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For six years, the world has operated under a complete delusion that
Central Banks somehow fixed the 2008 Crisis.
All of the arguments claiming this defied common sense. A 5th grader
would tell you that you cannot solve a debt problem by issuing more debt.
Similarly, anyone with a functioning brain could tell you that a bunch of
academics with no real-world experience, none of whom have ever started a
business or created a single job can’t “save” the economy.
However, there is an AWFUL lot of money at stake in believing these lies.
So the media and the banks and the politicians were happy to promote them.
Indeed, one could very easily argue that nearly all of the wealth and power
held by those at the top of the economy stem from this fiction. So it’s
little surprise that no one would admit the facts: that the Fed and other
Central Banks not only don’t have a clue how to fix the problem, but that
they actually have almost no incentive to do so.
So here are the facts:
1) The REAL problem for the financial system is the bond
bubble. In 2008 when the crisis hit it was $80 trillion. It has since grown
to over $100 trillion.
2) The derivatives market that uses this bond bubble as collateral
is over $555 trillion in size.
3) Many of the large multinational corporations, sovereign
governments, and even municipalities have used derivatives to fake earnings
and hide debt. NO ONE knows to what degree this has been the case, but given
that 20% of corporate CFOs have admitted to faking earnings in the past, it’s
likely a significant amount.
4) Corporations today are more leveraged than they were in
2007. As Stanley Druckenmiller noted recently, in 2007 corporate bonds were
$3.5 trillion… today they are $7 trillion: an amount equal tot nearly 50% of
US GDP.
5) The Central Banks are now all leveraged at levels greater
than or equal to Lehman Brothers was when it imploded. The Fed is leveraged
at 78 to 1. The ECB is leveraged at over 26 to 1. Lehman Brothers was
leveraged at 30 to 1.
6) The Central Banks have no idea how to exit their
strategies. Fed minutes released from 2009 show Janet Yellen was
worried about how to exit when the Fed’s balance sheet was $1.3 trillion.
Today it’s over $4.5 trillion.
We are heading for a crisis that will be exponentially worse than 2008.
The global Central Banks have literally bet the financial system that their
theories will work. They haven’t. All they’ve done is set the stage for
an even worse crisis in which entire countries will go bankrupt.
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financial crisis, we offer a FREE investment report Financial Crisis
"Round Two" Survival Guide that outlines easy, simple to
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