The current bank crisis
Oct 12, 2019
Last month I reported how the banks were having a liquidity shortage and how the Federal Reserve was stepping in to give $75 billion per night in overnight loans. Those loans were not cumulative, of course, as they were being repaid the next day.
However, there were also longer-term loans, some for 2 weeks, for banks that were in more serious trouble. Once the 2 weeks ended, they simply rolled it over and gave them a new 2-week loan. These loans are now up to more than $240 billion.
The bottom line is that the liquidity crisis is ongoing, and so the Fed is now doing Quantitative Easing (QE), which is bankerspeak for creating new money. The Fed balance sheet is now going back up after QE3 ended a few years ago. This is a “repo” bailout, but it is actually a QE4 of about $60 billion per month.
They are trying hard not to call it QE, because the public is now familiar with that term. Likewise, they claim to be doing it for just the next four months. But we all know what that means. It’s a bit like sending troops to Syria for 30 days for a nice little war. It is sold to the public incrementally.
Just one day after we laid out what Goldman’s revised forecast for the Fed’s “NOT A QE” will look like, which for those who missed it predicted that the Fed would announce “monthly purchases of about $60BN for four months, split across Treasury bills and short maturity coupon Treasuries, in order to replenish the roughly $200bn reserve shortfall and support the pace of growth in non-reserve liabilities”, the Fed has done just that and moments ago – well ahead of consensus expectations which saw the Fed making this announcement some time in November – the US central bank announced it would start purchasing $60BN in Bills per month starting October 15.
What does this mean?
Under the Fed’s system, there are “market cycles” which are anything but “natural cycles.” Every 7 or 8 years the Fed raises interest rates, supposedly to combat inflation, but it is really to foreclose on property, transferring money from the people to the wealthy. The banks foreclose and often then auction property, which is purchased by the wealthy at low prices. The banks themselves do not do so well, but the bankers themselves, if they purchase these properties, do very well long-term.
The last crisis was 11 years ago. We are long due for a market correction, but Trump has worked hard to build up the economy and to bring manufacturing companies and jobs back to America. So the “normal” downturn has been delayed for a few years, even though the Fed began to raise interest rates shortly after Trump came into office.
The Fed bosses like to raise rates to crash the economy as a political weapon, knowing that the public has been tricked into thinking that the President is the one who controls the economy. Actually, the Fed controls the economy and financial system through its “independent” control of interest rates. The Fed wants power but does not want to claim responsibility for its own actions.
Trump understands how the system works, and so he has been very critical of the Fed’s interest rate hikes. He perceives that the Fed was intending to put the brakes on the economy so that people would blame him when the markets crashed. The Fed is part of the Deep State that wants to ensure that Trump does not win the 2020 election.
But Trump has “trumped” the Fed. First, by drawing attention to their high interest rates, he has made it possible to blame the Fed if the markets crash. Secondly, if the Fed lowers the interest rates, and the economy continues to do well, Trump can take the credit for a good economy. It’s a win-win situation for him.
So the Fed has finally begun to lower interest rates just as the bank liquidity crisis has hit.
The Fed’s banking system is long overdue for a collapse. Most monetary systems do not last nearly as long as the Federal Reserve Notes have lasted. From the Bretton Woods agreement in 1944 to the abandonment of the gold standard in 1971, was just 27 years, after which time we replaced it with the oil standard and the petro-dollar.
From 1971-2019 the petro-dollar has lasted another 48 years. Now this system is breaking apart, and we are due for another change. There are differing views as to what this change will look like, but Trump’s public statements indicate that we are going back to a gold standard. We will see how that works.
Meanwhile, we are now seeing banks coming under pressure, not only for a liquidity crisis but also for their manipulation of gold and silver prices and their massive derivative problem, which were not resolved after the 2008 crisis. In 2008 the banks were bailed out by the government; such bailouts will not be as easy to sell to the public in 2019.
Nonetheless, the Fed’s QE4 should give us a little more time before the real crisis hits and they have an excuse to move to a new system. It appears that Trump wants to forestall that crisis until his second term begins in late 2020 or 2021. His opponents in the Democratic Party, however, want to see a financial crisis before the 2020 election so that they can blame Trump’s trade policies. We will see who wins that fight.
The crisis will surely come at some point. Some say it is at our doorstep even now. But because the markets have been rigged for decades, I do not think that Trump’s Treasury Department will lose control of it. When the crisis hits, it will because it was allowed to happen. It will be allowed at some point in order to give an excuse to move to a new system.
So be prepared but do not be afraid. Always remember that no man has ultimate control over world events. God has already ruled against the beast system and has transferred authority to the saints of the Most High. What happens will work in our favor, even if it appears to be a crisis. We know the Word, and our faith is based on hearing the Word of God, not the words of men.