We’re in the thick of it now. Markets are crumbling, the central banks are in full printing mode and in this video I’m going to show you how we got here, how I think this ends, and of course, more importantly what we should be doing about it right now.
Today we’re going to be talking about where this end game is and what we should be doing about it. So, things are moving very fast. They’re moving day by day, by day, and it’s happening so fast that I can’t even keep up with the news. I mean, credit markets are freezing up, complete industries are shutting down.
BAILOUT AND GOVERNMENT COMMITTMENT
Governments have committed to printing trillions of dollars. As of today, checks are supposed to be being sent out to all Americans, checks in the mail. Meanwhile, the market’s crashed harder and faster than any time in history.
It’s fallen about 30% in 20 days, which has never been seen before, not even in the 1929/1930 Great Depression. A lot of people want to blame the virus on this, but it’s not the virus’s fault. The world was ready for this. As a matter of fact, it started cracking up a long time ago. If anything, the virus was a pinprick to a balloon. So, imagine a balloon that’s overinflated ready pop, and then you had a pinprick. This pop really started a long time ago.
A LITTLE BACKSTORY
Seven months ago, September of 2019, we saw the repo market starting to break apart. Basically, you have this overnight market where banks have to settle every single night and they put up US treasuries, which are cash. They’re the best asset, the safest investment or asset you could have. They put up cash as collateral and the banks have to settle.
In September 2019, it didn’t have any money. It froze up overnight. The credit markets basically seized and Fed, the Federal Reserve had to step in and put in $75 billion. The fed put in $75 billion in one day, overnight, to keep the credit markets from freezing up, from seizing up. Now that sounds like a lot of money, but that was in September of 2019. It went from $75 billion to $100 to $150 to $250 to $500 billion.
And right now, today, we’re seeing $1 trillion a day. The fed is putting in $1 trillion a day being put into this overnight repo market just to keep the markets from freezing up. Now, like I said, we can go back way further and really it started back in 1971.
THE END OF THE GOLD STANDARD STARTED THIS
I’ve made, I don’t know, a dozen videos about this. I’ve referenced this event a lot. 1971 was the time when we broke the gold standard. The whole world has been on the gold standard for 5,000 years. In 1971, we severed it and we entered into what’s the greatest financial experiment of all time. We’re about 50 years into this money experiment where basically we don’t have real money that was backed by something. We have fake fiat money. Additionally, in the last 50 years, since 1971, real wages have been falling.
Because wages have fallen and there is nothing to back our money, debt has exploded. It’s gone through the roof! And that’s because when we had to actually have our money backed by gold, we were limited by how much we could print. And once we severed those ties it was unlimited and it’s just blown up from there.
Basically, the gold experiment has been trying to end ever since it started. It was already failing right from the beginning. Now, the Western world started building up debt, right? Building these bubbles of debt more and more debt, stunning proportions. I mean, you can see on the chart right here how much debt has been built up and right now it’s deflating, right? It’s imagine like a debt, like a balloon filling up with debt and it’s deflating right now.
DEFLATION AND DEBT
Now this isn’t the first time it’s happened. It’s tried to do this in 1974, a couple of years after, it tried to do it in 1981, ’87, 1994, 1997, 2001, 2008, 2011 every time the fake money balloon has tried to deflate and each time the central bank, the Fed has responded with more debt, feeling it back up. So it’s trying to come down and they fill it back up. Each time the Fed was able to do that, each time they were able to fill that balloon back up because there was enough balance sheet capacity leftover. But, the amount of assets, the savings have been going down, down, down. So while there was still assets in the system, there were still net savings.
We’ve been in deficit spending, meaning we’ve been upside down. An example is, if you’re a household, you’re living off your credit card, right? We’ve been in deficit spending and we’re at a point now where there’s no capacity left.
THE FED RESPONDS TO TRY AND KEEP THE ECONOMY AFLOAT
So what happens is every time the balloons tried to deflate, as soon as this fake money tried to get kicked out of the system, each time it took more and more stimulus to do this. It’s a law of diminishing returns, right? In the beginning it just takes a little bit, but each time it takes more and more and more. Kind of like a drug addict you need more and more drugs to get that same level every time.
If we go back to 2008, if you remember 2008 the great financial crash, the entire financial system of the whole world basically came to a standstill.
If the Fed didn’t jump in, the banks were going to run out of money. ATMs were going to go dry, people are going to go crazy, et cetera. That’s how bad things were, and they had to bail out the mortgage companies and they put together a TARP bill. TARP, it was $700 billion, $700 billion. It’s a lot of money.
In addition, Obama put together a stimulus package of another $800 billion, $700 billion, $800 billion. That was the numbers. Okay, well, right now, just in like the last week, and this number is going to go way up, probably by the time you watch this video later, but in one week, the Fed’s already committed over $2 trillion and I mean it’s been less than 20 days.
PRINTING MORE AND MORE MONEY
Think about that from 700 billion to now two trillion, but that’s just a drop in the bucket. The Fed’s about to print 10 trillion, 10 trillion, and that’s just the FED. The other central banks around the world, they’re doing the same thing. They’re trying to restore solvency, right?
There’s no money out there. They have to print more, print, more print, more and more credit, more credit to keep everything from freezing up. Now how is this going to end? Can they just keep printing money into infinity? Does it end at some point? Will we see inflation? So if they print all this money, are we going to see hyperinflation? Are we going to see deflation, right? That’s what we want to know.
INFLATION OR DEFLATION?
Now, I made a video recently where I talked about everybody sees the end game, which is deflation. The question was do we see inflation first and then deflation or do we go right to deflation? And everybody’s trying to decide which way. I think most people are on the deflation side, which makes sense, right?
We have hundreds of trillions of dollars of fake debt and as people default on it, it deflates, right? So that money is basically in thin air. As soon as I had to say, I’m not going to pay you back or I’m unable to pay you back, instantly that money’s gone. Right? So, it’s deflating.
We can see that everybody’s bracing for that. They’re ready for deflation, which is why the dollar is getting super strong, which is why gold is going down, which is why Bitcoin went down, et cetera. The bubble is shrinking, shrinking, shrinking. The money’s disappearing from thin air.
I’m seeing something a little bit different. Like I said, we’re printing massive amounts of money, but yet the stocks are still dropping and gold’s dropping, right? Everyone’s flying to the dollar because of that deflation. But I think the final act of this isn’t just hyperinflation, it’s not deflation. It’s actually something different. It’s actually the final act is stagflation.
Is basically deflation combined with inflation. So stagnation meaning nothing moves, the market doesn’t move, it doesn’t change, but it’s also combined with inflation. It ends with a synchronized global currency devaluation against gold.
JAPAN AS OUR LEADING INDICATOR
I’ve referenced several times before, we can always look at Japan as kind of like our leading indicator. Japan’s about 25 years ahead of us, and they’ve been in this stagflation for about the same time, 20, 25 years. They’ve had no economic growth. Their debt to GDP is 350% debt to GDP. Their real estate market has cratered and it never came back. And just nothing’s growing. Nothing’s happening. They’re seeing inflation, but there’s no growth. And so what happens is, like I said, this basically leads to an end of a synchronized global currency devaluation against gold and it’s the death of the existing world monetary order as we know it.
WHAT IS HAPPENING TO OUR CURRENCY?
Now, we saw something come out just a couple of days ago and it came out from Credit Suisse. Tidjane Thiam, the president of Credit Suisse, says that “Longer term risks to consider. The central banks are taking on credit exposure and they’re taking on the risk of other central banks.” He continues, “what happens when it all blows up? Do they go bust, either yes and the fiat, the fake fiat currency is ruined, or they don’t because they print money to cover their losses. They either go bust or they print more money to cover their losses, but either way, whichever route they go, the integrity of fiat, fake fiat money is ruined. And so attention is going to be on a new currency, either gold or digital or both.”
I have been saying for some time that gold will get to $50,000. I know it sounds extreme, but basically it came to the same conclusion that Mr. Thiam does. Money as we know it, the currency, dollars, euros, whatever, they’re ruined, right? There’s no more trust in that.
WITHOUT TRUST, WE ARE GOING TO NEED A NEW CURRENCY
You have to understand that we have to trust our money. Money used to be real. Now it’s just based off of trust. But once we lose that trust, how do they restore it? I have a video “How Gold Gets to $50,000” where I explained it, I broke it down. Mr. Thiam says the same. He says the integrity of the fiat is ruined and so attention is going to be on a new currency, either gold or digital or both. I agree with him. I agree with everything he said.
I’ve been saying it for a long time. If you check my video feed, the fiat money experiment is done as we know it. We have to go back to something, as he said, gold or digital currency, which probably is Bitcoin. In the short-term, it’s probably going to be a government digital currency. Just recently, the secretary of the treasury Mnuchin hired one of the vice presidents of Coinbase.
Coinbase is the largest cryptocurrency exchange at least in the US. Why? Why would they hire of the VPs? Because of a digital money? A digital currency. It’s going to be gold or digital currency.
GOING FORWARD
In the short-term, we’re going to see continued deflation, rushed to dollars, probably short-term pain in gold, short-term pain in Bitcoin, but the longer game is this switch.
Everybody’s ready for it, but are you? That’s the question.
Leave me a comment down below and let me know if you’re going to be ready for that switch and what you’re doing about it. To your success. I’m out.