We are on the brink of a total economic collapse across the globe.
The signs are all there…yet most people have their heads too deep in the sand to understand
what is coming.
Currencies will collapse…economies will crumble….and Bitcoin will be this world’s
savior?
Or will it also be brought to its knees??
Well find out in about ten minutes…because it’s time for Chico Crypto!!!
Things are going to get unbelievably serious very soon.
We are staring in the face of economic, currency & nation state collapses.
This will be far worse than the 2008 economic crisis, and could even outdo the great depression
of 1929…and the funny thing is, we can watch this economic hurricane approach in real time…
Currencies are starting to collapse across the board.
Everyone knows about the British pound, which went into a free-fall earlier this week almost
reaching 1 to 1 parity with the dollar….its lowest level on record versus the USD…but
as we can see from the chart, this freefall has been going on for a while now…
Checking out this chart, we can see the British pound was sitting at a cool 1.38 cents in
November of last year.
With the recent collapse down to a low of 1.03 cents, this has been a retracement of
over 25 percent in under a year.
And the UK bond market was going bananas.
Here is the 30 year UK bond price…called a GILT.
Earlier this week it was down over 55 percent since the beginning of the year, and down
nearly 45 percent just from a couple months ago….
With the UKs currency collapsing and their bond market about to implode… the BOE, the
Bank of England had to step in….
Financial Times covered the fiasco.
Their article says “The Bank of England took emergency action on Wednesday, unleashing
a £65bn bond-buying programme aimed at stemming a spiralling crisis in government debt markets.”
“The BoE suspended a programme to sell gilts — part of an effort to get surging inflation
under control — and instead pledged to buy long-dated bonds at a rate of up to £5bn
a day for the next 13 weekdays.”
And according to this article from the daily record “Respected Sky News economics editor
Ed Conway said he had been told pension funds were on the imminent brink of insolvency,
which pushed the Bank of England to act.
Millions of working people and businesses have money in pension funds which will pay
out a guaranteed sum on retirement which could have all been lost.”
So this was a bailout….the UK government is resuming Quantitative Easing to bailout
Pension funds that had over leveraged themselves and were facing margin calls of insolvency
that could have happened at any time…
But it isn’t only Britain….the world’s top economies are also facing a currency and
bond crisis.
As we can see, the world’s biggest economies are #1 the United States, #2 China, #3 Japan,
#4 Germany & #5 the UK….these 5 countries' economies make up 55 percent of the total
global economy.
Checking out the currencies of these economies…China’s Yuan has been collapsing, Japan’s Yen has
been collapsing, Germany’s Euro is collapsing, and of course the UK’s is too.
The only currency that isn’t going into a freefall is the world’s reserve currency…the
US dollar.
A full-on currency collapse of 4 out of the 5 biggest economies in the world is not good….but
many people will say….but the dollar is doing fine, we don’t have anything to worry
about as Americans….
Boy, let me tell you that is about as wrong as it gets.
The US dollar will be next.
Let me explain why…
So last week, it was the Japanese Yen getting hit hard…and to save the YEN from a full
on collapse…the Japanese government had to step in and intervene for the first time
in 24 years.
From popular Japanese news outlet Kyodo, we can see they say “The Bank of Japan, as
ordered by the Finance Ministry, is believed to have sold dollar-denominated assets it
holds, such as U.S. Treasuries, to buy the yen in the financial market, investors said.”
Actually if we look at the largest holders of US treasuries aka US debt, we can see it’s
all the countries who are facing massive downturns in their currencies.
Japan is #1 with over 1.2 trillion, 2nd is China with nearly 1 trillion, 3rd is the UK
with 634 billion, and then finally it’s the eurozone countries..like Luxembourg, Ireland,
Belgium, France, Norway and Germany who combined have over 1.2 trillion in US treasury securities.
So if the bailout doesn’t work for Britain, then England is going to have to begin the
Selling of US treasuries… same with China, same with Eurozone countries…they will do
the same thing Japan has been doing…selling their US debt assets, to buy up and defend
their own currencies from a meltdown…
Which in turn is going to blow up the global bond market, not just within the UK…and
this is already beginning if you know where to look…
Liquidity in the US bond market is already facing serious challenges…checking out the
US government liquidity index for treasuries, we can see outside of the worst of the pandemic,
liquidity is at the worst level in over 12 years.
You don’t want high numbers with this index, as high numbers represent stressed liquidity
conditions.
The bond market Move index, which is a measure of implied volatility in the bond market is
reaching seriously high levels, which when it gets over this level, it usually means
a serious global shakedown is coming…it got over this in 2020 with the pandemic, it
jumped over this in 2008, it jumped over this with the Iraq War and with 9/11…
Now jumping over to the global bond market, we can see since the beginning of the year,
it has lost over 20 percent of its value….this is unheard of throughout modern history, and
never thought was possible before this year.
This index is priced in dollars, and with 53% of the index in foreign-denominated bonds,
the strong dollar is killing it.
That is why the US aggregate of this is doing relatively better, as it’s 100 percent dollar
denominated bonds…but it’s still getting crushed over the year, down nearly 15 percent
instead of 20…
This isn’t good my friends…if you look at historical performance of US bonds since
1977, this 14.86 YTD performance is the worst by extremely large numbers.
The next worst performance from US bonds came back in 1994, when there was a -2.9 percent
return.
This year is over 4 times as bad….
So what does this mean?
Well, governments across the globe will have 2 choices.
Do what the UK just did, and resume Quantitative Easing,….pushing up inflation to even higher
highs….or they will do what Japan did, have to dip into their US cash reserves or balance
of treasuries and sell them to defend their own currency…hurting the US economy and
dollar.
Zerohedge covered this in an article just posted yesterday….and this is what they
concluded the article with “let us break it down for you: pivot means that central
banks can't take any more pain and will soon do QE and rate hikes at the same time everywhere,
eventually ending hiking and starting to cut rates - the bottom line is that this is the
beginning of the end for the fiat system which now faces a terminal dilemma: fight inflation
and suffer market collapse and economic depression with millions laid off, or push to stabilize
social order and employment with higher asset prices, runaway (hyper)inflation be damned.”
Fiat currencies are coming to their end…the everything bubble is about to collapse.
The Yen is going to crumble, the pound will get pounded, the Euro will falter, and the
Yuan will collapse…this will push up the dollar in the short term, but eventually the
Contagion will find its way into the USD and the US economy…our bond market is already
showing cracks…
This may have been their plan all along, collapse global currencies to usher in a new CBDC system….but
if this collapse does happen, people will lose faith in the government, and wont’
want anything to do with their new CBDC…
The only other option is Gold and Gold 2.0….Bitcoin…which is much easier to use as money than bricks
of GOLD….just wait and see, BTC supercycle is coming, after a bit more pain as governments
and central banks continue to pull the wool over people's eyes…but soon they will see
clearly, as hyperinflation takes over across the globe…Cheers I’ll see you next time!!