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The End of the Global Debt System Approaches
The 2008 Crisis was not THE Crisis.
The 2008 Crisis was largely a banking crisis focused on securities. The REAL Crisis will hit when the bond bubble collapses.
The current global monetary system is based on debt. Governments issue sovereign bonds, which a select group of large banks and financial institutions (e.g. Primary Dealers in the US) buy/sell/ and control via auctions.
These financial institutions list the bonds on their balance sheets as “assets,” indeed, the senior-most assets that the banks own.
The banks then issue their own debt-based money via inter-bank loans, mortgages, credit cards, auto loans, and the like into the system. Thus, “money” enters the economy through loans or debt. In this sense, money is not actually capital but legal debt contracts.
Because of this, the system is inherently leveraged (uses borrowed money).
Consider the following:
1) Total currency (actual cash in the form of bills and coins) in the US financial system is little over $1.2 trillion.
2) If you want to include money sitting in short-term accounts and long-term accounts the amount of “Money” in the system is about $10 trillion.
3) In contrast, the US bond market is well over $38 trillion.
4) If you include derivatives based on these bonds, the financial system is north of $191 trillion.
Bear in mind, this is just for the US.
Globally the bond bubble is north of $100 trillion. And this $100 trillion has been used as collateral for a derivative market that is well north of $555 TRILLION.
Again, debt is money. And at the top of the debt pyramid are sovereign bonds: US Treasuries, German Bunds, Japanese Government Bonds, etc. These are the senior most assets used as collateral for interbank loans and derivative trades. THEY ARE THE CRÈME DE LA CRÈME of our current financial system.
So, this time around, when the bubble bursts, it won’t simply affect a particular sector or asset class or country… it will affect the entire system.
The coming crisis will not be another 2008. It will be something much much worse. The 2008 Crisis was caused by an implosion of the Credit Default Swap market. At that time, the entire CDS market was roughly $50-60 trillion in size.
The interest rate based derivatives market is TEN TIMES larger in size: north of $555 trillion.
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Best Regards
Phoenix Capital Research
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So how can this so called bond bubble burst if the banks can and in fact are buying more bonds than are issued?
Theoretically it never has to burst. They can just keep printing more and more forever and ever. I think it's pretty clear at this point that is the plan. The amount of physical currency has no effect on this whatsoever. The vaasaaast majority of transactions take place with theoretical currency via electronic transactions anyway and if worst comes to worst they will just add zeros on the paper.
There could be 10^1000000 dollars of notional bonds out there. It doesn't matter. Debt doesn't matter at all when you own the system in which it exists. The only thing that matters is perception and right now everything is awesome, the algos of the banks set the asset prices higher nearly every week and the tee vee tells us things have never been better.
If you google "Federal Reserve monetary base" the first response should be from the Fed with $4.036-Trillion.
Of that $4.036-Trillion, $1.34-Trillion is in circulation, the rest is held as reserves.
That is the total Legal Tender money supply.
Everything else referred to as 'money' is actually private, debt based, credit, including the credit generated and issued by the Fed.
The $10-Trillion in deposit accounts is credit, bank debt, there obligation to pay you in legal tender, which, of course, they do not have and can't afford to get.
The Fed explains credit as such: "Credit dollars are a debt generated currency that is denominated by a unit of account. Unlike money, credit itself cannot act as a unit of account. However, many forms of credit can readily act as a medium of exchange. As such, various forms of credit are frequently referred to as money and are included in estimates of the money supply."
Now, isn't it magnanimous of the Fed to placate our references to credit/debt as 'money' by including it in the count of the money supply even though, by their own words, it is not money....
Technically, the Legal Tender (FRNs and U.S. coin) is not debt based. If the Congress were to dissolve the Fed, the government gets back all the legal tender along with the assets held by the Fed as backing. What the government doesn't get is the 10s/100s of trillions in credit/debt generated by the banks and Wall Street. Why, you may ask... Because none of that is part of the actual money supply.
De Duitse regering, betrokken bij de vredesonderhandelingen tussen het KAPITAAL en de VRIJHEID, noemt de 'gecontroleerde MACHTstrijd' in Oekraïne, Libïe en Griekenland een 'punt van zorg'.
http://www.nrc.nl/nieuws/2015/02/16/ovse-moet-vrij-toegang-krijgen-in-oo...
Reuters schrijft dat 'de malware kan worden gelinkt aan de NSA', maar in feite surft de NSA ook gewoon mee op de 3e SpinozaGolf. Dat netwerk @GuusjA al sinds 2001 actief is, kan overigens wel kloppen. Via de site van Leefbaar Nederland werd de macht al geïnformeerd over de fundamenten van het systeem 'Leven en Laten Leven'.
http://www.nrc.nl/nieuws/2015/02/16/zeer-geavanceerde-malware-ontdekt-ge...
De onderzoekers van Kaspersky noemen 'de infectie daarom een technologische doorbraak', die in het DAB-systeem ook wordt gebruikt om de financiële transacties tussen rechtspersonen inzichtelijk en controleerbaar moeten maken. Al zal de eurozone eerst moeten overgaan op het BitCoin-concept. In hotel GradjA wordt al gepleit om een belasting van 50% te heffen op valuta-transacties. Dit om de Valuta-oorlog per direct te stoppen en de 'echte economie' te stimuleren. Al gaat al wel het verhaal dat de Financiële woordvoerders van de Tweede Kamer niet ook niet kunnen begrijpen.
http://www.trouw.nl/tr/nl/4492/Nederland/article/detail/3852647/2015/02/...
Dus zal staatssecretaris Jetta Klijnsma (Sociale Zaken) wel weer aan de Tweede Kamer schrijven dat beleid in harmonie met het GELD=ZUURSTOF-paradigma 'heel moeilijk en ingewikkeld is'. In de optiek van netwerk @GuusjA wordt het echt tijd dat de minister-ploeg wordt gezuiverd van bewindspersonen die niet kunnen denken volgens de patronen van de 'Logica van de 1'.
I think M2 is GDP divided by 1.53 currently, or ~12 Trillion ( http://research.stlouisfed.org/fred2/series/M2V ). Let's postulate that the average rate of return on the $38 (your estimate) trillion in bonds is ~4%. That would be ~$1.5B in interest due every year. There is NO WAY the productivty of the US economy can afford to pay this every year (~10% of the non-Government economy). So the Government and others have to borrow additional amounts every year and re-float the rest just to keep the ponzi going. We know what that is for Government every year: ~$600B/year currently (never mind the unfunded future liabilities). I suspect the non-Government amount is smaller for now, but a the cost of very low nd shrinking levels of investment in productive capacity (CAPEX).
The Japanese have managed to ride this down for many years without a complete collapse. I would like somone to do the aalysis of how long the US can ride this down. I'll start to panic when the annual fiscal deficit starts to accelerate north of $1T/year again. I don't think there is a road back from that this time around.
If the OP believed this baloney he should be selling guns and ammo not financial products.
Sell guns and ammo? No, buy guns and ammo. And he probably does own them
"The End of the Global Debt System Approaches"
It is not a "debt system," but a grift system.
If the money they loaned out were not fiat representing stolen deposits and counterfeit money, then it would be a "debt system." Such a system would then not be using thugs and mercenaries in an attempt to subdue and plunder various countries, and peoples.
The banksters need to repay us.
If Daisies grow under the guillotines, fertilized by the blood of the banksters, then that would be the only benefit to the world the banksters have brought.
Bingo.
CDS should be illegal and the derivatives market needs to be nuked. The bursting of the bond bubble will be the best thing that could ever happen. There is no alternative.
Fraud, the basis of the fraudulent-reserve system of grift, banking, should be illegal.
The banksters need to repay us.
G. Edward Griffin
Creature From Jekyll Island
https://www.youtube.com/watch?v=lu_VqX6J93k
Reread the section on the sinking of the Lusitania and take a look at your "nuke ISIS" philosophy in that light.
Frankly, there are way too many derivatives. And debt. But I been hearing these claims of Debt crash for 40 + years - after we bailed on Bretton Woods. Which was an UNWORKABLE mess.
Get on with the effing crash, cause I am getting sick of people who want my $ 99, 199, 995 or 2,995 to learn the sooper sekrits of survival. Click here and listen to some shit offering 2 - 9 FREE reposrts when I give them my 99, 1995 etc.
wishful thinking
He writes "Again, debt is money."
Wrong.
Debt is fraudulently masquerading as money, and he (and we) erroneously call this debt "money" thereby perpetuating the fraud.
Using real money (no interest attached) or Bankruptcy are the only recognized ways to extinguish debt.
The only other way is stated in the original Title 31 of the act, from
http://www.federalreserve.gov/aboutthefed/section31.htm:
"Section 31. Reservation of right to amend"
"The right to amend, alter, or repeal this Act is hereby expressly reserved."
"[Omitted from U.S. Code. Part of original Federal Reserve Act; not amended.]"
Read that again: "Omitted from U.S. Code. Part of original Federal Reserve Act; not amended." The authorization of the Congress to "amend, alter, or repeal this Act" was intentionally omitted from the US code!
The congress could do the right thing if they had the balls!
Debt-Is-Not-Money
I have a 1967 Thorndike Barnhardt dictionary that actually defines money as gold and silver coin. This is consistent with America's Constitution, so ... All this other stuff is just sleight of hand, null and void, illegal, as are most of the volumes of "law" on the books. It will come to an end, however, transitioning back to a silver backed currency should not be a huge problem - maybe even something totally different and not centralized since false weights and measures seem such a temptation for some.
The bandits will circle their wagons and might make it a problem, and probably want some fireworks... Anyway, gettin' back on track is certainly doable, just need a do-over - go back to what the Constitution said. Run the bad guys (and girlz) out of the government halls and put honest people in there, and get back to work. Prolly have to confiscate some of the stolen assets (ill-gotten gains), thats the tricky part and takes some time. That'd keep the courts busy for quite some time, and they could hold their heads up high doing the right thing, reclaiming the respect they should have, and a future for their children. Justice must be served.
That dictionary should be banned
They have banned The Constitution at this point.
(ps, rush on down to the ever consolidating big box office store near you and get a pc with NSA tracking software already installed from the factory!)
A journey of 1,000 miles starts with but a single step.
-Confucius
Ahem, psst – I think all of congress might be in on ‘the code’. Pass it on.
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Metals & Markets With Dave Kranzler: Silver Will Be Best Performing Asset of 2015PM Fund Manager Dave Kranzler joins the show as a Guest Host this week discussing:
http://www.silverdoctors.com/metals-markets-with-dave-kranzler-silver-will-be-best-performing-asset-of-2015/
None of it is real!!
Now you see it, NOW YOU DON'T.
I am sure happy I own REAL things.
I'm starting to give my chickens some perks, like heated water.
Lots of Love and Loads of Respect to Zero Hedge and most of its members too.
I'm a believer of assets over fiat, and I'm doing my bit to invest in assets - and am committed to life long learning too.
Here's the thing - I need fiat currency for everyday living and to pay my way for life.
I keep reading phoenix capital, listen religiously to mike maloney's gold and silver presentations, even take the odd short position against the markets because my fiat is losing value - and you know what? I keep losing money.
I get the picture, but even at the age of 30something, I wonder if I'm going to die before we see any financial reforms. These uber-bear articles should never be viewed if anyone here trades the market... It goes against what's happening in the markets (yes, I know the markets are corrupt, but so is fiat, and you all have it in your banks and wallets!)
Consider "believing" this end-is-coming narrative... I mean what then? I have gold, and I'm going to be allowed to keep it????
Folks, I like Phoenix Captial's rational views, but if I took them seriously I'd be Short SPX from 700 and Long Gold from $1900. Makes you wonder if this company is nothing more than bear-pusher for the market providers like IG and co (I mean we see their ads plastered all over the place!)
Sorry about the rant, but I just wish we had an article that says: "look it is all bullshit, but to protect yourself, you might consider NOT buying gold at $1900, and NOT shorting the SPX at 700! Here's a thought, gold is good value here, and the SPX might be worth a trade here with a stop - at least with the Fiat you'll generate from your trades you can aquire more land and more gold".
But no, all we get is the world is ending, the world is ending - that's not objective either.
I'm a Zero Hedger - but to me, that means being objective first and foremost. Opinions are a distant second.
Timeframe matters. Think about this, a clear after the fact analisis, Weimar hyperinflation. Did you know that the year before going up millions% gold price did actually fall around 50%? That is a good example of the sea retreating before the tsunami arrives. So yes, the timeframe of this folks doesnt look very "trading oriented". More like long term survival oriented. I dont say that they are right, just that to judge them maybe you need to wait a decade from now. And in the meantime dont use them as a timing tool, cause they arent.
...perks, like heated water.
You're making chicken soup?
The 2008 crisis and its aftermath boils down to what is presented in this article. Phoenix capital and all their ilk, need to understand and acknowledge the simple truth presented there and knock off the doom and gloom narrative.
http://www.valueplays.net/2014/06/05/davidson-myth-2008/
The site you direct us to is named "Stock Twits" so......................
So... run in circles and scream in NOT the answer?!?!?
Plan out cot locations in your basement for all the family members who do not have a paid-off palace.
I keep several not-so-nice RVs out back for such emergencies.
It was either that or set up a de-lousing station at the front door.
The financial crisis of 2008 was not caused by the CDS market. The CDS market was one transmission channel of contagion within the financial system.