The mathematics are simple and clear: The reign of the petrodollar is quickly coming to an end. An out of control welfare state, repeated bailouts of ‘Too Big To Fail’ institutions, and decades of unjustified wars (financed through deficit spending) paint a clear picture for those who are informed and have a semblance of common sense. The question isn’t if the modern financial system will collapse, but when, and what’s the best way to prepare for the next leg down in the debt spiral.
When considering the near-term future of the economy one need not look further than the (not so) Federal Reserve and their recent statements concerning interest rate policy. Recall that as part of the response to the 2008 Financial Crisis the Fed began a Zero Rate Interest Policy (ZIRP) which, in theory at least, provided liquidity and stability to financial markets worldwide. In addition, the Fed soaked up trillions upon trillions of dollars in toxic assets on its balance sheet; many of which are worth pennies on the dollar (if they were appropriately valued, of course). While these measures may have helped to prevent a deep recession in the short-term, in reality these actions only kicked the can down the road, all while setting the stage for a worldwide depression orders of magnitude worse than what would have resulted without central bank intervention.
In plain English? The economy is a strung-out heroin addict; rather than committing the patient to a rehabilitation facility and forcing a painful – but necessary – detox, the Powers That Be instead elected to double the daily ration of smack and send the addict on his way. What could go wrong?
Just about everything.
Fast-forward to mid-April of 2016 and its clear to see that the Fed and Friends are out of ammo. Nearly $20 Trillion in National Debt; Interest Rates at near record-low levels; currency wars raging worldwide (it’s not just the Fed devaluing the currency!); collapsing industrial numbers and commodity prices – the list could go on indefinitely. Despite nearly a decade of unprecedented ‘emergency’ action, nothing has been fixed, and the Fed and Friends are running out of ammo. So what’s the next step? A few potential scenarios could play out over the rest of 2016:
Negative Interest Rate Policy (NIRP): While impossible for someone living in the real world to comprehend the logic behind negative interest rates (a lender pays to lend their own money?!) such a scenario is all but certain in the coming months and years. In fact, several large central banks worldwide (including the European Central Bank and Bank of Japan) have already crossed the event horizon into the black hole of debt. While the Fed continues to posture and jawbone – allegedly planning to raise interest rates at least twice in 2016 (recently revised down from their initial promise in January that they would raise interest rates 4 times!) – the simple mathematics show that the only option for the Fed is to engage in NIRP once the façade of economic recovery has completely fallen. We are approaching that eventuality quickly.
Fiscal Crises: The government shutdowns of the past few years were nothing but a dress rehearsal for the drama to come. Once the Fed goes all-in with NIRP (and perhaps additional quantitative easing) it will be clear to markets worldwide that America will soon be unable to service the interest on its debt, let alone pay back the principal. Simply put: Once creditors worldwide realize the petrodollar is in its death throes, dominoes will fall fast. A preview of what’s to come has begun to manifest itself at the local level: Chicago’s bloated public pension system is nearing bankruptcy; Puerto Rico has all but defaulted on its bonds (with the US Taxpayer on the hook, of course); dozens of cities and counties have already become bankrupt; and we’re just getting started. Once the house of cards begins to fall, and the Federal Reserve can no longer serve as a backstop of last resort, prepare for absolute chaos.
WAR: Nothing fixes overpopulation and insurmountable debt better than an ole fashioned war! Hotspots from Syria to North Africa to Ukraine to the South China Sea are only waiting for a spark. A global depression and currency war will be more than enough to set off the fireworks, and the first Great War of the 21st Century will be underway. Many believe we are already in the initial stages of this new Great War. While the climax may be years in the offing, it’s better to be prepared much too early, than one hour too late.
Making detailed predictions is very difficult, especially when the Banksters & Co. have a myriad of tools at their disposal to bend, twist, and distort reality. But in the end, mathematics – the language of the universe – will always prevail. Prepare now!
Be sure to explore the rest of this site and of course, tune in to the Patriot Power Hour w/ Lucifer Bernanke LIVE each Thursday at 6 PM Eastern / 3 PM Pacific — don’t forget to Contact Ben “Lucifer Bernanke” Cochran to give your feedback, ask questions, or even be a guest on the show!