Economic Update: The coming turmoil in 2015 and 2016

The month of August when global markets are usually calm have set a president of what is about to come around the world. I want to give you a full global analysis over what has happened the last month in the world economy and what might be coming soon?

First let’s take a look at what have happened in the economy in the month of August:

China’s currency devaluation and other countries doing the same erupting a currency war 2.0. Let us take a look at how the shot across the bow to the US Dollar’s world reserve currency status. While China devalued their currency and have had a massive stock market and real estate market crash as their debt bubble is deflating they have thrown all the money they can to keep the bubble from deflating in a natural pace, usually it should drop 30-70% depending of the leverage. The Chinese debt to GDP is now at a record 207% to GDP. This is up from the 2008 number of 125% to GDP in the private sector. This is almost an increase of 100% in only 7 years a massive increase in debt.

As China wants to keep it’s economy afloat it has done a lot of invasion of it’s economy by halting trading on 80% of it’s stocks traded on the stock exchange, but most important of all it started selling something that might change the world forever. China started tapping into it’s foreign exchange rates by selling US Bonds!!!!! The biggest buyer of US debt that helped the US government keep borrowing money has now turned around and started selling the US debt and this might start an cascading event of selling by others holding the US debt.

I predict more US debt being sold and US dollars might flood the US economy. Where it will go and what assets or commodities it might inflate is yet unknown, but this is one of the final signs of the demise of the US dollar. Russia as shown above has been trying to get rid of US treasuries for a while already and has been buying gold instead.

Lets take a look at the recent currency devaluation from China and what has followed. There has as of lately been an enormous volatility in currencies as countries believe that by devaluing their currency their economies strengthen. Here are the last number on currencies to US dollar valuation over the last month and year:

World	Actual	Monthly	Yearly	Date
Canada	1.3204	2.00%	22.30%	28-Aug
Mexico	16.7551	2.80%	27.80%	28-Aug
Brazil	3.5835	7.70%	59.30%	28-Aug
United States	96.149	-0.90%	16.60%	28-Aug
Argentina	9.2933	1.40%	10.60%	28-Aug
Venezuela	6.35	0.90%	1.00%	28-Aug
Colombia	3,075.00	8.00%	63.50%	28-Aug
Chile	691.995	4.00%	17.40%	28-Aug
Peru	3.226	1.40%	16.30%	28-Aug
Cuba	1	0.00%	0.00%	28-Aug
Dominican Republic	45.04	0.40%	3.40%	28-Aug
Guatemala	7.6795	0.10%	-1.20%	28-Aug
Uruguay	28.485	2.00%	20.20%	28-Aug
Costa Rica	532.4	-0.20%	0.70%	28-Aug
Panama	1	2.40%	2.00%	28-Aug
Bolivia	6.9	2.90%	2.20%	28-Aug
Paraguay	5,367.24	5.10%	28.80%	28-Aug
El Salvador	8.735	0.00%	-0.10%	28-Aug
Trinidad and Tobago	6.3538	0.20%	0.40%	28-Aug
Honduras	21.9889	0.20%	4.30%	28-Aug
Jamaica	117.41	0.30%	4.30%	28-Aug
Nicaragua	27.4655	2.90%	6.40%	28-Aug
Haiti	51.4462	-8.30%	16.40%	28-Aug
Bahamas	1	0.00%	0.00%	28-Aug
Suriname	3.3	0.00%	0.00%	28-Aug
Guyana	207.21	0.10%	0.00%	28-Aug
Cayman Islands	0.82	0.00%	0.00%	28-Aug
Euro Area	1.118	1.80%	-15.10%	28-Aug
United Kingdom	1.5391	-1.40%	-7.20%	28-Aug
Switzerland	0.9629	-0.50%	5.30%	28-Aug
Russia	65.427	11.50%	77.90%	28-Aug
Turkey	2.9239	6.00%	35.80%	28-Aug
Sweden	8.4634	-1.10%	21.80%	28-Aug
Poland	3.7689	1.30%	18.40%	28-Aug
Norway	8.2893	1.70%	34.10%	28-Aug
Denmark	6.6755	-1.00%	18.20%	28-Aug
Czech Republic	24.1725	-1.00%	15.30%	28-Aug
Romania	3.9587	-0.70%	19.00%	28-Aug
Hungary	281.075	-0.20%	18.70%	28-Aug
Ukraine	21.2	-2.80%	54.70%	28-Aug
Belarus	17,552.50	15.30%	68.40%	28-Aug
Croatia	6.7597	-2.30%	16.90%	28-Aug
Bulgaria	1.7456	-1.20%	17.70%	28-Aug
Serbia	107.52	-0.60%	21.10%	28-Aug
Bosnia and Herzegovina	1.7486	-1.80%	18.20%	28-Aug
Iceland	129.93	-2.90%	11.40%	28-Aug
Albania	123.8295	-2.20%	17.10%	28-Aug
Macedonia	54.83	-0.90%	18.40%	28-Aug
Moldova	19.05	2.40%	39.80%	28-Aug
Japan	121.73	-1.80%	17.30%	28-Aug
China	6.3899	2.90%	4.00%	28-Aug
India	66.1525	3.70%	9.00%	28-Aug
South Korea	1,180.30	1.80%	16.50%	28-Aug
Indonesia	14,110.50	6.20%	21.00%	28-Aug
Saudi Arabia	3.7513	0.20%	0.10%	28-Aug
Taiwan	32.356	2.50%	11.10%	28-Aug
Iran	29,930.00	1.20%	20.70%	28-Aug
United Arab Emirates	3.673	0.00%	0.00%	28-Aug
Thailand	35.858	3.00%	12.50%	28-Aug
Malaysia	4.172	9.80%	32.90%	28-Aug
Singapore	1.4088	2.90%	12.80%	28-Aug
Israel	3.9297	4.10%	10.30%	28-Aug
Hong Kong	7.7516	0.00%	0.00%	28-Aug
Philippines	46.7455	2.90%	7.40%	28-Aug
Pakistan	103.905	2.20%	4.20%	28-Aug
Iraq	1,146.00	-3.70%	-1.40%	28-Aug
Kazakhstan	243.2099	31.80%	35.40%	28-Aug
Qatar	3.6416	0.10%	0.10%	28-Aug
Vietnam	22,462.50	4.70%	7.60%	28-Aug
Bangladesh	77.851	2.30%	2.20%	28-Aug
Oman	0.3853	0.40%	0.40%	28-Aug
Azerbaijan	1.0503	-0.20%	34.70%	28-Aug
Sri Lanka	134.35	3.00%	3.30%	28-Aug
Syria	220.25	0.60%	43.40%	27-Aug
Myanmar	1,281.75	3.20%	32.00%	28-Aug
Uzbekistan	2,595.52	0.80%	11.90%	28-Aug
Macao	7.9826	-0.10%	0.00%	28-Aug
Turkmenistan	3.5	0.00%	22.80%	28-Aug
Lebanon	1,506.50	-0.10%	-0.40%	28-Aug
Yemen	214.89	0.00%	0.00%	28-Aug
Jordan	0.7089	0.40%	0.40%	28-Aug
Bahrain	0.3773	0.10%	2.00%	28-Aug
Afghanistan	65.06	7.60%	17.20%	28-Aug
Nepal	105.784	3.50%	9.30%	28-Aug
Brunei	1.4089	3.10%	13.60%	28-Aug
Cambodia	4,101.30	0.40%	3.10%	28-Aug
Georgia	2.345	2.90%	35.60%	28-Aug
North Korea	130.04	0.00%	-0.10%	30-Jun
Mongolia	1,991.00	0.50%	9.50%	28-Aug
Laos	8,182.95	0.50%	4.20%	28-Aug
Armenia	483.53	1.00%	18.00%	28-Aug
Tajikistan	6.3198	1.00%	25.40%	28-Aug
Kyrgyzstan	65.9956	8.30%	24.60%	28-Aug
Maldives	15.36	0.70%	-0.20%	28-Aug
Australia	0.7165	-1.80%	-23.40%	28-Aug
New Zealand	0.6463	-3.10%	-22.90%	28-Aug
Papua New Guinea	2.8112	1.60%	36.50%	27-Aug
New Caledonia	106.689	-1.60%	18.10%	28-Aug
Fiji	2.1565	1.10%	15.90%	28-Aug
Nigeria	199.05	19805.00%	24.70%	28-Aug
South Africa	13.313	6.10%	25.50%	28-Aug
Egypt	7.8357	0.40%	9.90%	28-Aug
Algeria	106.055	7.40%	32.70%	28-Aug
Angola	125.65	-0.20%	28.70%	28-Aug
Morocco	9.7298	-0.30%	18.30%	28-Aug
Sudan	6.077	1.90%	6.60%	28-Aug
Kenya	103.9295	3.40%	19.60%	28-Aug
Ethiopia	20.8375	0.10%	4.90%	28-Aug
Tanzania	2,140.00	4.50%	31.40%	28-Aug
Tunisia	1.9591	0.30%	13.20%	28-Aug
Libya	1.3664	-0.50%	12.90%	28-Aug
Ghana	4.03	10.10%	6.50%	28-Aug
Ivory Coast	586.4614	-1.80%	17.80%	28-Aug
Congo	928	0.10%	0.40%	28-Aug
Cameroon	584.866	-1.60%	17.50%	27-Aug
Zambia	8.46	10.90%	41.00%	27-Aug
Uganda	3,630.00	6.60%	38.60%	28-Aug
Gabon	584.866	-1.60%	17.50%	27-Aug
Mozambique	41.255	8.50%	35.80%	28-Aug
Botswana	10.283	3.70%	17.40%	28-Aug
Senegal	586.4614	-1.80%	17.80%	28-Aug
Equatorial Guinea	586.4614	-1.80%	17.80%	28-Aug
Republic of the Congo	584.866	-1.60%	17.50%	27-Aug
Chad	584.866	-1.60%	17.50%	27-Aug
Namibia	13.3045	5.90%	27.20%	28-Aug
South Sudan	7.2	0.00%	71.40%	11-Mar
Mauritius	35.18	-0.50%	13.10%	28-Aug
Burkina Faso	586.4614	-1.80%	17.80%	28-Aug
Mali	586.4614	-1.80%	17.80%	28-Aug
Madagascar	3,302.60	-1.10%	29.40%	28-Aug
Benin	586.4614	-1.80%	17.80%	28-Aug
Niger	586.4614	-1.80%	17.80%	28-Aug
Rwanda	729.3	7.30%	7.50%	28-Aug
Guinea	7,250.35	-3.80%	3.10%	28-Aug
Mauritania	314	-3.40%	7.40%	28-Aug
Sierra Leone	4,640.00	18.10%	6.10%	28-Aug
Togo	586.4614	-1.80%	17.80%	28-Aug
Malawi	556.185	20.80%	40.60%	28-Aug
Eritrea	15.28	1.90%	1.90%	28-Aug
Swaziland	13.3045	6.20%	25.00%	28-Aug
Burundi	1,538.00	-1.70%	-0.80%	28-Aug
Lesotho	13.3045	6.20%	25.30%	28-Aug
Liberia	84.66	0.00%	0.80%	28-Aug
Cape Verde	97.766	-2.60%	17.60%	28-Aug
Central African Republic	584.866	-1.60%	17.50%	27-Aug
Djibouti	177.67	0.60%	0.80%	28-Aug
Seychelles	13.0405	-2.60%	0.50%	28-Aug
Somalia	658.5	-1.50%	-16.00%	28-Aug
Gambia	39.6	0.90%	-0.10%	28-Aug
Comoros	439.846	0.50%	21.10%	28-Aug
Sao Tome and Principe	21,722.50	-2.60%	16.90%	28-Aug

As you can see there has been a massive volatility in currencies over the last year. This is caused by countries fighting to devalue their currencies in order to be the cheapest currency to export more and have more income revenues. The problem is that the newly devalued currency for the citizens in that country now will buy less and less and as their salaries stay stagnate they become poorer.

USA is the problem

As you can see above The US dollar has become a safe haven as it is still by the trading class looked upon as a safe haven. The problem is that this is not the first time a massive increase in the US dollar versus other currencies. Lets take a look at a similar event happen before another historical event.

As you can see above around the times of market crashes the US Dollar increases in value as more and more people flee into it for “safety” while the downside will be huge when the crash comes.

Here are some of the causes of the current volatility from Charles Hugh Smith:

Five Interconnected Trends

At the risk of stating the obvious, let’s list the major trends that are already visible.

1. The China Story is Over

And I don’t mean the high growth forever fantasy tale, I mean the entire China narrative is over:

1. That export-dependent China can seamlessly transition to a self-supporting consumer economy.
2. That China can become a value story now that the growth story is done.
3. That central planning will ably guide the Chinese economy through every rough patch.
4. That corruption is being excised from the system.
5. That the asset bubbles inflated by a quadrupling of debt from $7 trillion in 2007 to $28 trillion can all be deflated without harming the wealth effect or future debt expansion.
6. That development-dependent local governments will effortlessly find new funding sources when land development slows.
7. That workers displaced by declining exports and automation will quickly find high-paying employment elsewhere in the economy.

I could go on, but you get the point: the entire Story is over.  (I explained why in a previous essay, Is China’s “Black Box” Economy About to Come Apart? )

This is entirely predictable. Every fast-growing economy starting with near-zero debt and huge untapped reserves of cheap labor experiences an explosive rise as the low-hanging fruit is plucked and the same abrupt stall and stagnation when the low-hanging fruit has all been harvested, leaving only the unavoidable results of debt-fueled speculation: an enormous overhang of bad debt, malinvestment (a.k.a. bridges to nowhere and ghost cities) and policies that seemed brilliant in the good old days that are now yielding negative returns.

2. The Emerging Market Story Is Also Done

Emerging currencies and markets have soared on the back of the China Story, as China’s insatiable demand for oil, iron ore, copper, soy beans, etc. drove global demand to unparalleled heights.

This demand pushed prices higher, which then pushed production (supply) higher, as the low cost of capital globally enabled marginal resources to be put into production with borrowed money.

Now that China’s demand has fallen off—by some accounts, China’s GDP is actually in negative territory, despite official claims that it’s still growing at 7% annually—commodity prices have crashed, taking the emerging markets’ stock and currency markets down. (Source)

Here is a chart of Doctor Copper, a bellwether for industrial and construction demand:

Here is Brazil’s stock market, which has declined 54% in the past 12 months:

These are catastrophic declines, and with China’s growth story over, there is absolutely nothing on the global horizon to push demand back up.

3. Diminishing Returns on Additional Debt

The simple truth is that expanding debt has fueled global growth. Though people identify China as the driver of global demand for commodities, China’s growth is debt-driven. As noted above, China quadrupled its officially tracked debt from $7 trillion in 2007 to $28 trillion as of mid-2014—an astonishing 282 percent of gross domestic product (GDP).  If we add the estimated $5 trillion of shadow-banking system debt and another year’s expansion of borrowing, China’s total debt of $35+ trillion is in excess of 300% of GDP—levels associated with doomed to default states such as Greece and Spain.

While China has moved to open the debt spigot in recent days by lowering interest rates and reserve requirements, this doesn’t make over-indebted borrowers good credit risks or more empty high-rises productive investments.

Borrowed money that poured into ramping up production in emerging nations is now stranded as prices have plummeted, rendering marginal production intensely unprofitable.

In sum: greatly expanding debt boosted growth virtually everywhere after the Global Financial Meltdown of 2008-2009. That fix is a one-off: not even China can quadruple its $35+ trillion debt to $140 trillion to reignite growth.

Here is a sobering chart of global debt growth:

4. Limits on Deficit-Spending (Borrowed) Fiscal Stimulus

When the global economy rolled over into recession in 2008, governments borrowed money by selling sovereign bonds to fund increased state spending.  In the U.S., federal borrowing soared to over $1 trillion per year as the government sought to replace declining private spending with public spending.

Governments around the world have continued to run large deficits, piling up immense debts since 2008.  The global move to near-zero yields has enabled governments to support these monumental debt loads, but even at near-zero yields, the interest payments are non-trivial. These enormous sovereign debts place some limits on how much governments can borrow in the next global recession—a slowdown many think has already started.

Here is a chart of U.S. sovereign debt, which has almost doubled since 2008:

As noted on the chart: what structural inadequacies or problems did governments fix by borrowing gargantuan sums to fund state spending?  The basic answer is: none. All the same structural problems facing governments in 2008 remain untouched in 2015. These include: over-indebtedness, bad debts that haven’t been written down, insolvent banks, soaring social spending as the worker-retiree ratio slips below 2-to-1, externalized environmental damage that has yet to be remediated, and so on.

5. Central Bank Stimulus (Quantitative Easing) as Social Policy Has Been Discredited

In the wake of the Global Financial Meltdown of 2008-2009, central banks launched monetary stimulus programs aimed at pumping money into the economy via bank lending. The stated goals of these stimulus programs were 1) boost employment (i.e. lower unemployment) and 2) generate enough inflation to stave off deflation, which is generally viewed as the cause of financial depressions.

While it can be argued that these unprecedented monetary stimulus programs achieved modest successes in terms of lowering unemployment and pushing inflation above the zero line, they also widened wealth and income inequality.

Even as these programs made modest dents in unemployment and deflation, they pushed asset valuations to the moon—assets largely owned by the few at the top of the wealth pyramid.

Here is a chart of selected developed economies’ income/wealth skew:

The widespread recognition that the benefits of central bank stimulus mostly flowed to the top of the pyramid places political limits on future central bank stimulus programs.

The 2008-09 Fixes Are No Longer Available

In summary, the fixes for the 2008-09 recession are no longer available in the same scale or effectiveness.  Expanding debt to push up demand and investment, rising state deficit spending, massive monetary stimulus programs—all of these now face limitations. This means the central banks and states have very limited tools to reignite growth as global recession trims borrowing, investment, hiring, sales and profits.

The US have had a loose debt policy

The US have had a policy of deficit spending by government. The belief that by borrowing more money they can now pay down their debt with cheaper money. The problem is that they now have even more debt and need to print even more money to pay off that debt and they have entered into a never ending cycle of destructive behavior until people loose confidence in their worthless paper currency.

The US is bankrupt and many governments and banks around the world are bankrupt as well if they didn’t manage to get more debt to borrow to pay the interest on old debt they are done. They just accumulate debt while many governments heavily overspend.

Lets take a look at Government spending as a part of GDP to see how much of the total income of the country comes from government activity:

 

Country	Tax burden % GDP	Govt. expend. % GDP
Timor-Leste	276.7	139.7
Kiribati	20.2	91.8
Cuba	24.4	66.7
Libya	1.0	66.6
F.S. Micronesia	12.0	65.3
Lesotho	37.6	63.1
Denmark	48.1	57.6
France	44.2	56.1
Finland	43.4	55.1
Belgium	44.0	53.3
Greece	31.2	51.9
Solomon Islands	36.9	51.2
Sweden	44.5	51.2
Slovenia	36.8	50.8
Austria	42.1	50.5
Italy	42.9	49.8
Netherlands	38.7	49.8
Hungary	35.7	49.4
Portugal	31.3	49.4
Bosnia and Herzegovina	38.9	49.2
São Tomé and Príncipe	16.8	49.0
United Kingdom	35.5	48.5
Ireland	27.6	48.1
New Zealand	31.7	47.5
Iceland	36.0	47.3
Cyprus	26.5	46.1
Ukraine	38.0	45.6
Germany	37.1	45.4
Serbia	35.2	45.2
Spain	31.6	45.2
Mongolia	33.1	45.1
Iraq	1.9	44.6
Israel	32.6	44.6
Ecuador	17.6	44.0
Norway	43.2	43.9
Samoa	23.4	43.9
Montenegro	24.2	43.8
Poland	31.7	43.5
Czech Republic	35.3	43.3
Maldives	16.2	43.3
Croatia	32.6	42.5
Japan	27.6	42.0
Malta	34.4	42.0
Canada	31.0	41.9
Luxembourg	37.1	41.8
United States	25.1	41.6
Argentina	34.6	40.9
Barbados	27.4	40.9
Algeria	10.0	40.4
Venezuela	12.5	40.1
Burundi	14.3	40.0

 

As you can see at the top the 50% government as a part of GDP these countries are in economic turmoil as they cannot support their bloated government anymore. Greece, Denmark, France, Finland, Slovenia and Italy. These countries have so much government as they government has become unsustainable.

United States National Debt

When a governments size hits over 50% of a countries size and private sector is 50% then the government who creates nothing of real value other than needing income from the private sector in form of taxes. The bigger the government becomes the more taxes you have to pay. We might see as high taxes as England saw in the 60’s and 70’s.

See this is what happens when you pay 95% taxes the Beatles even wrote a song about it called the Taxman:

What is coming in the weeks ahead?

I believe we will see even more volatility in the markets signalling a crash, but governments will do whatever it takes to intervene in order to have people trust their local currency.

The Plunge Protection Team in the US as an example went in during the crash last Monday.

Working Group on Financial Markets

From Wikipedia, the free encyclopedia

  (Redirected from Plunge Protection Team)

The Working Group on Financial Markets (also, President’s Working Group on Financial Markets, the Working Group, and colloquially the Plunge Protection Team) was created by Executive Order 12631,^[1] signed on March 18, 1988 by United StatesPresidentRonald Reagan.

As established by Executive Order 12631, the Working Group on Financial Markets has three Purposes and Functions.

(a) Recognizing the goals of enhancing the integrity, efficiency, orderliness, and competitiveness of our Nation’s financial markets and maintaining investor confidence, the Working Group shall identify and consider:

(1) the major issues raised by the numerous studies on the events in the financial markets surrounding October 19, 1987*, and any of those recommendations that have the potential to achieve the goals noted above; and

(2) the actions, including governmental actions under existing laws and regulations (such as policy coordination and contingency planning), that are appropriate to carry out these recommendations.

(b) The Working Group shall consult, as appropriate, with representatives of the various exchanges, clearinghouses, self-regulatory bodies, and with major market participants to determine private sector solutions wherever possible.
(c) The Working Group shall report to the President initially within 60 days (and periodically thereafter) on its progress and, if appropriate, its views on any recommended legislative changes.^[1][2]

These teams of officials in many countries are working with hedge funds and pension funds with deep pockets and with the central banks to keep a market crash from happening.

This is just a centrally planned economy and the free market and capitalism that experts say is dead is non existent.

Also the recent jump back up in oil and commodity prices will be short lived. Many commodities are less manipulated and some of them show a more accurate measure of current economic conditions. Be prepared for sub $35 a barrel of crude oil in the coming weeks and months as the whole debt based monetary system is about to unravel and interest rates will not go up as central planners will finally say to the public there is nothing we can do.

Stock markets will start to tumble and more and probably see another downside of another 30-40% on many stock exchanges. The US dollar selloff might start as countries are desperate to rescue their economies by selling foreign reserves which mostly is US debt.

There will also be an unwinding of the fracking industry and over $10T in derivatives held by pension funds and investors will become worthless as the over-leveraged fracking industry will go bankrupt caused by under production cost oil prices.

Several big real estate bubbles will pop especially China’s, Canada and Norway’s as these countries continued to pump up real estate prices in 2008.

The end game is getting closer, but we might see another attempt by central planners to keep the ponzi scheme alive by propping up the markets and printing more money QE4 and keeping interest rates lower and closer to zero or negative.

John Sneisen

The Economic Truth

Non copyrighted

World War 3 a Financial War?

We are on the verge of war!

A lot of people have been speaking of the possibility of a hot war between the west and China and Russia. This is possible as both sides have mutually assured destructive plans to blow each other to pieces,  but I think we are very much more likely to see a Financial War than Nuclear attacks. We are even more likely to see Civil Wars before a global destructive war.

As a matter of fact we are seeing a Financial War going on right now globally. Between countries desperately trying to keep a cheap currency in order to have a surplus in their trade budget as today’s world has become a global competitive market place. The problem with what is called a currency war is that now you are also attacking your own constituents! The people that live in that country who is now cheapening their currency will suffer as inflation the newly created money made to cheapen the currency will chase all kinds of assets and commodities and prices will go up and as interest rates will continue to be low the more money will be created out of thin air and the more and more those hard earned money you have become less worth.

Japan is one of the biggest competitors in the race to 0 around the world monetary systems. In Japan the Print to cheapen currency policy known as Abenomics are failing as exports grew very little and the people of Japan are ending up buying assets that hold their value against FIAT currencies and most people loose as they have their life savings in devalued Yen. What people doesn’t seem to understand is that we are at war today against the global banking cartel. They are destroying our wealth by making money creation cheap by near 0% interest and printing currency. If you study the world around you it becomes apparent that more and more families are struggling as their wealth is getting destroyed or played with by bankers in their investment accounts. Most people are not seeing any raises in their salaries and if you don’t increase your salary by the same number as the inflation and we are not talking the CPI(Consumer Price Index) a fancy economic word for inflation. We can account for the CPI, but we also need to earn on top of whatever percent it is more as the CPI is highly manipulated and most things you buy is not calculated into the CPI by default.

As we are seeing our wealth destroyed if we hold it in paper FIAT, there are far more and bigger dangers lurking in the Shadows of finance and Military plans that can destroy our life’s and wealth a lot faster.

Financial Warfare

As we have our wealth eradicated by the failed Central Bankers around the world there are way bigger problems ahead. Derivatives, Bonds, Stocks, Gold, Silver, Bitcoin and other assets are both positive and negative tools that is in use by bankers, every day people and in military plans as a way to save a country, your wealth or destroy a country.

The inventions of derivatives was talked about in the financial sector as a safer financial world, but as seen in 2008 the leverage used in these types of investments can be as Warren Buffet says Weapons of Mass Financial Destruction.

China

Derivatives lurks in what is called the Shadow Banking system which is the banks way of using a Ponzi Scheme(Today’s Monetary System) to create a ponzi scheme on top of that. They use the big accounting firms like KPMG and others to hide their “Books” their real assets and liabilities as they invest in Shadow Banking Derivatives such as CDO(Collateralized Debt Obligations), CLO(Collateralized Loan Obligations) and MBS(Mortgage Backed Securities). These securities are highly leveraged full of bad assets and ready to blow at any moment. When they blow the Too Big To Fail banks sits ready to get Bailed Out or Bailed In! The CDO’s are very popular in China as the corrupt State Owned Enterprises are using these bad investment techniques from the banks to create malinvestment through giving them the power to produce steel, copper and concrete while the corrupt government with banks invests in infrastructure and building cities that never might get inhabited as there are no one to move into them, but the SOE’s benefit, the shadow banking industry in China wins and the $3T in CDO, CLO and MBS investments that could blow up as the ponzi scheme comes down when there is no more money left to feed it! If this unravels it could send ripples into the global economy way bigger than the $100B+ CDO crash of 2008 in the Western banking system.

US

Our Economic and Monetary system have been totally demolished since 1971. The US is in the worst shape as they are supposed back the world with their continuously failing policies. After Obama took office in 2008 as the melt down on Wall street and the global economy was apparent he made some very bad decisions with his team to bail out wall street’s bad investment programs after they brought down the world economy with CDO’s as talked about above. Some people say the reason why it happened is that Obama had the biggest amount of Wall Street donors in history of any president and he were willing to do whatever it takes to keep them happy.

After the 2008 an economic recovery is long gone, the US government shut down, the world is moving away from US dollars as world reserve currency and the never ending sink hole of US Government unfunded liabilities now topping over $17.5T+. This number will increase faster and faster as the US continue to spend way more money than they have.

The US Federal Reserve the Central Bank of the US has also failed as their policies of 0% interest and Quantitative Easing or the buying of bad and toxic assets from the US banks in trouble giving them new cash to go out and do the same as they did in the first place to get into the toxic assets and then the FED takes these bad assets and put it on it’s own books.

The problem is how will they exit? Thinking about investment. One of the first and most important question an investor should ask himself is how do I exit? Well how will the FED exit as who would like to buy assets that have failed and are under performing? The US have created to gigantic bubbles of epic proportions still building up today. 1. The Stock Market and 2. US Housing markets. There are no fundamentals that say stock prices or housing prices should go up, but the underlying cause is of course leverage and debt made available from the FED to Wall Street and friends. The new Wall street slum lords making it impossible for people to fix their houses as they can’t contact their land lord or how about the massive rise in margin debt following the US Stock exchanges?

Wait there is more. I said fundamentals are not there. Monetary Velocity is at record lows actually lower than the depression in the late 20’s early 30’s. Consumption is falling rapidly as people have no money to spend and the US Economy who is 71% consumption has put many retailers into either bankruptcy or to cut jobs or stores all over the country. Also the so called economists are using faulty numbers where they wont even count in people who have stopped looking for job as unemployed. We live in an illusion and the bad derivatives who blew up the US are in full force coming back as the same Wall Street Ponzi schemes continue.

EU

As I was writing this blog it became news that the ECB the European Central Bank has issued negative interest rates. Negative interest rates means that they have made a war against the savers as suddenly when you borrow the bank your money they charge you an interest and on top of that they can do whatever they want with that money. The European Union also have it’s own plans and the the Forth Reich to prevent wars in-between countries in Europe can become so successful that they can take over where the US failed?

The EU also have strong ties to making their currency a global reserve currency and they are positioned better than the US. But no FIAT Currency in it’s current states can survive the coming global FIAT default carnage as Central Banks world wide print themselves to death as people loose total faith in their failing system!

Financial War plans?

So what is happening now financially war vice? Have you heard about sanctions and capital controls as Russia, Iran, Cuba, Iraq, North Korea and a couple more are seeing restrictions on the use of US Dollars for their trade as the US only wants people to cooperate with them on their terms. Capital Controls and Embargoes are set in place to hurt economies. They makes it hard for you to move money around and they slow down your economy, can create massive inflation and forces you to think out side the dollar world reserve box. The world around the west are getting tired of getting bullied by the US Empire and are moving away from the Dollar.

There are 1000’s of different trade deals since 2008 that have moved countries away from using US Dollars to settle debts, do trade or investments. The US is cheapening it’s dollar to keep it’s “Partners” in check and are letting wall street interests steal the wealth of whole nations having US Dollars as reserve currency.

Financial war what can countries do and are doing to protect themselves and to attack back?

I don’t know if you remember the islands in the South China Sea dispute between Japan and China? It was a lot of war mongering and the US was not sure which side to be on as they were in a double whammy. China and Japan are the biggest holders of US debt aka. bonds. China holds a whooping $3T worth and Japan about $1T. If these countries went to war then who would the US back? Both countries if dumping their US dollar reserves would be capable to sink the US and the world economy with it. One strength that China had that the Japan doesn’t have is their Gold holding that unofficially can be as high as 5-8000 tonnes. Gold has real value and cannot be devalued. This put China way ahead of Japan which would have their reserves dwindle to near 0 which is the real value of any Fiat currency.

Also by buying big shares in companies world wide rouge Hedge Funds could also pose a threat to any economy as they could use derivatives and their positions in any companies to explode an economy. There are way many more ways states protect themselves. Ex. when Iranian’s had a halt in the possibility to use US dollars they started settling oil trade with Turkey in gold.

It sounds like we the people are put in the middle of war mongering psychopathy that are craving power and might just like Kings and Queens in the old days.

What can we do to protect ourselves?

3 words Gold, Silver and Bitcoin. How can these three protect us or even work as financial militia warfare back against the centrally planned wealth stealing economy?

These three have been mentioned a lot lately together and I believe that a combination of this 3 can help you a lot when the global carnage comes due. Another good commodity to have during the coming global monetary system meltdown is food. Food might be needed as transportation and other systems together with banks might shut down for weeks as a global reset button will be hit by elites as explained above.

Food has been shown to be a great asset as people might starve to death during cities lack of access to food as supermarkets rely on a 3 day supply only.

Gold and Silver protects your wealth as FIAT paper currencies are printed by greedy elites. Elites use gold and silver to protect against paper failures and this has happened 1000’s of times throughout history, but it is funny how we forget. During the 1900’s about 50-100 fiat currencies failed got devalued or replaced or people stopped using them as they lacked trust in them. It is all about trust, but in today’s case and many times before government law forces us to use the bankers failed system who only enriches the government and the banks.

Bitcoin should also be mentioned here as it is a currency without any real tangible value, but it has a limited supply which cannot be increased. This is great! As Bitcoins will not really loose their value unless we choose to not use them. Bitcoins also eliminates today’s crony system as there are no need for banks or governments in a Bitcoin system. A Free market approach helps Bitcoin emerge as a solution to help the people!

Be prepared and protect yourself!

As I am not giving you financial advice, but just repeating what a dozen of financial experts are saying it is very important you take my word very seriously and do your own due diligence on what I have been talking about. There are so many risks out there today and the system is built to enrich those in control the bankers and governments world wide.

If we don’t protect ourselves a globally controlled crony capitalist system could quickly emerge and as the US fails the bailout will not come from tax payers but a globalist bank called the IMF!!!

Share this blog with friends and family and start understanding money!

Before Chaos comes intelligence. Prepare for the worst and hope for the best! We might have only months, but at the best we have a couple of years. Wealth protection is important as elites don’t want you to have wealth as wealth gives you economic power and something to say when the day of failure comes.

John Thore Stub Sneisen

The Economic Truth