Here is a joint statement by Lagarde and Powell at a secret meeting of G7 with all the leaders and financial leaders of seven countries, as well as with the IMF and BIS:
“The financial system is on the verge of collapse since September 2019, when we launched Repos and QE. And since then it only got worse. Coronavirus hit us at a time when the banking system was almost destroyed.
We had enough problems with saving banks. But now we have to save large corporations, small companies, individuals, local municipalities and states, the federal state, and this is in addition to saving the financial system, which is deteriorating every day. The whole system flows like a sieve, and we do our best to keep it all afloat.
Fortunately, we have printing machines, and this helps to support all this, but only fairly. We are very afraid that the market will understand that all the money that we print is useless. And of course, but we cannot tell anyone. But if the world soon realizes this day, the financial system could explode in a matter of days. And we would be completely helpless to stop this ………. ”
Exponentially harder than 2008 – black hole
And these are dear readers, where the world stands today. On the verge of collapse of the entire financial system. Just a small crack can push the whole system into a black hole.
All that is needed is a serious second wave of CV-19 or bank bankruptcy, which caused an explosion in debt markets and the entire system.
Yes, we know that in 2008 the world was in a similar situation, but with a debt of more than $ 100 trillion, and who knows how many additional $ 100 trillion derivatives plus the collapse of the global economy are now exponentially worse in terms of risk,
We must also remember that bad debts in the financial system are growing every minute, and most borrowers are under serious financial pressure. Just look at the chart below how bad debts follow unemployment. Banks have not yet reported this, but we will see it in the next couple of quarters.
TELL THE TRUTH – A REVOLUTIONARY ACT
So why are the heads of the Fed and the ECB not telling the truth? Well, maybe they are in their own CB Speak.
ECB President Christine Lagarde says recovery from coronavirus pandemic will be “Restrained” and forever change parts of the economy. And Powell recently said: “The path forward is likely to be experiencing“Lives and livelihoods have been lost, and great uncertainty looms large.”
Thus, “restrained” and “complex” are as far as they can stretch out without panicking the world. Obviously, they will never warn bank depositors that their money will soon disappear. That is why people need to understand this themselves. But they will not, of course, until it is too late.
LESSONS AT RISK
Most people have never had to worry about risk in the financial system, since so far they have been saved by the Central Bank.
With over 50 years in business, you will learn many lessons along the way. In my youth, when I received my Master of Business Administration degree in 1969, I had to learn all about Keynesian economics, but much later I realized how wrong all this was.
My first job was in commercial lending at a Swiss bank. These were the days when the Swiss banking system worked on conservative principles. It was an ideal training for risk analysis and understanding, which was very different from today’s huge leverage with minimal financial support.
My real base in risk management was at Dixons. At that time, it was a small British business that we created for the leading British consumer electronics retailer and the FTSE 100 company. At first I was a green 29-year-old financial director, and a few years later, executive vice chairman. Dixons was founded by a Jewish entrepreneur who was an excellent businessman and seller. It was a steep learning curve. He is now 88 years old, and he is still sharp, as always.
One of our principles was always to panic early, but in a controlled manner.For example, if there has been a significant decline in consumer spending, we have implemented a significant reduction in expenses within the company within a few days. And if we made major acquisitions, we quickly sold off dead or liquid assets to lower leverage to conservative levels.
Being financially prudent and commercially aggressive, we were able to quickly develop the company without taking on excessive risks. We survived without pressure the oil crisis in the early 1970s and the miners’ strike, which led to the fact that electricity was only 3 days a week. On other days, we sold TVs with candles.
Low leverage and low debt were keyThus, it is very different from today with huge debts and leverage. And therefore, not a single person, not a single company can survive a serious crisis without massive government assistance. Recently, no one was taught to save or collect a nest for a rainy day. When things go well, all the money is spent, and when they go bad, you either lend money, or the state should help. This applies to both individuals and large corporations.
DEBTS AND DEFICIENCIES – A MODERN MANTRA OF FINANCE
With low or zero interest rates and the ever-declining value of money, there is obviously no incentive to save at all. In addition, governments and central banks provide very bad examples.
But how can you expect people to be careful when their governments and central banks have been in short supply for decades and printed money. Debts and deficits are the mantra of modern finance. But what no one seems to understand is that this mantra has become a chronic disease that kills the world much faster than coronavirus.
WEIMAR & ZIMBABWE SQUARED draws near
The central banks of the world are currently in the process of excellence both Weimar and Zimbabwe. Together with governments, they printed around the world and borrowed $ 18 trillion from the start of the CV. And since the Great Financial Crisis began in 2006, their global debt has more than doubled: from 125 trillion US dollars to more than 275 trillion US dollars, but this is only the beginning.
We are talking about billions, trillions and quadrillion, as if we understood what it means, but in reality no one does it. It is absolutely impossible to understand what a trillion is. Let’s start by counting up to one trillion. It will take you 32,000 years. And then you will have to count very quickly, never doubt or make mistakes – and never start over. So, $ 18T, just created all over the world, how long will it take? Almost 600,000 a years.
FRS AND ECB QE ZERO VALUE
So obviously completely unrealistic and impossible. Whenever such money was made before, like Weimar, it was always worthless. And this is also the time!
This amount of debt can never be serviced at a market rate. Only at zeros or negative rates. It can never be repaid with properly earned money. $ 18 tonnes represents 22% of global GDP. And since today almost all countries have a deficit, there is absolutely zero chance that this debt will ever be serviced or repaid in the future. Remember that the US has not had a proper budget surplus since 1960. (Please do not write me about Clinton’s years. They were fake surpluses as debt continued to grow).
Almost all the money created by the US government and the Fed over the past 20 years is completely useless. Because any money created at will from the air, by definition, is fake. If all that was required to print 10 trillion dollars was to press a button and nothing was produced using goods or services, then money has zero value.
I know that I emphasize the previous thought over and over again. This is done so that at least a few people can understand what can happen next, and, therefore, prepare themselves and their financial situation.
So why do not Powell and Lagarde tell people that the actions of the central bank destroy the economy and the value of the country’s money.
The dollar has lost 86% this century, while the euro has lost 82%, measured in real money. Real money is, of course, gold, since it represents constant purchasing power and is the only money that has been preserved in history.
JOURNEY TO ZERO WILL NOT BE LONG!
There is an ominous difference between stock value and profit. As shown in the diagram below, since 2012, the values have doubled, and the profit for 2012-19. It remained unchanged. Now, in 2020, profits are falling and stocks will follow.
Dow correction ended May 8 and is now resuming a downtrend. All optimists of V recovery will get a real shock. The Dow monthly index peaked in January 2020, see Chart, and the downtrend was confirmed long before CV began to bother the markets.
In the past couple of weeks, I have said that the resumption of a downtrend in the stock market is inevitable, and it seems obvious that it is inevitable. Most market participants will be shocked, as stocks around the world fall below March lows and in the long run, much, much lower.
Many fear that precious metals will initially fall along with stocks, but this is unlikely.
On the contrary, it seems Gold is now breaking through an important level of $ 1770. Since Maginot Gold Line was broke a year ago for $ 1,350gold rose by more than $ 400, or 30%. The six-year consolidation since 2013 allowed to accumulate a lot of energy, which in the next step will bring gold more than $ 2,000.
There was a massive battle to deter Silver below the level of 18 dollars. It seems that the LBMA boys are now losing the fight, as silver has surpassed the level of $ 18, which it has kept lower since 2014, with the exception of 3 months in 2016.
this is Maginot Silver Line even more significant than gold, as it comes from a much lower level 64% below the peak of $ 50. After that, we can see the explosion of silver and a sharp drop in the ratio of gold / silver.
Praeterea censeo Carthaginem esse delendam – Cato Senior
3rd Punic War 149 – 146 BC
“In addition, I believe that Carthage should be destroyed” this is what Cato the Elder spoke at the end of every speech he made in the Roman Senate before the 3rd Punic War 149-146 BC In the end, his perseverance paid off, and Carthage was destroyed by the Phoenician city in North Africa.
I learned this phrase in Latin at school, as well as about Roman history, and it has been stuck since then.
The reason I mention this is because I, like Cato, usually end most of my articles in the same way, namely that you have to keep gold in order to preserve material values, and not for profit, measured in paper paper money, which will soon be completely discredited.
I hope not only my historical understanding of gold, but also my passion and perseverance will help several people to avoid ruin in the coming years.
Postscript The G7 secret meeting, discussed at the beginning of this article, obviously never took place. But it must be!