by thewealthwatchman • • Comments Off on New Cracks Appear: Time is Running Out for a Cornered Federal Reserve
Fed Panic
Brothers, a few weeks ago the Fed held a closed-door, emergency meeting. I’d written about this meeting just before it happened, but wasn’t able to immediately follow up on it with what was likely discussed. I’d like to take a moment today to go over what they likely dealt with, because it speaks volumes about what we are now facing on the world economic scene.
Several things have just come to light in recent days which spell huge trouble for the financial system, and for the US Dollar. While these events are forcing the Fed to now act out of desperation, this recent headline in particular, telegraphs that something very serious lies ahead.
Fed Poised to Relinquish Crisis Tools It Used to Bail Out AIG
Uh oh. Folks…that headline should cause you to sit up and pay attention.
Remember: the only thing that forestalled a complete derivative meltdown in 2008 was TARP, the $700 billion dollar deal that Congress was basically forced into signing. When a bank failed in that environment, it triggered a payout, which then caused other banks to be in dire need of liquidity themselves. It fed on itself, and it would’ve taken out the entire banking system, without the huge taxpayer swindle of TARP.
TARP allowed AIG, and other banks, to meet emergency demands for liquidity & cash based upon their need as the daisy chain of credit default swap ‘margin calls’ were being made. It bought them some time.
However, the Fed will not now be able to do that for the next AIG or Bear Stearns. Here’s why, via Bloomberg:
“Under the Fed’s revised authority, it would only be able to save firms in a broad-based scenario, meaning it must rescue at least five entities at the same time, according to a statement released by the central bank. The change is meant to prevent the Fed from bailing out a single company.”
Whoa. Read that again, and think for a moment about what this means. It means the next time one or two financial institutions are about financially fail, there will not be a TARP 2 to pull them back from the brink!
I’ve cried out from the rooftops for over 16 months now…the next time the financial crisis returns, there will be no bailouts! Bailouts were the banksters’ first quick fix, but they will not be repeated. The banks have signaled this so many times, and this new announcement about revoking Fed powers for singular bailouts should be screaming at you that they know what is coming, and they are now removing themselves from ‘responsibility’, and blame.
The banksters have a new ‘solution’, a new “template” for trying to get out of disaster.They even told you what that new template was going to be after they used it…
Cyprus was the Tell
In early 2013, the Cypriot banking system was in huge trouble. The entire island nation’s banking system suddenly hit a brick wall of insolvency, as EU crooks went after Russian money in that banking system.
They had hoped to seize large portions of Russian cash that used the Cypriot system to conduct business in a private manner, and perhaps even as a means to convert bonds in gold, as Jim Willie has suggested.
The Russians however, were forewarned by insiders there, just before the bank closures occurred, and removed tens of billions of dollars before the system was shut down. The sudden bank shutterings only hurt the average Cypriot depositor. Here’s how that disaster broke down, on a timeline basis, via zerohedge:
“March 16 2013: Cyprus announces the terms of its bail-in: a 6.75% confiscation of accounts under €100,000 and 9.9% for accounts larger than €100,000… a bank holiday is announced.
· March 17 2013: emergency session of Parliament to vote on bailout/bail-in is postponed.
· March 18 2013: Bank holiday extended until March 21 2013.
· March 19 2013: Cyprus parliament rejects bail-in bill.
· March 20 2013: Bank holiday extended until March 26 2013.
· March 24 2013: Cash limits of €100 in withdrawals begin for largest banks in Cyprus.
· March 25 2013: Bail-in deal agreed upon. Those depositors with over €100,000 either lose 40% of their money (Bank of Cyprus) or lose 60% (Laiki).”
The entire banking system was shut down. But instead of passing a bill to take taxpayer money to bail out the failed Bank of Cyprus or Laiki Bank…they simply confiscated any money in depositors’ accounts which happened to be over 100,000 Euros.
An average of 50% was seized of any sum over that amount! Just imagine how that scenario would’ve played out for you…
If you were a retiree, pensioner, or just a young person who gave far too much capital and trust to your bank, you suddenly lost tens, or hundreds of thousands of dollars! Many people lost millions. Their entire life’s work and savings were vaporized.
They went from being wealthy, to being bankrupt, in a single weekend. It also took weeks for those trapped inside that banking system to be able to even start withdrawing 100 euros a day, which basically wasn’t even enough for many to make day to day bill payments with.
It’s going to happen elsewhere, these “bail-ins”. The rules have already been changed to allow them to occur in most Western nations, when financial calamity returns.
That’s not the only headline that prompted the Fed meeting, and backed them into a corner now though, for another key, long-awaited decision has finally just been made…
Chinese SDR Inclusion
The decision to include the Chinese Yuan in the IMF’s fantasy currency, the SDR, is a lock now. Though it hasn’t officially been implemented, this is how it’s been approved to go down in 2016.
Starting next year, the Chinese Yuan will be included into the “Special Drawing Rights” with a weighting of roughly 11% of the currency pool.
Here’s what it will look like on a chart from a friend of mine:
As you can see, China’s currency share in the SDR came at the direct cost of other major powers, but most of it, surprisingly came at Europe’s expense!
This is rather silly, considering many of Europe’s countries’ gold reserves represent a higher percentage of both their GDP, and their national balance sheets than the US’s does! Want proof? Here’s how it breaks down:
Japan and the UK both lowered, but it was the US dollar that really got off the hook easily! There is no way that the US dollar still deserves a 42% weighting in the SDR. It cannot be justified by any metric.
However, for those who think that China’s inclusion was much ado about nothing, I beg to differ. Here’s why…
While the US dollar should’ve given up more of its claim upon world currency domination, China is not making a great deal of noise about the decision, because it knows the truth:
The truly difficult hurdle to wrest control away from the US dollar has now been accomplished.
The real prize was SDR inclusion. Remember, the IMF is a direct monetary weapon of New York and Washington powers. It is their pet institution, used to relieve the debts of nations who fall on DC’s good side(like Ukraine, who’s debt to Russia was just forgiven), and punish other nations who defy DC on regular matters of policy.
Now that China is in, they know it’s just a matter of time before the SDR and the IMF itself are dominated by Eastern interests.
They know their ascent in an ever larger share of the the world currency bloc is simply a matter of time. What’s more, now that they’ve got SDR inclusion, they can step up their game of gold-buying to an even greater extent!
The ridiculous announcement by the People’s Bank of China last summer, of another 600 tonnes of gold added to their reserves was laughable. Their gold reserves aren’t 1,720 tonnes. The true amount of their gold reserves is multiples of that figure.
Now that they’re in the SDR though, expect to see even more transparency in China’s gold numbers, and perhaps several more such “surprise” multi-hundred tonne additions in the months ahead.
However, though the Fed is now rather powerless to bail out large institutions, I believe the SDR inclusion helps explain what they’re likely to do next…
Will They or Won’t They?
For months they’ve talked of raising rates, and for months, many commentators have said the Fed “can’t” raise rates. I believe those commentators are mistaken.
The reason is that for months I’ve covered an enormous, ongoing process on my website, called “de-dollarization”. I’ve spent time showing how the world has recognized that DC’s real weapon is the US Dollar. In order for those other nations to defang the US Dollar tiger, and strengthen themselves, they must “de-dollarize”. They must build their own platforms, stack their own gold reserves, and take more market share from the world’s reserve currency.
This new SDR decision means that process has been universally recognized, and is in full swing.
The banksters’ system is fragile right now, but the thing which scares them even more is their precious dollar losing too much market share, too quickly.
The dollar itself is where the money is. The dollar itself is where the power is. Therefore any action that can help the dollar maintain its supremacy and function for even awhile longer, must be pursued.
That includes the possible decision to raise interest rates. This week the Fed will announce its intent on whether it will raise rates in the immediate future or not.
Understand this: if they do not raise them, it’s not because “they can’t”. Ok?
Nearly everyone said several years ago, “The Fed can’t taper”, only to be gobsmacked when the Fed did just that. Whatever will help the US dollar maintain its hegemony just 3 years, 1 year, or even 6 months longer, is what they are likely to do.
Raising interest rates could be a way to forestall the inevitable, and help give the failing dollar a needed boost. If this happens, the banksters could hit silver and gold, and hit them hard. Gold will likely be taken to $1000, or even a 3 digit price should even a .25% rate hike occur, and silver could be taken to the 12’s.
I’m just preparing you for what you could happen. You should be ready for that possibility. There is no doubt though, that any rate hike will be small, and be short lived, but the market chaos it will cause will be severe.
Conclusion
If you’ve ever seen a deer staring into your headlights at night, you know how utterly petrified and frozen they become. They’re simply too scared to move, paralyzed by the oncoming danger they’re looking at.
Brothers, the Federal Reserve is now the deer in the proverbial headlights!
They are caught between a rock, a hard place…and a firing squad.
They’ve now been stripped of major powers they once had to bail out banks in the last financial crisis, knowing full well that just such a crisis is staring them right in the face.
They know that the act of raising rates in our world right now is literally playing Russian roulette with every barrel loaded!
Yet, they know that China’s inclusion into the SDR, means that the Mandarin foot is now in the door of the Western banking cabal’s institution. Again, percentage doesn’t matter as much to the Chinese, as actual inclusion itself. That was the difficult part. The easy part: yanking the US/UK’s hands off the steering wheel of that institution will be easier.
The Fed knows that failing to raise rates as they’ve basically committed to, means that the already dwindling market share of the US dollar’s use in trade settlement will accelerate.
Remember, the real money & power is not in the market rigging of silver, gold, commodities…the real money is made by maintaining the US dollar as the reserve currency itself.
That is the real prize, and always has been! That’s where the power is. Without that power to create the world’s reserve currency(and the credit that comes with it), US imperial hegemony instantly stops.
Globalism, would also likely almost instantly stop with it.
Therefore, any action that prolongs this putrid, dying currency and world order, is a necessary(even healthy) action in the eyes of those who have run our world into the ground.
Janet Yellen is doing her best impression of that deer in the headlights: knowing full well what raising rates means for world markets, yet knowing what failing to raise them now means as well. There are no good options for her or the banksters’ dying system, and she knows it!
Ah well, c’est la vie!
The car is barreling down upon you, and the moment of action has come! Do or die!
Time to make a choice, little deer!
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