Credit Suisse: Russian sanctions could lead to central bank balance sheet expansion

I came across this Bloomberg article, SWIFT Ban Means the Fed May Need to Be Ready With Dollars, which lays out a probable scenario (>50%) in which the Fed and ECB may have to actually expand its balance sheet on a temporary basis. These actions would most likely involve the use of TOMOs or liquidity swaps.

If this is the case, we could see a scenario in which the asset markets respond favorably after the initial shock. Many more dollars will be circulating around the globe.

SWIFT Ban Means the Fed May Need to Be Ready With Dollars

    • Ukraine war has led to sanctions on Russia’s biggest banks
    • ‘Central banks should stand ready to make markets’: Pozsar

February 27, 2022

The decision to exclude various Russian lenders from the SWIFT messaging system could result in missed payments and giant overdrafts within the international banking system and spur monetary authorities to reactivate daily operations to supply the market with dollars.

That’s the view of prominent Credit Suisse Group AG strategist Zoltan Pozsar, who published a note Sunday examining the consequences for money markets of the decision to take some lenders off SWIFT, a system that facilitates international payments between institutions.

Drawing comparisons with the 2008 Lehman Brothers Holdings Inc. failure and the pandemic-related market seizures of March 2020, Pozsar warns that “central banks should stand ready to make markets on Monday again.”

“Exclusions from SWIFT will lead to missed payments and giant overdrafts similar to the missed payments and giant overdrafts that we saw in March 2020,” Pozsar wrote. “Banks’ inability to make payments due to their exclusion from SWIFT is the same as Lehman’s inability to make payments due to its clearing bank’s unwillingness to send payments on its behalf. History does not repeat itself, but it rhymes.”

In Pozsar’s view, current excess reserves and reverse repurchase agreement facilities won’t be enough, and monetary authorities will need to act. And the upshot from that is that the Federal Reserve, which has been paving the way to start shrinking its balance sheet through so-called quantitative tightening, might actually expand it again first, according to Pozsar.

Gold has a floor, and Russia and China were the buyers

In a related Reuters story, Russian central bank to resume gold purchases on domestic market from Monday, it stated that “Russia’s central bank on Sunday said it would resume buying gold on the domestic market from Feb. 28, as it undertakes measures to try and ensure financial stability during Western sanctions against Moscow for its invasion of Ukraine.”

I see this being bullish for gold.

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34 thoughts on “Credit Suisse: Russian sanctions could lead to central bank balance sheet expansion

    1. Maybe I’m paranoid but I can’t help but feel uneasy. Life is starting to open up for the vaxxed here in Canada – no passports, no capacity restrictions. Maybe even no masks. Dare I venture out? Some of my music groups are hitting the ground running, ready to start up. No time wasted – playlists planned, venues booked. I fear that ‘they’ are allowing the unvaxxed to mix with the vaxxed, the vax will get sick and blame it on us. Is it that? I feel like I’ll be a target, a sitting duck. Some of my groups with *ahem* older people (boomers) are demanding safety protocols. I want to avoid these people especially. All I need is for one of them to become gravely ill and it’s my fault.

      1. I meant to say that life is also opening up for the unvaxxed as well. We will be allowed to integrate into society after being ostracized. It’s unnerving.

    2. The war in Ukraine is a convenient distraction from the Covid Vaccine issue. There are a couple of accomplishments with the Ukraine war distraction:

      1) The anti vaxxers are no longer pushing against the vaccine mandates.

      2) The war also diverts attention away from the increased deaths and health problems due to the
      Covid vaccines. Everybody is glued to the Ukraine news and not paying attention to their own or relatives increasing health problems after getting vaccinated.

      Meanwhile many US states are still quietly pushing vaccine passes. Check out this article in Forbes:

      The vaccine push is NOT over. The war in Ukraine is a clown show distraction from other agendas being pushed on us(vaccines being one). I don’t think WWIII is here with the Ukraine war but it is coming.

  1. I think these increased sanctions against Russia are part of the plan to crash the economy. The sanctions cut off supply therefore raising prices. Higher prices slow the economy as peoples disposable income disappears due to the higher prices. Just look at the price of oil as an example. The sanctions also cut off business therefore reducing manufacturing activity. I think we could be headed to the next depression except there will also be inflation. The the Central Banks will have to put off tightening or even start easing from here.
    Precious metals and residential real estate may be good investments in this scenario.

  2. There’s a green candle on the weekly for the spoos, and if this is the worst the stock market can do with the world falling apart, I still think we have found a short-term floor.

    Only a Chinese intervention on behalf of the Russians will make this thing go lower.

    Inflation can rage for another two to three years before the current USD system falls apart, but that should be enough time for the final rounds of more wealth and power consolidation before World War III and a new system emerges.

  3. The war in Ukraine has caused a lot of media spin in both the mainstream media and the Alt media.
    Many in the Alt media are pro Putin apologists while the mainstream media paint Putin as a monster.
    I think Putin is NOT a nice guy. Putin has been a KGB gangster in the past and is anything but a man of God.
    The mainstream media also hype up how the Ukrainians are fighting back and holding up the Russians. That may be partially true but ultimately I think Russia will accomplish their objective as the Ukrainian army is outnumbered and out weaponed.

    The real lesson with the media coverage of this war is that the truth gets lost in the spin. The Alt media is pro Putin biased while the mainstream media is anti Russian biased. Here is an article written by Mike Snyder that gives a balanced view of this war:

    If you need to know the real truth then pray to God and the Lord will give you the truth on a need to know basis. I also pray that innocent Ukrainian and Russian lives are spared and rebuilt. I see enough video that many of these Russian soldiers did not want to fight this war but were drafted to do so.
    Many Ukrainians are facing this mess because of corrupt Ukrainian and Western Government officials playing this war for their ends.

    I ultimately pray that those working for the Synagogue of satan (Putin, Biden, Chicomm) destroy each other and self destruct.

    1. The Russians will accomplish their objectives in Ukraine unless Western allies step in the fight to bolster the Ukrainian army in which case a World War will break out.

      1. the west is sending weapons and there a many volunteers heading over also. Many captured Russians and abandon equipment, many Russian soldiers surrendering don’t want to fight.
        There are many families ties between both countries they are really brothers and sisters.
        Also though i dont think that NATO should be on the Russian boarder i can understand Putin and Russia not wanting that we did not want missiles in Cuba.

        1. I suspect Putin is following a script now and that this all needs to be done in the buildup to World War III. That will come later on in the decade, sometime after 2025. I don’t think he’s going to stop with Ukraine, and suspect he may even begin to reincorporate many of the Central Asian Nations and other former Soviet Union members.

          If this is the case, the Russian citizenry are going to get financially creamed. Already the ruble has been decimated, and I suspect that Putin will not relent.

          Both sides have claimed NATO’s meddling to be the cause. NATO is outdated and Russia is using it as an excuse to invade. Meanwhile the west, led by the us, keeps mentioning NATO membership to Ukraine, although this intention is disingenuous.

  4. My latest observation about Ukraine is very much out of line to popular thinking. So call me crazy. But remember this a year from now because some of it may be accurate.

    On another hunch – and almost as a joke – I searched “Ukraine redevelopment zone” and came up with some interesting info. Seems there is a $277B redevelopment plan headed up by Zelensky.

    What if a significant component to this war is about destroying the old to make way for the new? Ukraine is effectively a US satellite after all. Out of that $277B, the developers and their financial backers would have to set aside a lot of money for demolition. But what if Russia was willing to do the demo for free? Putin gets to play with some of his war toys as a bonus while using defense related money to do demo work. This will save the developers millions! All they would have to do is call the Northern Central Asians to clean up the mess. In the US the Mexicans do the clean up. No offense to Mexicans but we all know who does much of the heavy lifting around here.

    I know it sounds crazy but the way things have been going in the last 10 years nothing surprises me any more. Fires in CA and other parts of the US outside the Megaregions. Riots in select redevelopment zones across the US. Homeless camps in select areas (largely older industrial zones) to depress property values and make whatever remaining tenants move out. None of these events are accidental nor few.

    This thinking of course has to assume that the ultimate goal for Ukraine (and the rest of the world for that matter) is to cram people into large city centers where everyone can be plugged into the system. No more living in rural areas or anywhere that a cell network can’t reach. World leaders are all in on it.

    Note the September 2021 dates on the articles. It’s almost like the timing is perfect!

    This PDF has a lot of info but I did not read it all. What’s for certain is a large group of people have put a lot of effort and planning into Ukraine for it to be destroyed by Russia.

    Let’s face it. Russia has the capability to take Ukraine in the classic sense of the term and be done by lunch. There would be nothing left. This war will drag on with AP images of gorgeous Ukrainian models with semi auto rifles making statements that qualify as a Trump campaign slogan until the entire world completely supports the rebuilding of Ukraine into some WEF technocratic wet dream. Don’t ever forget that in order for the world to advance toward communism 2.0 it has to be your idea.

    1. Very good and interesting insight Al. There always is more than meets the eye. Can’t trust mainstream OR Alt media.

    2. Good analysis AI. I heard a smart fellow say that the appalling losses of the armies in WWI were not due to incompetent generalcy. They obeyed orders and slaughtered millions of “surplus” laborers. Foch called them “cannon fodder.” In WW II my understanding is that working-class areas of Germany and Japan were bombed but the wealthy were not. Culling again. Consider also that AH never backed down and butchered millions of his troops on the Russian front.

      Consider VN. If you were in college you didn’t face the draft. Millions of working class and ghetto kids were drafted and 60K + were KIA and how many more maimed, effectively taken out of the workforce. What kind of BS is this, other than culling labor and leaving the managerial class alone?

      With this in mind I maintain that the narcotics phenomenon in rural, white America is a plan also. Wall Street makes billions, while the rural areas are depopulated and property goes to auction. If Uncle Shmuel wanted to stop the pillbilly holocaust it could. There are counties in southern WV that are depopulated down to what it was in year 1900. They can’t afford to pay the $60 dollars a day per prisoner incarceration charge for the regional jails. Property crime and shattered families are hollowing out Appalachia. Brain drain.

      1. To my point and observations stated above, the following is quoted from this 2018 article:

        “Dozens of beautiful but decrepit historical buildings are scattered around Kyiv’s city center. Protected by the law from demolition, they slowly disintegrate from age and neglect. City planners and preservationists disagree on how to fix the problem.”

        Here comes a war to solve this problem! It sure seems like a convenient attack by the current boogeyman (Russia) is a perfect crisis to evade current laws on the books. As the world is blasted with images of destruction caused by Russia and Putin, a simultaneous effort in support of Ukraine is going full tilt boogie. Ukrainian flags on every overpass, city building displaying colors, FB profile pics, etc… Every person you meet has their individual and unique observation in support of Ukraine. I will say this is the first time (outside my immediate family) that regular Americans have even acknowledged the existence of Ukraine. Media brainwashing at it’s finest!

        It’s sad to see this happen and even one death is a tragedy of epic proportions. But the media being what it is, I can hope much of this destruction is theatrical and the people are not in harms way (mass evacuations?). Did Russia announce the demo plan so the city had time to shut the gas off and purge the lines a day before the bomb hit? I’m not glued to the news but if the actual events are only hours from the reporting shouldn’t there be fire, smoke and commotion everywhere? Every image and video seen looks like a construction demolition site rather than an unannounced deployment of bombs. If I’m missing something please fill me in.

        Right now I see current headlines saying Kharkiv is being destroyed and I find many hits about redevelopment plans in Kharkiv. Web sites in good English and very professional offering real estate and property services

        I think investors are lining up with sacks of loot.

  5. What do you think is the timeframe to collapse? Do you still believe there will be one? You have mentioned in the past that is bond yields and interest rates cannot remain suppressed forever. You also predict much higher asset prices.


  6. This article pertains to a famous 1750 sermon written by Jonathan Mayhew, and his defense of resisting tyranny, based on Romans 13.

    Excerpt: This sermon was printed and reprinted numerous times in the colonies and London. Mayhew begins:

    Let us now trace the apostle’s reasoning in favor of submission to the higher powers, a little more particularly and exactly. For by this it will appear, on one hand, how good and conclusive it is, for submission to those rulers who exercise their power in a proper manner: And, on the other, how weak and trifling and unconnected it is, if it be supposed to be meant by the apostle to show the obligation and duty of obedience to tyrannical, oppressive rulers in common with others of a different character.

    Mayhew distinguishes between the moral duty of the Christian to submit to lawful authority and the citizen’s duty toward “lawless, unreasonable” tyranny:

    Those who resist a reasonable and just authority, which is agreeable to the will of God, do really resist the will of God himself; and will, therefore, be punished by him. But how does this prove, that those who resist a lawless, unreasonable power, which is contrary to the will of God, do therein resist the will and ordinance of God?

    Consequently, Mayhew argues:

    Thus, upon a careful review of the apostle’s reasoning in this passage, it appears that his arguments to enforce submission, are of such a nature, as to conclude only in favor of submission to such rulers as he himself describes; i.e., such as rule for the good of society, which is the only end of their institution. Common tyrants, and public oppressors, are not entitled to obedience from their subjects, by virtue of anything here laid down by the inspired apostle.

    1. Do you understand what I mean? Our current set of tyrannical rulers are not entitled to our obedience. While we may not yet have to take up arms, don’t give them respect when none is due. Avoid government affairs when possible, and please do not look to them to solve any of your problems. For the government creates the very problems we seek them to solve.

    2. I really like your article on Mayhew. Romans 13 only applies to submitting to a just government that is in line with God. We should not submit to any government that works for satan. By submitting to unjust , satanic governments only aids and abets their power. I think anybody who willfully submits to a government that works for satan is committing a transgression against God.

  7. Jonathan Edwards; Sinners in the Hands of an Angry God,for%20the%20First%20Great%20Awakening.

    This great awakening was the catalyst for the colonists to begin to seriously reconsider British rule in the colonies. The United States was much different than any other nation before or after its formation. I read these sermons and bow my head in sadness for what this nation used to be.

    Today, we have a bunch of weak spirited debt slaves crying the blues, all PC and tripping over one another to prove how woke they are. There is one thing I know for sure. The vast sea of these self described victims are in for a shock the moment their ghost leaves the body.

    We deserve what is coming and what is already here. The problem stares us in the mirror.

    1. Your comment about the “weak spirited debt slaves” is so true. I posted on another site about needing to hear from the pulpit about repentance like the Jonathon Edwards sermon “Sinners in the Hand of an Angry God”. I was informed by another poster that it was sermons like this that pushed people away from the church – brow beating parishioners – the poster called it. I didn’t even bother responding, my point was totally missed. I guess repentance isn’t politically correct.

  8. I have reposted this because I thought this did not originally post.
    One important lesson to learn from Russia’s invasion of Ukraine is GET A GUN. Ukraine has loose gun laws where most people can get semi auto guns or shotguns. The invading russian soldiers are being stymied because Ukrainians own guns and are willing to fight the russians. If you live in a place where you are not allowed to own a gun or the government makes it very difficult to own a gun(such as blue states like CA, NY, NJ, and Massachusetts) then GET OUT of those places. Do not count on those governments to defend you when an invasion happens. People who do not have guns when their area gets invaded are totally helpless. Any government that makes it extremely difficult or forbids its citizens to own guns is an enemy government working against its citizens.

    If the USA ever gets invaded then the Northeast states and all the west coast states will be toast as those states make it hard for residents to own guns. Most of the Northeast USA coast and West Coast USA residents will most likely run instead of fighting the invaders.

    1. I can see Russia getting so frustrated with the Western sanctions that it will tag team up with Chicomm China and strike the West, with particular emphasis on the US.

      It’s hard to not see this eventually happening. This is especially true if Russia carries out its true intentions and tries to reincorporate the Central Asian Nations as well.

  9. Long live QE! All we need is death and destruction, war, misery, social and racial injustice, immorality, stupidity, evil, and greed.

    This is the perfect monetary system for the last days. This monetary system addresses all of the concerns of the unwashed. They’re not mutually exclusive and this is the only system currently available that can mollify the livestock.

    This monetary system allows cheap internet streaming and social media to prevail. This monetary system allows us to have our cheap cell phones to track and Trace us and to keep us diverted.

    So, watch the vaccinated livestock go out there and blame others for the world’s miseries. Everyone is blaming someone else like a big circle.

  10. World war III according to the sides in Ezekiel 38-39 makes sense. No wonder why it’s not PC to bring it up. It will be the perfect excuse to start over. Stocks will continue higher until the nukes drop on America.

    1. The futures are already paring losses. Often times it’s best to buy the futures on the open of a large gap down.

  11. Putin readied his nuclear forces today.

    Turkey is closing the bosphorous strait. EU sending large amounts of supplies to Ukraine including fighter jets. Cut off Russia from SWIFT.

    This is escalating.

  12. Based on btc’s performance today, would should see the equity markets fall overnight, and gold should rise.

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