfect Storm – The Money Crisis – 'Repo' explained – Negative Growth - Letter from Great Britain [06-11-22]
My book "The Financial Jigsaw” has now been accepted and published at my academic network. Scroll down and Hit: ‘View Full Text’ button for the complete book: https://www.researchgate.net/publication/358117070_THE_FINANCIAL_JIGSAW_-_PART_1_-_4th_Edition_2020 I will be pleased to email a free PDF on request to: firstname.lastname@example.org.
INTERESTING FACT: In the light of last week's Jubilee celebrations it is worth noting how long good Queen Bess II has to beat the world record: For 70 years and 121 days Queen Elizabeth II has sat on the throne. She is third on the list of all-time longest-reigning monarchs. France's Louis XIV, the Sun King, reigned for 72 years and 110 days, from 1643 to 1715. Thailand's King Bhumibol Adulyadej was on the throne for 70 years and 126 days, from 1946 to 2016.
THOUGHT FOR THE WEEK: So, Boris has won the confidence vote, but the general consensus is that he’s burnt toast. In 2019, Theresa May won a confidence vote by 63% to 37% but disappeared after six months. Boris failed by winning only 211 votes to 148, or 59% to 41%. It is likely he'll lose two by-elections on June 23rd and the House of Commons Privileges Committee has yet to conclude its investigation into whether he misled Parliament over PartyGate, things don’t look good. Has 'Teflon Boris' finally flipped into the fire?
BREAKING NEWS: Wonder where all the money went? Whilst Rishi our Chancellor has saved the Brits from starvation with £15billion, the government lost 75% of the £12-billion spent on PPE in the first year of the Covid-19 outbreak due to inflated prices and faulty kit. Boris has spent £4-billion ($5-billion) on unusable PPE and now “plans to burn significant volumes” of it, Parliament’s spending watchdog found. Yes, it seems they have money to burn!
In the meantime, low-paid health and care workers are calling in sick because they cannot afford to fill their cars with petrol to travel to work, the head of the UK’s largest trade union has warned. Johnson said on Thursday that the UK economy was “steering into the wind” but cautioned against a “wage-price spiral”, as the cost of a tank of fuel hit a record £100. But his hasn't stopped many Unions which have united calling for massive strikes this month revealing ominous signs of a return to the 1970s and a winter of discontent.
IS THIS A PERFECT STORM? Weeks ago none other than the Governor of the Bank of England, Andrew Bailey, described the situation facing the economy as “apocalyptic”. Indeed, to paraphrase the Bible referencing the four horsemen as “sword, famine, wild inflationary beast and plague”; this could well be describing the confluence of problems facing the global economy.
Reflecting these fears the markets are down overall and very jumpy as uncertainty reigns supreme. The BoE pumped nearly a trillion GBP directly into the British economy one way or another during the two years of the scamdemic. It is no surprise therefore that inflation has taken off which in my view is not going to slow down any time soon.
This has been further compounded by the Russian operation in Ukraine having disrupted the already dislocated, post-pandemic global energy and food supply chains. Thus we have the sword of Damocles hanging over the developed world because we have no idea where this is going; so is this part of the prophecy also coming true? Not only are we facing more potential plagues, according to the likes of Bill Gates and friends, but also famine especially in the emerging countries.
It appears that there is little that our leaders can do except bluster and puff up their egos as they meet secretly in posh hotels like the Bilderberg mob did last week. Whatever plans are being hatched you can be sure that we, the unwashed, will not be beneficiaries and neither will Europe as it is starved of essential oil and gas supplies whilst Russia becomes stronger because they own vast resources which USNATO have long targeted especially after the Ukraine coup in 2014.
WHAT's really causing all this mayhem? There are many scenarios on offer but the real culprits are hiding behind the complexities of our failing global financial system – yes you guessed right – it's the bankers and their global supporters who are attempting to hold back the inevitable incoming tide of economic decline which the system itself has created ever since the 2008 crisis almost caused the seizure of our global credit system.
This is a highly complex scenario which few understand and which I have attempted to explain in my book referenced above. It is not a subject that most people find at all interesting but without this knowledge it is impossible to appreciate why we are facing such extremes of economic distress and what to do about it. My colleague at BOOM Economics has a short explanation which might ring a few bells:
"PROBLEMS WITH OUR VENETIAN MONEY SYSTEM: Our money system evolved in Venice 400 years ago. BOOM calls this our Venetian money system but, in fact, it evolved much earlier in history and probably in Babylon, an ancient city situated in modern day Iraq. In our Venetian money system, the money supply grows via new bank loans that are collateralized against assets. This means that asset owners can borrow more readily and at lower cost than people who don’t own any collateral assets.
It is a wealth channel — funneling fresh new money to the already wealthy for use as they see fit. If a nation is demographically expanding with increasing numbers of working people, it works well — all boats rise. But if the opposite demography happens (a falling working age population) then it can speed fresh new money preferentially into the hands of the wealthy. They subsequently become ever wealthier, until a handful of people possess most of the asset wealth. Social inequality then follows; the social fabric becomes torn, political instability follows as sure as day follows night. Feudalism and dictatorship await.
The way back to a more balanced society is to increase the proportion of cash transactions in the real economy to a much higher figure. Why? Because cash (which is interest free) is a buffer to the dominance of credit money (interest bearing). We have allowed the ratio to fall to 2 % Cash: 98% Credit in many advanced economies. This is a very dangerous imbalance for any nation. So we simply cannot fix all of our social problems and brewing political instability until we attend to this critical issue; the secret money crisis under the surface": https://boomfinanceandeconomics.wordpress.com/2022/06/04/problems-with-the-money-system
BUT the cause wasn't only the trigger of 2008 because unreported in September 2019 the system suffered a further shock known in financial circles as a 'Repo crisis'. Here is a 13 minute crash course video showing what Repo is all about (sorry about the excessive hype, I would have preferred an academic one)
Continuing this subject, a reader asked me this week: "…what is your knowledge on whether or not the banks have closed out their positions on the USD $17.66 trillion that Trump and Mnunchin printed up as part of the 2019-20 REPO? …what do you think? Is COVID just another banker scam to get free money?"
I used my research to answer to the best of my knowledge: "Yes indeed exactly my contention – Covid was cover. It has all been building up since 2008 which was never solved, funded through 'Repo'. Larry Fink (Blackrock) said as much in 2019 by ‘Going Direct’
“We wrote in August 2019 about the nearly exhausted monetary policy toolbox and the challenges it poses for dealing with the next downturn. This has now come to the fore – and that’s why it is time to go direct with policy support. Simply using up the limited monetary policy space remaining – interest rates, forward guidance or even quantitative easing – could quickly put the macro focus on the lack of tools left and thus backfire. The only way to address this is to add further lines of defense and make fiscal policy an explicit part of the crisis response toolkit.” https://www.blackrock.com/corporate/insights/blackrock-investment-institute/publications/coronavirus-policy-response
But we also have to account for the ECB and the faulty TARGET 2 euro system. I suspect we are seeing a repeat of 2012 and as you say the 2019-20 Repos might not have closed out but maybe hiding in the EU swaplines – here’s a reminder of 2012:
“As financial markets convulse over the European Union once again, RepoWatch would like to remind its readers that at the heart of the problem lies the repurchase market. Yes, some European countries spent too much money and now are burdened with too much debt. So let’s look at where they got that money.” Repos are at the heart of the European distress AND: “There is a further issue to consider over collateral quality. While the US Fed only accepts very high-quality securities as repo collateral, with the Eurozone’s national banks and the ECB almost anything is accepted — it had to be when Greece and the other PIGS were bailed out. And the hidden bailouts of Italian banks by bundling dodgy loans into repo collateral was the way they were removed from national bank balance sheets and hidden in the TARGET2 system” https://mises.org/wire/could-2022-bring-collapse-euro The City of London seems to be assisting too and its influence in the Eurodollar market helps the Fed: https://www.bankofengland.co.uk/news/2020/march/boe-launches-contingent-term-repo-facility I’ll keep digging.
SO how does all this impact the Brits as they struggle to keep warm and feed themselves? Storm clouds have gathered over the UK economy as soaring inflation, weak business investment, tax rises and global economic shocks all hit what's left of economic growth – spoiler alert: real growth has been negative since the early 2000s.
Britain’s economy is expected to grind to a halt this year – and even shrink slightly in the October-December quarter, as the economic outlook deteriorates and inflation hits double-digit levels. The latest forecast from the British Chambers of Commerce show that quarter-on-quarter GDP is expected to flat-line with no growth expected in Q2 and Q3 before contracting by 0.2% in Q4 and I think this is overly optimistic.
They say that expectations for annual growth in 2022, at 3.5%, are now less than half the 7.5% growth recorded last year. And things are set to get worse, with growth is expected to slow sharply to 0.6% for 2023, before recovering slightly to 1.2% in 2024. We'll see how this pans out; I'm not holding my breath.
The BCC also cut its forecast for consumer spending this year as the cost-of-living squeeze hits, and almost halved its prediction for business investment. The downgrade reflects heightened political and economic uncertainty, and rising cost pressures which are limiting smaller firms’ abilities to invest. Look for more 'downgrades' because their models will have no basis in reality until they recognise that the global economy is an energy system.
The OECD is even more realistic about Britain’s prospects. It forecast that economic growth in the UK will grind to a halt next year (it already has) and would be the second-worst performing G20 economy. And with fuel prices hitting records on a daily basis, there’s no let-up for struggling families.https://www.theguardian.com/business/2022/jun/08/zero-growth-warning-for-uk-economy
COLLAPSE MONITOR: Capital Exploits has a short article explaining the consequences of the above analysis. Excessive money printing has driven global debt into the stratosphere, beyond manageable by any measure. So there are now only two solutions CA can think of. One is a hyperinflation of the currency and the other is a debt reset.
"Those in power know that a hyperinflation would likely see them being replaced. History shows us this is true. No, rather they will try to self-detonate the system, have an enemy to blame it on (Covid, Russia, etc.) and retain control… or dare I say gain even more control.
This is what the entire WEF plan is all about. Right now they’re still using the mask of democracy, but as we’ve seen in the last two years this is merely a mask. Leaders all over the world have been bought and pressured or murdered (eg Magafuli) when not complying. The corruption is now increasingly brazen and blatant. The energy put into masking it grows weaker each day while the excesses and theft grow more egregious. Surprised? You shouldn’t be. This is the Fourth Turning." Worth reading the article in full to understand why the collapse of the US economy and the European Union (who are just as broke) is being accelerated. https://www.zerohedge.com/news/2022-06-07/corruption-now-increasingly-brazen-and-blatant
THE NARRATIVE BATTLE: The problem I have today is trying to see through the fog of mass propaganda and report the facts as I can determine them. I am sure we are all equally confused which of course is the objective of our lords and masters. This short 2 minute video offers a good lesson on how we can be fooled by what we see and hear. From the angle of the camera I have no way of determining if there were demolition charges set on Building No.7 or it's just a fake. See for yourself as it makes clever use of an orange!
A PLEA FOR PEACE IN THE WORLD: "IF I DON'T KNOW – I CAN'T ACT" - Information and knowledge should be free to everyone. Those less fortunate, who are unable to pay, are often those most in need. MAKING A DONATION will spread knowledge and understanding far and wide and empower humanity to keep the peace: https://www.gofundme.com/f/fnahvp-free-book
UNTIL NEXT WEEK: Tell Your Truth– Gently; Don't Comply – Gently: Laugh At Them – Gently: SPREAD THE WORD: YOUR DAILY COVID NEWS (cmnnews.org)
The less democratic governments do not have the debt issue that we enjoy. But I suspect the only real way out is massive default and new $, new E$.
Guys, we've been unmasked..
Every man for himself!!!