During the Next Crisis, Central Banking Itself Will Fail

Phoenix Capital Research's picture

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. If the below chart was a problem BEFORE 2008… there is no way that things are better now. After all, we’ve just added another $10 trillion in debt to the US system.


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 to nearly 50% of US GDP.


5)   The Central Banks are now all leveraged at levels greater than or equal to where 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 (back in 2009). 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.


The situation is clear: the 2008 Crisis was the warm up. The next Crisis will be THE REAL Crisis. The Crisis in which Central Banking itself will fail.


Smart investors are preparing now.


We just published a 21-page investment report titled Stock Market Crash Survival Guide.


In it, we outline precisely how the crash will unfold as well as which investments will perform best during a stock market crash.


We are giving away just 1,000 copies for FREE to the public.


To pick up yours, swing by:



Best Regards


Graham Summers

Chief Market Strategist

Phoenix Capital Research










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Dr_Snooz's picture

Um, guys.... The collapse has already started. It's been ongoing for some time. We get a crisis, a bank collapse, a derivative implosion, whatever. The elites rush in, patch up the mess by stealing another few trillion from us and handing it to their crony pals. Another few million workers get jettisoned from the labor market, the middle class ratchets a bit deeper into the mire, a bunch more small investors are ruined when Goldman steals their money and the game goes on.

We keep waiting for the single big crash that purges, cleanses and sweeps away the rotten-ness. Forget it. We're in Roman Empire crash mode; death by a thousand cuts. The whole thing is going to grind on until there's no one left to rob, no jobs left to slash, no investors left to fleece, no sovereign nations left to bomb. When we're all peasants in mud huts, handing a portion of our crops to the aristocrat's goons and keeping our beautiful daughters well out of sight, you'll know the big crash has finished. Until then, you have a wide window of opportunity to prepare for the new Dark Age.

Global Observer's picture

What a stupid article! Central Bank leverage? Central Banks can be leveraged infinity to 1 and it won't matter. Central Banks, by definition, cannot fail. They don't have to mark their assets to the market or balance the books.

lucky and good's picture

It has become abundantly clear that when it comes to the "economic chips" the powers to be have no intention of letting them fall where they may. However, several factors determine just how much influence can be applied to the the final outcome of current economic policies. Continuing with the metaphor of "falling chips." Things like the size of the chips, the rate or speed at which they fall, and the number of chips in the air may make them uncontrollable.

My point is we could find ourselves up to our neck in chips in a blink of an eye, and in the middle of an economic tsunami all bets are off as to how successful efforts to stem a catastrophe might be. The financial overlords may be losing control and this means during the final stage of the global shakedown events will be chaotic and become very wild. The article below titled, "The Final Shakedown Will Be Uncontrolled" tells how violent the crash might be.



goldsansstandard's picture

There is no reason that the reduction to third world status Won't be. Nearly permanent, like it is and has been for most of humanity, for most of time.

Never ending inflation, to enrich a small caste of counterfeiters.

The fact that Mugabe is still in power after taking his country to the Stone Age is all the proof you need that this scenario is a possibility.

Gusher's picture

There is no problem till we run out of paper and ink.   Or at least till our currence runs out of room for zeros on it.

The Trade Group's picture

Sorry to break it to you all, but pheonix capital predictions never come to pass. This makes an endless stream of doom and gloom predictions year after year. It is hard to find a prediction that came true.

Frankly Speaking's picture

The Fed is leveraged at 78 to 1. "

Bullshit. Tell me what $2 trillion in Mortgage Backed Securities are worth on the street and re calculate that leverage please.

swmnguy's picture

Well, right.  The Fed's leverage is infinite.  It's called a Fiat money system for a reason.

algol_dog's picture

WHEN! WHEN! ??????????????????????????????????????????

The Trade Group's picture

Never. This guys predictions suck. He never gives a date because then he would be accountable.

ExploitedCitizen's picture

Your kid's kid's might see the day the system crashes, until then buy the dip.

Bossman1967's picture

Same fucking story recycled over and over year after year. FEAR POORN BUY GOLD BUY SILVER THE WORLD IS COLLAPSING. I feel like a sucker that have missed on many oportunities waiting on a collapse. I will read 20 stories between now and the first that the dollar will collapse next year. BULLSHIT

nofluer's picture

Why does Zero Hedge allow fonix Capital to continue publishing (free) this click-bait? If they're gonna run ads, MAKE THE cheap cheesy bastards PAY for it!!!

ToSoft4Truth's picture

The collapse is always 'next season'. 



JRobby's picture

Yes, and next season they will transfer risk and bad paper to a distant planet.

PS: It will not be the finale

Dr. Bonzo's picture

Stop teasing me.

harrybrown's picture

Instead of burning books, just burn zionists....

lasvegaspersona's picture

Yer facts are getting stale. Still valid but like any porn one needs some variety...I hear.

ebworthen's picture

Exit!  Stage Left!

You can do it Janet!  6%!

No bailouts!  No QE!  Your bosses Dimon and Blankfein can roast!

Vendetta's picture

they'll continue on till it implodes then offer their continuation of the same with SDR's while everyone is freaking out.

83_vf_1100_c's picture

So when the banks collapse and the Chinese can't afford to rescue us, what will we use for money? AU/AG? Nahh, damned barborous relic. /s