THe Situation at Hand

The Situation at Hand

Financial markets are a complete shit show right now. Conventional knowledge is completely out the window. Traditionally, markets were made up of educated investors who participated with the expectation of profits stemming from legitimate valuations. This is no longer the case. Methods of properly valuing companies based on cash flow and PE ratios is a lost art and has no significance in the nonsensical system we face today. Everything is based off speculation now. Companies that have zero revenue can go public and raise funds solely off hype. Market capitalization is manipulated by institutions so retail participants are left holding the bag when the big players decide to sell. These markets have been taken over by day traders, corporate financing, and central banks. How can the average Joe make sense of these systems and turn a profit to protect their money? Inflation has been sold to the public as a good thing assuming it is kept under control, but it is inherently terrible for the middle class and even worse for the poor. People feel that the only way to protect their wealth is to engage in these markets, but even seasoned investors are finding it difficult to navigate these flaming cornfields. Individuals need to understand the situation at hand to protect themselves and potentially be successful in these pivotal times.  

Where are we at right now? The world economy is expectedly in a recovery. After numerous supply chain disruptions and low consumer confidence, we must assume that we are not “firing on all cylinders”. In the last 2 years the combined power of the world’s central banks has flooded the economy with over 20 trillion of their respective currencies. This is astounding and has obviously never been done before. The reason for this influx of cash can only be described as last-ditch effort to save the world economy from total collapse. Following the 2008 financial crisis, central banks have adopted the perpetual policy of throwing money at everything they can. Ironically named quantitative easing, this system has been great for markets, albeit inflationary. Combined with historically low interest rates, governments and institutions have been able to borrow inexpensively and invest with little fear of corrections. We have seen almost a 12-year bull market in equities and real estate. Wall Street has forced itself in almost every aspect of finance. I’m talking currency, crypto, single-family homes, precious metals, even corn futures! The current strategy of financial institutions is to constantly swap and trade. What this has done is completely manipulate the fair value of all assets. The constant buying and selling of futures contracts have engulfed the trade volume of almost every market. To simplify this, the big players are not buying and holding, consequently, they are not investing! This mechanism is responsible for markets being driven solely by speculation. The actual profitability of companies does not matter. Factors of supply and demand no longer influence asset prices. All the methods of fair valuation and viability ratios that we learned in business school are completely worthless in this environment.

 So what the hell do you do? Inflation is melting your purchasing power away, markets are manipulated to be built against retail investors, and most assets are in such a ridiculous bubble that you’re susceptible to major crashes. The move right now is to be a defensive investor. Bonds used to be the safe bet, but insolvent government and corporations make them scarier than they should be. You can buy precious metals and bury it in your backyard, but those markets are paper traded into obscurity. What market has actual price discovery? The answer is tangible necessities. People need food, protection, and energy to survive in the modern world. “You’re telling me I need to buy beans, ammunition, and oil?” Technically, yes! When nothing makes sense, simple and necessary goods rule over the rest. Assets that hold value specifically for the purpose or use case that they possess are the assets you want in your portfolio. This is because they are timeless and will always hold some inherent value. Think in terms of a society ending apocalypse, the raw materials that will be needed in the worse of times are things with true value. Things that are essential to survival will outlast any speculative asset at any length of time. This doesn’t mean that you have to be a doomsday prepper. Society will last as long as it wants to last, and the current population prefers it’s stability and institutions over total anarchy. However, financial markets are destined to fall, as is the natural order of things. Thermodynamics teaches us that what goes up eventually must come down. Our downfall will not be triggered by currency collapse or stock bubble bursts, it will sneakily come from the bonds, aka the debt market.   

The debt market is made up bonds, mortgages, treasuries, pensions, and financial derivatives of all the aforementioned. The size of the global debt market can only be measured in trillions. The derivatives market reaches the quadrillions. Yes, that is a real unit of measurement. Considerable instability in the debt market can only end one way, total economic annihilation. The collapse in the debt market, which will eventually come by the way of illiquidity, will trigger crashes in every other market. This is because every other market is a derivative of the debt market. Meaning that every single asset, currency, and commodity derives its value from debt. Debt rules the friggin world. Every major government and corporation rely on debt to function. The supposed financial superpower, the United States of America, is over 30 trillion in debt. With recent rate hikes by the federal reserve, the US government will soon be paying over a trillion dollars a year just to cover the interest on that debt. That’s over a quarter of all the tax revenue collected in a year. Some countries are even worse off but it doesn’t matter because they all must price their own currencies off the dollar and the debt it derives its value from. Many corporations are even more overleveraged. 20% of the S&P 500 are zombie companies, meaning that the money needed to pay the interest on their debt is greater than the revenues produced in a given period. These corporations are slowing eating themselves into bankruptcy. All of this debt originates from central banks as they are the entities that create new currency. Every dollar that gets created is another dollar of debt, including interest of course to be paid back to the bank. In addition, each new dollar entered into the economy decreases the value of every existing dollar. This is where inflation comes from. When these corporations and governments eventually default on all this debt, the central banks will have unfettered power over the worlds major institutions.  

The financial world is facing a major turning point. The next few years are going to be full of significant events that change the way we value currency and assets. The average person has no clue what’s coming. The financial professionals, economists and investors are arguing how and when these events will occur, but no one has a clear understanding of the situation at hand. The powers that be are intentionally keeping everyone in the dark for the purpose of implementing a new financial system before anyone can dispute it. They will say that it was undoubtedly necessary, and it was the only way to save the world from chaos and anarchy. In reality, they will be “rescuing us” from a system of banking that they themselves created and abused. Every country in the world must face its surmounting debt. This instability in debt markets will be our downfall. Eventually the bankers will have to admit that the party is over and there is nothing to be done now except start all over.

Banks have been running the world as long as there was a world to run. He who owns the Mint owns everything. In the ancient world, the monarchs would stamp their face on coins and called it legal tender for trade. However, kings and queens could only mint coins using existing metal. Inflation and deflation were existent but typically it was trivial. The value of that currency was backed by the royal’s military and any assets that the kingdom ruled over. This actually gave a lot of power to the constituents of any country because the moment that the monarchs became insolvent, their power was gone. This is because the power and money came from the people through taxes. If the ruling class had mismanaged the people’s money and were unable to provide services or finance an army than all they are left with is  propaganda. Once the people realized their rulers were full of shit, they could simply revolt and overthrow the indebted government. This is how the Roman Empire fell, it’s how the Ming Dynasty dissolved, and further on this has been the way of world superpowers.  

This all changed in the 16th century with the advent of mercantilism and capital markets brought about by the Dutch East India Company. What this did was it transitioned value from hard assets to paper. Businesses, particularly trading/shipping companies, could insure their expenditures with IOUs. This was the introduction of stocks and bonds where corporations could fund excursions with the promise of payment at a later date through dividends. This mechanism is what creates wealth out of thin air. This allows economies to grow faster and wider than the physical assets a nation possesses. Capital is value derived from the potential cash flow of an asset in the future. Mercantilism led to an environment that rewarded innovation and discovery. This brought about the age of exploration and eventually the industrial revolution. This was good for human civilization as a whole but it also drastically increased the power and scope of those in charge. Now that wealth could be built through capital investment and no longer determined by physical assets, bankers would loan money that did not exist through fractional reserve banking. This is simply defined as a bank that loans out more money than it holds to build its balance sheet through the use of debt. This debt could then be sold off to other individuals for a premium to build even more wealth. When this eventually gets out of hand and there appears to be more wealth in debt rather than true asset value, we get recessions and depressions. The business cycle can only exist in a growth-oriented economy. Because capital can be generated out of nothing except potential, it relies on the constant expansion of the economy. When that expansion slows down due to natural disasters, war, or unforeseen geopolitical events, the securities that derive value from something else must correct its price back to the true value. Recessions are actually healthy in this regard for true free markets. Unfortunately, when an entity is able to print value out thin air to protect itself from market downturns, the healthy business cycle is disrupted and favors the debtors. This function of banking has been repeated over and over in countries all over the world. The expansion of global trade and capital markets is necessary to keep the banker’s solvent. When they become insolvent, bad things happen on a global scale.

World Wars, terrorism, genocide, and enslavement are all biproducts of central banks who require more wealth creation. War is expensive but also very profitable. Economies typically grow during wartimes, not shrink. The first rule of economics is that everything runs off incentives. It is in the best interest of bankers to start geopolitical conflicts so they can make more money from weapons, government loans, and insurance. The Federal Reserve Act went into effect in 1913. World War I began the very next year. The decades to follow turned the entire world economy into a war economy. Technological innovation was used to advance weaponry, human labor was used to mass produce that weaponry and eventually use it. War is inherently unpopular to civilian populations, so banks must invest in media and propaganda to sway public opinion. The sinking of the Lusitania, the assassination of King Ferdinand, Pearl Harbor, the burning of the Reichstag. All are major geopolitical events that send entire nations into war with the full backing of its people. Yet, no one ever looks at the financiers who stem to gain from such events. War is unpopular to 99.99% of the world population but somehow we are constantly in some sort of conflict. War economies are the greatest producer of capital because every cost is necessary to defeat the enemy and “protect” the constituents. A fake crisis is just as good as real crisis because it requires unlimited funding to overcome the invisible enemy who can never be defeated. Psychological operations are propelled onto a population to instill a feeling of necessity for taxpayer funding of any given crisis. War economies are profitable and can become popular with the right propaganda.

The United States of America created the greatest war economy that the world had ever seen. Following World War II, the US had an industrial economy 5 times the size of every country combined. They were the victors because they financed the entire global conflict. The US cemented itself as the global superpower and the dollar as the world reserve currency. Although, this could only continue with the perpetuity of war. The US must continue to expand its wealth through conflict. The Cold War was simply a continuation of the war economy to engage in arms races and proxy wars throughout the second half of the century.  Why did the US and Soviets build enough nuclear weapons to blow up the world 10 times over? Because the central bankers profited off every single “defense” expenditure. The Korean and Vietnam Wars were designed to be unwinnable conflicts of attrition that simply printed money for the financiers.

This brings us to 1971 when the US dollar, the world reserve currency, officially became fiat or straight up fake. All currencies of the world were pegged to the dollar which was believed to be pegged to the value of gold. Once these countries began to call Americas bluff on the transactability of USD to Gold, President Nixon signed into law that the conversion would be temporarily halted. This indicated to the rest of the world that America was no longer solvent. We had racked up too much debt by printing money to pay for the Vietnam War and Lyndon Johnson’s welfare state. The provisional order became permanent, and the world became dependent on fiat currencies. This led to global stagflation in the world economy because we had a variety of central banks with the unfettered ability to print and never be held to account because there was nothing backing the value of the currency. Until, the enactment of the petrodollar system which required every country on earth to transact oil (a necessity for every industrialized country) with US dollars. A pact with Saudi royals, the biggest producers of oil, along with enforcement by the US military established the dollars peg to the price of oil. Any government or dictator that defies the petrodollar system will be destroyed and replaced by the US war machine. Refer to Hussein, Gadhafi, and most middle east conflicts for the last 50 years. All conceived by the bankers to protect the petrodollar system and to create more of that sweet war money at the expense of undeveloped countries.

Let’s recap. The world economy and foreign affairs are run by the central banks who profit from war and human misery. It has been this way for over hundred years and is perpetuated by war economies and oil producers. The currencies we use to transact have no value and require constant influx of capital typically done through the printing of new money for the purpose of financing war or phony crisis’s. The financial markets are artificially pumped with value derived from debt and speculation. True price discovery of assets no longer exists, and we are just waiting for the next war economy or potential collapse the entire world economy. That about sums it up.

As long as this situation persists, we are constantly at risk of economic collapse or the advent of a new world war. Recently, this risk has been exacerbated by geopolitical conflict and the demise of the petrodollar system. China and Russia have begun transacting raw materials, particularly oil, in their own currencies rather than using the US dollar. This requires the US Government and Federal Reserve to take drastic measures to ensure the stability of the dollar. Recent interest rate hikes and over production of oil has manipulated the demand side of US dollars. That is why the DXY, the ratio of dollars to other currencies has seen a sharp spike in the last few months. A strong dollar is not good for assets because it causes an environment of deflation even if the supply of dollars is still inflated. The dollar doesn’t have to be strong or liquid itself it just needs to be better than other currencies and commodities. So the rest of the worlds central banks must continue inflating their economies while the Federal Reserve sucks up all the liquidity to back the dollar and keep the system alive.

It is speculated that this mechanism is a deliberate demolition of the world economy in order to bring about a new system. Rather than face the business cycle’s eventual downfall of asset values, the advent of a digital financial system controlled by the central banks will be used to replace the current system and provide artificial liquidity to the debt-based economy. Central Bank Digital Currencies (CBDC’s) are already being implemented around the world. They will be stored and transacted through a blockchain ledger and backed by physical commodities. What this will do is drastically increase the value of precious and industrial metals along with energy and food-based commodities. We are in the beginning stages of a digital financial system under the complete control of central banks and world governments that will drastically reduce liberty of people around the globe. The currency itself will be insanely inflationary for the design of subjugating people by disallowing them to preserve wealth. The one percenters will be properly situated while the rest of the population is treated as second class work slaves. A true two-tier society of a few well-off individuals and everyone else who is unable to retire and dependent on government welfare.

This is obviously a chilling situation if it truly comes about. It will not happen all at once. It will come about slowly but surely with the support of a majority of the population. Things will have to get much worse before the public is desperate for the new system. The middle class must be dismantled and begging for welfare to combat the poor economic conditions. As mentioned before, the new system will save us while concurrently enslaving us. The individuals who reject the new system will not be able to transact, do business, or engage in the new economy. Those who escape the oppression will have to sacrifice the common comforts of civilized society. The one’s who engage in the new system will just comfortable enough to not rebel. They will own nothing and be happy. They will have little freedom but enough pleasures and luxuries to prefer the system of the state over the difficulties of the perceived savages.

The Brave New World will be starkly different from our life today and it appears to be unavoidable without a legitimate human revolution. There are of course ways to avoid the new state controlled system but it requires insurmountable independence, physical and financial. When the new economy comes about, the people who are financially prepared and properly situated in the correct markets will be propelled into the ruling class or effectively positioned to reject the system all together. To do this you must be in assets that have inherent value. Food, protection, and energy independence is essential to establish an autonomous household for you and your family. Without these things you will either be at the mercy of the elements or the state. Autonomy requires your own source of food and water, your ability to generate energy, and your potential to defend yourself and the people you care about. This is not required. You can live happily in the state-controlled environment as we have for generations. You will be comfortable and entertained, you will have the basic necessities, and your survival will be assured. However, your liberty and prosperity could be taken at the drop of a hat. Subservience is required and it will be rewarded, but disobedience will be punished. Human nature at its core is survival of the fittest, this time the fittest will be the obsequious servants of the state. They will make sure you feel safe and vilify those who oppose.

I have hope that we as a species can reject this and optimistic that we will at least have time to prepare. Most importantly we must eliminate our debt and become as independent as physically possible. We need to hold assets that will be used in the new system or have value regardless of any system. Commodities that relate to food, industry and energy will be the most valuable leading up to and after the switch occurs. Certain digital protocols (blockchain & cryptocurrency) that are adopted by the central banks for the purpose of providing liquidity, ensuring verifiability, reliable documentation, and scalability will be invaluable software for the new age. Being on the right side of this transition will give you the freedom to choose your path rather than forced to into subjugation. This can all be avoided with mass education of the past and current system, along with a population knowledgeable of the central bankers planned system. We are able to resist the impending enslavement of our species, but it will require resilience, independence and solidarity. Without those things we must prepare for the worst and be situated properly to be on the right side of this transition. Action must be taken sooner rather than later, as the central planners implement this system from the shadows. Prepare and congregate with like minded people, inform those who have no clue, and remember the freedoms of your forefathers before you give up your own. Good luck.