THE TWIN TOWERS OF BABEL ARE COMING DOWN: EQUITIES AND BONDS
When leveraged debt is money, what’s to worry?
For three hundred years, the banker’s ponzi-scheme of debt-based money brought wealth to the bankers and power to governments. Nothing lasts forever, however. In 2023, the dangers long dormant beneath the bankers’ debt-based markets are going to erupt.
BlackRock says get ready for a recession unlike any other and ‘what worked in the past won’t work now’ – December 8, 2022
“A worldwide recession is just around the corner as central banks boost borrowing costs aggressively to tame inflation — and this time, it will ignite more market turbulence than ever before, according to BlackRock.”
“The global economy has already exited a four-decade era of stable growth and inflation to enter a period of heightened instability — and the new regime of increased unpredictability is here to stay, according to the world’s biggest asset manager.”
“That means policymakers will no longer be able to support markets as much as they did during past recessions, a team of BlackRock strategists led by vice chairman Philipp Hildebrand wrote in a report titled 2023 Global Outloo”
“Recession is foretold as central banks race to try to tame inflation. It’s the opposite of past recessions,” they said. “Central bankers won’t ride to the rescue when growth slows in this new regime, contrary to what investors have come to expect. Equity valuations don’t yet reflect the damage ahead.”
In March 2022, I wrote: On March 15th and 16th, the Fed began a series of interest-rate hikes that will prove disastrous to global investors. Since then, the S&P fell 17%, the Nasdaq 30% and crypto markets over 50%. On December 10th , MarketWatch noted Household wealth down between $13.5 trillion in 2022, second-worst destruction on record
Market losses will be even greater in 2023 as the Fed will raise interest rates until it is convinced inflation can no longer become hyperinflation, a monetary state where fiat money becomes worthless.
NOTE: Ralph Foster’s book, Fiat Paper Money, The History and Evolution of Our Currency, is the perfect gift for those who still believe fiat paper money is preferable to gold and silver.
The seeds of today’s hyperinflation were sown in 2020 when central bankers printed historic amounts of fiat money to offset a catastrophic drop in demand due to Covid-19 lockdowns. While the historic money printing prevented an imminent deflationary collapse, it re-awakened powerful inflationary forces previously quiescent for decades; and prices began rising in 2021.
Inflation’s 2021 ascent caused James Bullard, president of the St Louis Federal Reserve, to warn: We’re at more risk now than we’ve been in a generation…this could get out of control…One scenario would be…a new surprise…that we can’t anticipate…but we would have even more inflation.
What Bullard meant by “a new surprise…that we can’t anticipate…but we would have even more inflation” is hyper-inflation , fait money’s Achille’s heel caused by excessive monetary liquidity that can be reversed only by raising interest rates.
Raising rates today, however, is extremely dangerous. Global economies, burdened with almost $130 trillion of debt, are vulnerable to any slowdown. When economies slow, so does the ability to repay debt. When growth stops, the bankers’ daisy-chain of debt unravels, bonds default and economies will collapse.
On December 19th, after the Fed had raised interest rates four times in 2022, David Lynch wrote in the Washington Post:
“…even after nine months of repeated Fed rate hikes, inflation-adjusted interest rates are still negative. Karen Petrou, managing partner of Federal Financial Analytics, said the stress will grow once rates move higher and really begin to slow the economy. After Thursday’s increase, the Fed now expects rates to peak next year above 5 percent and to remain there through 2023…“It’s a very tricky situation. As rates rise, even in a mild recession, then it gets ugly,” she said. “
“The Federal Reserve has not established a formal inflation target, but policymakers generally believe that an acceptable inflation rate is around 2 percent.” – Board of Governors, Federal Reserve System
Should the Fed keep raising interest rates to achieve 2% inflation, it will trigger a collapse of stock, bond and real estate markets that will make the Great Depression seem like an amuse-bouche
A GREAT WAVE OF INFLATION, THE COLLAPSE OF CAPITALISM AND THE EMERGENCE OF A NEW PARADIGM
In September 2008, in my article Gold & The Collapse of Paper Money, I referred to Professor David Hackett Fischer’s The Great Wave, Price Revolutions and the Rhythm of History (Oxford University Press 1996):
According to Professor Fischer, throughout history periods of social stability are interrupted by waves of rising prices. These great inflationary waves are accompanied by unexpected disasters, extreme social upheaval and cause the collapse of the existing era; clearing the way for a new more advanced age.
“In each wave of rising prices: …Food and fuel led the upward movement. Manufactured goods and services lagged behind. These patterns indicated that the prime mover was excess aggregate demand, generated by an acceleration of population growth, or by rising living standards, or both.”
“… Prices went higher, and became increasingly unstable. They began to surge and decline in movements of increasing volatility. Severe price-shocks were felt in commodity movements. The money supply was alternately expanded and contracted.”
“…Financial markets became unstable. Government spending grew faster than revenue, and public debt increased at a rapid rate…Wages, which had at first kept up with prices, now lagged behind. Returns to labor declined while returns to land and capital increased. The rich grew richer. Inequalities of wealth and income increased. So did hunger, homelessness, crime, violence, drink, drugs, and family disruption.”
“…This was a time of lost faith in institutions. It was also a period of desperate search for spiritual values…Young people, uncertain of both the future and the past, gave way to alienation and cultural anomie.”
“As 2022 ends and 2023 is about to begin, the greatest inflationary wave (measured in magnitude of change) is about to culminate in a crisis of demographic contraction, economic collapse, political revolution, international war and social violence that will end the present prevailing paradigm of capital markets and debt-based money.”
“The more universal a paradigm, the longer its existence, the more fundamental and revolutionary will be its shift.” – DRS, Time of the Vulture, May 2007
“The present prevailing paradigm of capital markets and debt-based money is now everywhere. Its collapse will be as far-reaching as its consequences. A soft-landing is not an option. The 1930s Great Depression will seem like an amuse-bouche compared to what is about to happen.”
NOTE: BlackRock warned investors to “get ready for a recession unlike any other” [i.e. the Great Depression]. Prior to the 1930s, any economic downturn was referred to as a depression. Today, they’re called recessions.
December 27, 2022
A BETTER WORLD IS COMING
“Each crisis improved the condition of ordinary people. It has also enlarged ideas of human dignity, freedom, and the role of law. This tendency has become more powerful in each successive wave.” ¬– Fischer, The Great Wave, Price Revolutions and the Rhythm of History
In 1981, Buckminster Fuller wrote that an unprecedented crisis intended to transform humanity into an interconsiderate harmonious whole with a higher standard of living for all was about to begin.
Bucky Fuller’s prediction of today’s crisis and its purpose supports Professor Fischer’s thesis that following the collapse of the present paradigm, a better world will emerge. Debt slavery will no longer be humanity’s common bond.
In Time of the Vulture (2007), I predicted a severe economic crisis was imminent. That crisis began in 2008 and is now nearing its cataclysmic resolution. My new book, “Docking At The Mothership” is intended to help readers understand and survive what is now about to happen.
Buy gold, buy silver, have faith.