The ECB Comes Clean On Rising Rates and the Coming Systemic Reset

Remember how the Fed, ECB and others all claimed ZIRP and QE were about generating economic growth, making mortgages more affordable, and helping consumers?

Well, that was a gigantic lie. The truth is that every major policy employed by Central Banks since 2008 have been about one thing…

Maintaining the bond bubble.

Governments around the world have used the bubble in bonds to finance their bloated budgets. If interest rates were anywhere NEAR normal levels, most countries would lurch towards default in a matter of weeks.

If you think this is conspiracy theory, consider that the European Central Bank openly admitted this in its semi-annual Financial Stability Review this week:

Even so, [the ECB] said that “higher interest rates may trigger concerns about sovereigns’ debt-servicing capacity,” and noted that “distrust in mainstream political parties continues to rise, leading to fragmentation of the political landscape away from the established consensus.”

Source: Bloomberg.

In plain speak, the ECB is admitting here that if rates were to rise, the financial world would quickly realize that most countries couldn’t finance their debt payments. Indeed, the five largest economies in the world are all near or above Debt to GDP levels of 100%

As I explained in my bestseller, The Everything Bubble: the Endgame For Central Bank Policy, the bubble in bonds is what finances this entire mess. It's what lets the political class continue to spend money the government doesn't have. And it's why the entire financial system is now in a bubble.

Remember, sovereign bonds are the bedrock for the current fiat-based financial system, so when they go into a bubble, EVERYTHING goes into a bubble, as all risk assets adjust to ridiculously cheap interest rates.

This is why I coined the term The Everything Bubble in 2014. It’s also why I wrote a book on this issue as well as what’s coming down the pike: because when this bubble bursts (as all bubbles do) the policies Central Banks employ will make those from 2008-2015 look like a cakewalk.

We are putting together an Executive Summary outlining all of these issues as well as what’s to come when The Everything Bubble bursts.

It will be available exclusively to our clients. If you’d like to have a copy delivered to your inbox when it’s completed, you can join the wait-list here:

Best Regards
Graham Summers

Chief Market Strategist

Phoenix Capital Research


Herdee Thu, 11/30/2017 - 09:37 Permalink

They can't let it burst. The point being is that they've put so much into it that they've got no choice now. They have to go directly to hyperinflation or its' bust. Old Ben said interest rates will never normalize during his lifetime. He's right.

gdpetti Thu, 11/30/2017 - 11:09 Permalink

These articles are always the same... let's not forget that the overwhelming amount of 'debt' in Japan and China is domestic.... not foreign like in the West. BIg Dif, and the reason so many forecasts for the East to collapse have been wrong.... we will all go down together, tied at the hip, but there is a big dif when you owe money to yourself... left hand/right hand dynamic. These articles need to show the % of foreign and domestic for each country, and not just lump them together... I think it's over 90% domestic for Japan/China... what's the domestic % for the West? Sure, the 'East' owns alot of the 'West' debt, but the ones to force the economic collapse will those pretending their shit don't stink... the West... which is why the 'deep' state has been investing in the East for so long... to prep them for the transition to the NWO... with better regional equalization... for what survives after Mother Nature passes through.

cwsuisse Thu, 11/30/2017 - 11:49 Permalink

Sometimes the comments are weird. It is not about the central banks letting or not letting the bubble burst. It is about failed investments which globally destroy a lot of capital and political unrest from the have-nots. 

Anonymous_Bene… Thu, 11/30/2017 - 21:56 Permalink

I know bonds are in a bubble. So I'm doing my part by refusing to pay interest on the debt conjured from nothing extrapolated to infinity. Income taxes, payroll taxes, everything but sales tax and property tax gets totally avoideded. I buy everything possible P2P so my sales tax contributions are as low as possible. Just doing my part to fuck the man and bring on the collapse as soon as heavenly possible, thank you very much. And yes I'm well aware that there are millions of other small businessmen in my shoes.

DjangoCat Thu, 11/30/2017 - 23:41 Permalink

Ricards tells us there will be a freeze and a reset, with a roll up to the SDR.  He said to watch Bitcoin and when it rockets, the time is nigh.Freeze means you can't get at your money, let alone buy Bitcoin.  Do it now.

hendrik1730 Fri, 12/01/2017 - 02:36 Permalink

Hyperinflation? Is already here but is hidden behind ZIRP. With a "normal" interest rate on savings of 5% ( historical average, from before the present madness ) and a "normal" inflation rate of 1% ( when fiat was still gold-backed ) a capital of 1 million US$ would generate a steady income of 40k/year while keeping the buying power of the principal intact. One can live on it if ones' lifestyle ambitions are not too extravagant.NOW, with interest rates on treasuries at 2.5% and an effective inflation rate of 9% ( Chapwood index, not that idiotic number put forward by the FED of say 1.5% ), even an infinite amount of savings does not deliver any stable income anymore : 25.000 US$ of interest income on a 1 million savings capital MINUS 90.000 US$ loss in buying power through inflation. Savings have become WORTHLESS and that's where the hyperinflation is de facto hidden.ZIRP/NIRP means ALL savers are being bled to death slowly and that any idiotic "investment" now can go ahead, no questions asked. Like big Cies. buying up their own shares with new debt. Good for the bonuses of the big brass, in the long run a disaster for said Cies when the debt needs to be rolled over. And also good for keeping the exponentially growing public debt mountain servicable until it is not anymore since the taxpayers AND the economy are being slowly bankrupted resulting in ever falling tax incomes. 

mosfet Fri, 12/01/2017 - 03:50 Permalink

A week ago Venezuela techinically defaulted on their bond payments and has been hyperinflating their currency since 2013.  And was the result an epic crash of their financial system?  Nope, their stock market pulled back 5% and then proceeded to double within 4 days!  Yep, failing to make their bond payments grew the Venezuela stock market more in 4 days than it's entire history going back to 1994. is money printing, t.i.n.a. and insolvency at it's finest.  Coming to a 1st world country near you.Q: In a market like this, with hyperinflation, when do you take sell to take profits?A: You don't - Dividends.Q: When do you consume the last of your Gold & Silver?A: With soaring food costs, 26% unemployment & gov 'redistributed' farmland; Sooner than you'd hoped.Venezuala has electricity, clean water, internet, a 'functioning' abeit devalued currency, cell phone coverage, late model cars, a stock market, acccess to crypto currencies & abundant fuel.  The FUD over societal collapse back to the stone age that so many here warn about?  Didn't Happen.

hendrik1730 mosfet Fri, 12/01/2017 - 12:31 Permalink

Nooo ?? How come people have eaten their pets in the mean time? Have ran accross the borders by the thousands to neighbouring countries for want of food? All ATM's empty? Bank accounts blocked? There's hardly any oil to get from tank stations. Everything is rationed or unavailable. Their stock market may have risen tremendously .... in BOLIVARS, not in US$. Wake up, man, it's a hellhole now.

In reply to by mosfet

mosfet hendrik1730 Mon, 12/04/2017 - 02:09 Permalink

Venezuala certainly is a hellhole economically but my point was that (even in those circumstances) basic necessities and even most amenities tend to remain available; often at an exorbitant price compared to stagnant incomes.Yes, their markets have soared only in Bolivar and fallen in Dollar terms.  And as the the Fed and ECB continue massive overt & covert printing, it's now our markets that are climbing in response to Dollar and Euro devaluation.  Gold, Silver and even crypto are excellent hedges for devaluation and even better for hyperinflation, but owning shares in dividend paying companies (which provide essential services) can provide anti-inflationary income that doesn't run out when the crisis lasts a lifetime.

In reply to by hendrik1730