The Only Thing That Will Save Us is Collapse

The global economy is buckling, and desperate intervention is only delaying the inevitable

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The House always wins.

The Central Bank-managed US Economy is a terrible Socialist program — because it helps very few, and causes harm to many. We aren’t supposed to have a “centrally-planned economy” but ultimately, we do. The big commercial banks’ addiction is the worst it’s ever been — and they’re gambling with the very money you and I entrust to them for ‘safekeeping’. They’re even gambling with the money of the government, yet somehow they’ve negotiated a literal blank check from the Federal Reserve. Open-ended Quantitative Easing (QE). Guess who foots the bill for that?

How the Sausage is Made

First, your bank doesn’t “hold” your money for you. Your deposit is the act of giving your money to the bank to do as they wish, in a very real, legal, title ownership sense. You simply become a creditor (and an ‘unsecured creditor’ at that), with an IOU from them. You always get your money back though, right? It’s insured anyway. Well, sort of.

Next, the FDIC (Federal Deposit Insurance Corp) is paid via teeny-tiny premiums from your bank. On paper, you’re safe up to $250K. But in the ‘insurance biz’, there’s a term called ‘catastrophic loss’ which is an event too large to pay out fully. In reality, those teeny-tiny premiums add up to about one-third of one percent of all the deposit money actually insured. Fun fact: Prior to the FDIC, there was the FSLIC — otherwise known as the Federal Savings & Loan Insurance Corp, which has a crisis named after it.

Third, banks don’t lend your money out as loans. When a bank grants credit to a person or business, the money for that loan is all digital, and is merely typed into existence, ‘crediting’ the account of whomever they’re lending it to. As long as that bank has enough “reserves” at the US Federal Reserve covering a small percent of the amount (3–10%), the money suddenly exists. The loan is then paid back to the bank by you using very real, worked-for dollars, plus interest.

Fourth, as I mentioned, you, the depositor, becomes an “unsecured creditor”. You may be familiar with how bankruptcies work: the assets of the party filing for bankruptcy are added up, opposite a potentially long list of creditors and the amounts of money they are each due. An order is followed during such liquidation, as they determine “who gets what”. Those owed the most, or those with special priority, get the most money. The creditors at the end of the list (i.e., you, the unsecured creditor), are lucky if they get anything. So for you, the depositor, it means you are at the very bottom of the list. The highest priority creditor to pay is the government, followed by hedge funds, investment firms, and all manner of other financial institutions and shadow banking institutions. (Yes, shadow banks are a real, widely-recognized thing.)

You’re at the bottom of the list. As Willy Wonka said, “YOU GET NOTHING!” That is an unsecured creditor.

Last, banks are allowed to keep your money, plain and simple. You gave it to them, remember? This is called a ‘bail-in’. You may remember what happened with the Island of Cyprus back in 2013. The failing banks ended up confiscating 47.5% of all depositors’ savings over €100,000 (Euros). Banks in the US can do this now as well, courtesy of the Dodd-Frank legislation.

The ‘Bail-In’

In reality, current leverage is so extensive, deposits would be kept by the bank(s) and it still wouldn’t be enough. No meaningful regulation was put in place either by Dodd-Frank, or the CHOICE Act which came after it.

Not only are Mortgage-Backed Securities still a thing — but these dicey financial instruments (called ‘Asset-Backed Securities’, or ABS’s) have proliferated into the realms of Student-Loan debt, Credit-Card debt, Auto loans, and more. This truly is the “Everything Bubble”.

This is why in the wake of this current clusterf*ck, the Fed recently announced it would ‘expand’ the types of collateral it would accept from the banks. They are now accepting everything under the sun to clear off the banks’ balance sheets. They really had no choice.

Aside from letting them fail, of course.

Your friend, the bank

That’s not a friend. Then banks have the nerve to ask you, the taxpayer, for money again — only this time, it’s your children’s future tax money, all the way to your yet unborn great-great-great grandchildren’s taxes. I think that’s a solid “NO.”

Too bad we don’t actually get to vote on it.

Too Big to Bail

Perhaps ‘Too big to bail’ is how we should think about this from now on.

Ever since Central banks like the Fed began attempting to control the wild horse that is the Free Market, the crises we’ve all experienced have been nothing more than slamming on the breaks to avoid the collision ahead. Whiplash is all monetary interventionist policy has actually caused — we haven’t even seen the real crash yet.

It’s gonna be rough, better put on your seatbelts.

Rinse and Repeat?

If it’s allowed to pop, at the very least we’d know it would likely be many years before the greedy could amass such an enormous amount of leveraged wealth for them — and debt for us — again.

I believe the only true way to stop this in it’s tracks from becoming worse this time, and possibly eliminate what will come back stronger in the future, would be for the banks to suck it up and FORGIVE DEBTS.

Another time bomb

It is possible that Deutsche Bank’s actual exposure could be in the Quadrillions — between off-the-book amounts and uncertainty, we simply don’t know. Deutsche got stuck with a lot of the bad debt from not only Europe’s 2012 recession, but ours from 2008 as well. As Deutsche Bank even now sits on the precipice of what would be a full global crash of it’s own, I think it’s worth pondering why the banks don’t just let it go, instead of demanding debt repayment at all costs.

You know who has quadrillions of actual dollars to cover that mess? No one — even if all of the money of the entire planet were piled together. It was a trick question, silly.

Global economy be damned, they want their money.

Monetary Systems and Policies

The point is that these systems and policies change at the will of the government and bankers, depending on the financial state of the country. These systems are sometimes created and modified in cigar smoke-filled rooms in places like Bretton Woods NH, Jekyll Island off the coast of GA, and Jackson Hole, WY by bankers, and often some clueless government officials. These systems are not set in stone.

It’s very important to point out that the monetary policy we have in place today is less than 50 years old — overdue for a change, actually — and with the happenings in the world right now, there is an increasing chance of change ahead. All floating currencies continue to lose purchasing power against gold.

The Digital Dollar?

You can’t grab emergency cash from an ATM in a crisis if there’s no actual, physical cash to grab. Let that sink in.

I plan to write much more on nation-level digital currencies soon, but I will say multiple central banks are researching digital currency right now, and some central banks such as the Bahamas have even implemented one. I’m not against digital currency per se — I’m against having it tied to our identity and our lives — and I hope you will consider the potential problems with such a system as well.

We must involve ourselves with writing the rules — because the digital monetary system being planned is FUNDAMENTALLY THE SAME, only you can be sure that it will further solidify the rigged system we have that exacerbates inequality, and ultimately expedites the means by which your money flows to the top.

Final Thoughts

Stay tuned, and stay safe.

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I write about Economics and Social issues that affect us all, because my country, America, has problems and change is needed now.

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