An easy follow perspective on the current financial market
Ok... so chocks away
Ok... so you probably know we live in a debt based economy. Money is created when we create debt, debt is made when banks provide mortgages, loans etc. Most money is created this way with a very small amount of cash, bank notes etc. (around 3%) which is sold for profit to the banks.
So far so good... except right now we have a big problem with this virus, which is interrupting business, and causing job losses and that is affecting almost everyone in some way or another. The whole tourist sector, aviation, the leisure industry, travel, performers across all categories... oil revenues are down (less travelling in all modes)... a massive switch to online purchasing, reducing high street numbers and of course the impact that this has had on traditional retail... this is a pretty big deal.
So... let us continue
People are saving. Why are they saving? Because they are uncertain about their future. Well that is a good thing right? wrong... The economy won't grow with people hanging onto their money... what we have relied on to keep the whole hamster wheel running is people spending, and they are slowing down (furlough, loans, and grants have kept buying going in the short term). What they have been buying is DIY products, Gardening equipment (summer) but that is likely to come to an end now... in fact it already is... and furlough is coming to an end on the 31st October too.
Well the next thing is people will probably start defaulting on their mortgages, rents and loans. What happens if they do that? ... well if you remember back in 2007-2008 (the sub prime story), basically the bank realised the debt bundles (banks package up bundles of debt and sell them on to other banks and pension funds) were worthless or at least a fraction of their expected value. This rolled through the banking system... like a domino effect, as assets they had bought were basically not worth anything. Banks were in real financial trouble.
Anyway enough about that...
So... what would the situation be if the banks went bust again? ... how could that happen? ... well, people stop paying their mortgages or loans... because of an economic crisis. What, like the crisis being caused by Covid? ... Yep, exactly... But more than this, it only takes one bank, anywhere, to begin the string of events that lead to a huge financial meltdown.
Something else as background info before we get into the question above... most of the money created is done so through private banks (e.g. Barclays, Lloyds, HSBC, Westminster in the UK), now all of these banks have their own board of directors, shareholders and are permitted to run their bank as they choose within of course the controls of the financial regulatory system. However, it is pretty cumbersome and clumsy, designed for a world that no longer exists. (see. Bretton woods 1944). It could do with an overhaul anyway.
The trillion(s) dollar question... what if the banks went bust this time?
Well let's take a moment here to look at a scenario I posed a year or so ago. My bank goes bust. Let's say I have a fair chunk of money in there lets say £80k (which coincidentally is the same amount that we are allegedly insured / protected for, except that is also not really true if it all goes "pete tong")... and I have a mortgage. Now, who do I pay my mortgage too if the bank goes bust? ... Well it would be very messy but I would think the government might take over that mortgage and somehow give you that £80k back ... or use it to offset the mortgage maybe?
How might that actually work?
Bearing in mind that this is highly likely (many can't believe it has gone on as long as it has), we have an economic disaster on our hands, and, plus the US presidency is being contested as I write this... the outcome of which might lead to a very volatile situation as well. Whether we like it or not, 70% of financial transactions around the world are settled in dollars. So what is happening in the US at this time has a direct effect on the markets around the world.
This might be the first time you have heard about this, but it is already being piloted in 4 huge Chinese cities, so it is happening.
What is it? ... basically a digital wallet which is pretty similar to having one of the banking apps on your phone, except it is run, managed, and controlled by the government.
So back to my scenario above, what will happen to the banks, how is that going to pan out? ... They will be allowed to fail this time around... Why? Because (a) it would cost too much to bail them out and, we the people would not allow it (b) They already have a plan in place which supersedes the old banking system. Essentially the virus, the economic disaster, the need for financial reform all wrapped up into one new global financial and economic reset.
So was this a fortuitous coincidence? ... Governments taking advantage of a pandemic... or was this planned all along... just a thought. Have you any idea how long it takes to plan and implement system reforms like this? ... let me help you... years! ... this was no coincidence.
Banking sector is removed
So the whole banking system can be taken out in this way. People don't lose out of course. Business as usual on the face of it. You still pay your mortgage and your money is safely transferred to a new haven. The banks though? ... it is over. Will they be unhappy? Yes... can they do anything about it? Who knows, riot in the streets... I am not sure they will have much support from the masses.
What does the government get? Complete financial and regulatory control. Total control over how much, where, and when money is created, no banking sector getting in the way, streamlining of the whole financial system. Once every country is on board, then, global central banking underwrites everything.
A currency that is digital and controlled by the government. Through your wallet they can take tax directly, manage your benefits and payments, control your access to your money, stop and start access to your money as they please... and if you don't have a vaccine or follow their instructions? ... well you can see where that is heading can't you...
Imagine you go into a shop and that shop is unapproved by the government, your digital wallet card won't work. What if you are trying to buy a product that is deemed inappropriate for you; card won't allow that purchase. What if you are trying to buy an airline ticket and they don't want you travelling... all possible with a CBDC.
We're in the home stretch
This is not a post to frighten anyone, rather to simplify what is happening out there so more people are aware.
Oh I nearly forgot... negative interest rates... what? does such a thing actually exist. Yes, basically if you leave money in your account then you will pay for the privilege! Why would they do that? They don't want you saving, they want you spending and borrowing!
How it this going to effect stock markets, shares, precious metals (gold / silver), unregulated crypto currencies (e.g. Bitcoin and Etherium) time will tell... but as they are all linked to our ability to access our money, and pay, unless they accept this from a 'non official' source, then maybe those transactions can't happen.
Black markets and unregulated facilities
I can see a huge growth in money and exchanges of goods and services which is outside the official digital framework. This will of course be deemed illegal by the authorities.
Why? Why would people want to do this? Because they don't want everything they do to be controlled and monitored... as for the government they want everyone 'in the system'.
This is the largest power grab and control play that we have ever witnessed... not just in our lifetime, but ever. It will be ushered in primarily because when the banks fail we will embrace the safety net of the CBDC and the helicopter financial incentives (free money) used to sweeten the deal.
Once inside the 'Net' we are at the mercy of the powers that be. Like in China all is rosy and you can build whatever you want, earn good money etc. But do not say anything defamatory against the state, do not object 'too strongly', and certainly be aware that snitches willing to 'turn you in' will be everywhere. So a bit like the old communism of old... and in order to pay for it all... massive hikes in taxation!
The Euro zone is likely to be even more regulated that Brexit Britain... so there is no salvation over there...
How has it got to this? Can we avoid it now? What are our options? How long will it take to roll out? ... is there anything we can do to protect ourselves?
All good questions... I wish I had the answers for you... but... let's start conversations, let us work together... get in touch if you'd like more information and want to speak to like minds!