Nationalism and protectionism will be the red herrings for the next bust, but the system will remain intact

The elites created the fiat monetary system to consolidate the world’s wealth and power

The elites of the secret societies control the central banks and have used this interlocking network to consolidate the world’s wealth and power. These privately-run central banks control virtually all nations, including China and Russia. Through their monetary printing press these elites have bought up and gained effective control of the media, governments, all large public corporations, and the politicians who run for office. They now control the technology that is released to society as well as the educational system, so they have completely brainwashed much of  the population. This has left the average person ignorant and extremely vulnerable to each economic cycle.

The consolidation of the world’s wealth has been unprecedented in world history

Most readers of the alt-financial media view this monetary system as fatally flawed, but to the globalists it was designed perfectly.  For instance, we can tell this system has worked as intended by measuring the consolidation of wealth by these powers. It is estimated that by 2030 the top 1% will own roughly 2/3 of all global wealth. Imagine the acceleration of the process during the next boom/bust cycle. As you can see from the accompanying chart, the top 1% have stepped up this process since the last recession and now own at least half the world’s wealth.

Thus, between now and 2030 most of the unwitting participants in this global economy (the average person) are going to lose much of what they still own. These people will be our family members, friends, and neighbors. Based on these trends, the globalists still have some work to do. Too many people around the world still own too much stuff and that needs to change.

The elites need to create another bust, but they need to divert us away from the real cause; central bank policy

We need to understand that this current monetary system still has some life left; it is the vehicle for the elites’ wealth consolidation. So, this current boom cycle and upcoming bust phase has been carefully planned in advance. We are analyzing it in real time.  It will be a tough several years for most people, but for those who understand and take action they can come out fine.

As I have discussed in my previous shows and blog posts, the owners of the central banks need to create a red herring and divert the people’s attention away from the reality of the situation. So, when things blow up, why not blame nationalism and protectionism?

On Friday morning, European Central Bank President Mario Draghi warned that rising protectionism poses a risk to the eurozone economy and stressed that the ECB would be cautious about removing its monetary stimulus.

The ECB has been able to hold down longer-dated bond yields… for now

What an interesting idea… the ECB is being disingenuous when it says it will wind down its monetary stimulus. It cannot as the weaker eurozone nations are on permanent life support and that in order to keep the euro intact permanent stimulus is required. Unless control of national fiscal policy and government spending is brought under a  eurozone umbrella,  the eurozone will eventually unravel as any remaining confidence in the stimulus program will dry up. As we can see from the accompanying chart of eurozone 10-year yields, there is still some confidence in the ability of the ECB to hold things together. It remains to be seen how long this confidence will last.

Mario Draghi knows things are tenuous and that he can never stop monetary stimulus. The Bank of Japan has been keeping the Japanese financial system on life support for over 20 years, so never underestimate the ECBs ability to keep things going for longer than we can imagine. However, Draghi is not stupid. He is just carrying out orders so, why not blame protectionism? It was the reason the globalists gave for causing the great depression and WWII. They are planning on it working again.

President Trump and protectionism will be blamed for the next bust, but the central banks will cause it

Here is a 62-year chart of the federal funds rate with the domestic recessionary periods superimposed.

Every recession in the US was preceded by a tightening in US Fed monetary policy and a rise in the Fed funds rate

My contention enumerated in my articles from 2013 was that the US Fed should have been raising the Fed funds rates as far back as 2012. While it didn’t have to terminate its QE purchase program, a rise in the Fed funds rates could have helped to normalize monetary policy without being overly restrictive. It could have signaled to the markets that the US Fed was becoming more confident in the economy, while providing the liquidity to keep the “green shoots” growing. It could have raised rates two to three times to the rate back to about 1.00%. In the whole scheme it would not have really had much of an impact.

Unfortunately, the Fed did not commence raising rates until the end of 2015; three full years later than it should have started. This allowed asset prices to grow in most sectors (e.g. equities, real estate, non-fungible assets, sovereign debt) and until January of this year stock prices continued to climb. As of this writing, real estate continues to rise, but for how much longer?

Here is an unemployment chart spanning the past 25 years. We can see that unemployment is at a cyclical low. It cannot go down much further.

The bottom line is that it’s time for the next bust. Everything is signalling it and the elite need it to consolidate the world’s wealth and power. But think about this; even if we have another depression why would we have to jettison the current monetary system?

The current system still has life left; do not count it out

My one contention with the alt-financial media is that they are convinced this current monetary system is going to fail very soon. I have been reading these articles for 15 years. This is a misguided concept if for one reason; the elites have nothing yet available to replace it. Let’s look at some of the ideas that will not work

The IMF and the SDR

The concept of the Special Drawing Right (SDR) has been around since 1969, but the IMF itself admits that it has never been a practical vehicle for global trade. Yet, I continually see articles mentioning this as a replacement for the US dollar. The SDR is neither a currency nor a claim on the IMF. Rather, it is a potential claim on the freely usable currencies of IMF members.

Think about the logic error; why would someone who wishes to circumvent the US dollar or other fiat currencies go and use a basket of these broken currencies in the form of an SDR? Exporters want to get paid in their currency or a liquid currency, not an SDR. Their employees don’t want to get paid in SDRs.

Cryptourrencies

I continually read about those who claim that blockchain technology and cryptocurrencies will replace the dollar and other fiat currencies. This will probably indeed be true at some point, but it is clear that there are still major technological limitations currently holding cryptocurrencies back – they are too slow, unstable, and the technology behind them needs to advance greatly. We are still at least 10 years away from cryptocurrencies having the potential in taking the mantle away from the US dollar.

There will be a time, but great strides in technological advancement need to occur in the crypto sphere for them to pose a challenge to any reserve currency. They may currently be a store of wealth, but that does not mean they are capable of replacing transaction currencies.

Chinese yuan

I have analyzed this in the past. China is an export-driven economy and thus relies on trade surpluses to grow its economy. As a result there are not enough yuan outside China to facilitate global trade. In addition, the ChiCom government still effectively manages the yuan, so if many of the yuan ended up outside of China the Chinese government and PBOC would lose control over its management of the yuan. Only a free-floating yuan would pose a threat to the dollar hegemony and China is not ready for that.

Chinese futures markets are yuan-denominated and are primarily only opened to domestic entities. Chinese oil and distillate producers and distributors could benefit from yuan-denominated futures contracts, but that’s because their revenue is denominated in yuan.

I’m sorry, but the yuan is still about 1.25% of global reserves and will never be a threat to the US dollar in its current form. Besides, China doesn’t want to make the needed sacrifices (e.g. run large trade deficits and discontinue central management of the yuan) to make the yuan a dollar replacement.

Gold

Gold may be a store of wealth, but the fiat monetary system has grown so large that if the world’s major currencies tied themselves to some sort of gold backing the economy would collapse overnight as there would not be enough money growth to service outstanding debt.

Conclusion

Never underestimate the ability of the globalists to keep this current system going. Just because the US 10-year yield may spike to 5% does not mean we have a collapse and a new system will magically appear. Only a war will bring the needed force majeure. President Trump’s protectionist stance will only be the excuse for the next bust, but the show will go on.

There needs to be a replacement system, but there currently is not one publicly planned as there are no current practical replacements to the US dollar. The Chinese yuan cannot replace it. Gold can’t replace it. A basket of fiat currencies such as the SDR will not be able to replace it. Cryptocurrencies are not yet ready for prime time.

We are being set up for the next bust. How we respond to it will determine whether we end up on the losing end or come out ahead. From what I can tell, most following the alt-financial media and those supporting Trump will be the biggest losers. Of course, this is being done by design.