Topic: Monetary reset
In a Nutshell
The financialization of our modern day credit driven economy and the unprecedented explosion of debt in the past four decades have slowly but surely driven our monetary system to a dead end. Unless preempted by a major war, the impact to our society when the monetary reset unfolds will not be smooth.
We go into mid-level details on topics contributing to the monetary reset, many of which are not covered, intentionally or otherwise, by mainstream media in the hope that you won’t get broadsided by this financial pickup truck when it hits and complain “Nobody saw this coming”.
The possible outcomes to the monetary end game and the subsequent reset range from tolerably painful to devastating hardship and chaos. Part 3 of this series examines one which sits on the hit-me-gently end of possible monetary reset scenarios championed by a most unexpected tiny island nation of Iceland.
A recent report commissioned by the prime minister of Iceland lays bare in laymans’ terms the root causes of the 2008 collapse of the country’s banking system, the same set of core problems which permeate the rest of the monetary and banking systems of the world.
Forget about what you have been taught in economics classes on how money is created. This is how it really works in real life.
After a near death experience of its banking industry during the 2008 global financial meltdown, Iceland looks hard at the root causes of the crisis and contemplates the reset button to its monetary system, a system which shares the same characteristics and ills with the ones used by all major economies.
With the latest central-bank-gone-mad printfest otherwise known as quantitative easing from the European Central Bank, the financial world is firmly in the twilight zone. The extend and pretend strategy is pretty much on its last legs, and the monetary end game is now in sight.
Hypothecation happens when a borrower pledges collateral to secure a debt. Even though the borrower retains ownership of the collateral, the lender has a right to seize said collateral should the borrower default. This way, the creditor ‘hypothetically …
In his open letter published in a German newspaper prior to the Greek election, now prime minister Alexis Tsipras let loose a fusillade of Voldemorts, laying bare what has been obvious to many but which seemingly everyone was afraid to utter in public.
G20 governments are quietly slipping bail-in provisions into law to make sure that next time a too big to fail bank blows up again by derivatives it will be rescued using depositors’ money, in the name of protecting the taxpayers.
Herded along by the Financial Stability Board, governments of leading economies endorsed a framework during the past G20 Summit whereby depositors’ money will be used to rescue a failing bank when the global derivatives casino blows up again next time.
Another glance at the total derivatives the big 5 Canadian banks are exposed to since our last report shows the banks collectively continued to expand their derivatives books – by almost 1 trillion.
The immediate market celebration of a continued accommodative Fed at the last FOMC meeting might be premature. The pundits might have missed the cues buried in the Fed’s tea leaves.
Conventional economists and monetary practitioners take it as gospel that economic growth is both a necessity for our well being and something which can be projected indefinitely into the future. The end of growth as we are now witnessing, then, would fundamentally alter the constructs upon which our economy is based, with far reaching impacts.
Part 2 of the series describes the sequence of a typical bank failure and explores the list of options available to Deutsche Bank and the likely outcomes.
The commercial break at the close of the opening act of the global financial crisis in 2008 is finished. Here comes Act 2 with the globe’s most risky bank as featured guest.
With Brexit serving as the catalyst, Season 2 of the European banking crisis may be about to unfold.
In light of the recent bank bail-in legislation introduced by the Canadian government, here’s an update on how much the big 5 Canadian banks are exposed to derivatives, those toxic financial instruments of mass destruction which blew up the financial world in 2008 had it been not for the governments using massive public money to bail out the private banks.
A confluence of driving forces nudges the global monetary system toward a reset, with deflation leading the charge.
Faced with mounting losses in their bond portfolios and massive redemption requests, mutual and hedge funds begin suspension of any and all redemption requests. The next phase of the junk bond crisis has begun.
The flash crashes of some of the largest blue chip tracking ETFs on Aug 25 should serve as a warning of what’s to come for their smaller and illiquid high yield brethren.