This Crash has already started in China. We are all watching Xi visit Putin in Russia and we wonder what is happening. It’s quite simple, the United States is having a slow (and not so slow) banking crisis; it started with inflation that was not inflation and a recession that was not a recession. That led us to five or six increases in the rate of interest rapidly. What that does tightens the amount of US Dollars everywhere. This also applies to the amount of currency available for most countries; the Swiss Franc, the British Pound, the Euro, and the Japanese Yen, but not China; it is printing vast amounts of Yuan deflating it against the dollar.
China is in the midst of a financial meltdown; their labor costs are very high, 1000s of companies are leaving for elsewhere, no one is buying real estate, no one trusts the banks or the stock-bond markets, and their ports are empty. Not just exports, but imports as well. Why? They have stopped being the factory of the world. They are unable to sell goods to receive dollars in return. This is critical as the Chinese import roughly 80% of everything in their economy; energy (oil, gas, coal, and nuclear expertise), food (and fertilizers to grow it themselves), raw materials, and technology which they normally steal (or try to). Chips are essential for an export economy and the US (and its Allies) have shut down all of the high-end and medium chips.
So what? China must have US Dollars to buy everything it needs from the world, most especially food, fuel, and raw materials like iron ore. After three years of lockdowns and Warrior Diplomacy, it is running out of dollars; the ports are empty and the foreign investment has dried up. All the big companies are fleeing, even Apple.
What can China do? It must keep buying food, fuel, and raw materials and if it cannot use dollars, well, somehow, get them to take Yuan. That means that the US Dollar must be destroyed (or Weakened) as the World Reserve Currency. Many people have been predicting this for decades, but the dollar is still quite strong against all other currencies.
What about Russia? The sanctions have finally hit Russia hard; it cannot ship most of its oil and gas to China or India; not enough ships and not enough insured cargo. Russian is staying afloat by selling lots of gold; they are one of the world’s largest gold producers. They put tons of gold on an airplane to pay for imports on the black market. Russia, too, is running out of US Dollars.
What’s the plan? Get BRICKs to come out with a new “Reserve” currency that will replace the US Dollar. That is what the Xi/Putin lovefest is all about. Is it going to work? Probably not.
Even with the looming banking crisis, the US has two oceans for protection, is the largest food exporter, has the most robust financial infrastructure, and many other factors that made it great. Think innovation; autocracies do not innovate well.
Ok. That’s the big picture on Russia and China. The EU is slowly dying (or not so slowly).
The US will be going through a huge financial crisis; everyone is somewhat concerned about the safety of their money. The banks have been trapped into holding low-yield bonds/Treasuries before the rapid run-up in interest rates. But that’s not all; the real estate markets in the US are collapsing. The commercial buildings are empty and mortgages are not being paid or rolled over. Defaults are coming in large numbers; these are assets for banks. The same can be said for the residential market; it is coming a bit slower but will catch up quickly. Look for a 50% drop with a worse case of 80%; it is going to be a “bloodbath.”
What happens when many banks shut their doors and people cannot get their money (or have to wait weeks for it)? While this is happening, the value of real estate is plunging. Many thousands of businesses will go under. We will enter another great depression nearly 100 years later.
This will happen everywhere and there is no way to stop it. The finances of the world are too interconnected. Bank failures will take down small, medium, and large banks; even those that were too big to fail, like Credit Swiss.
Get your cash out now, while you still can. If we are going into a Depression that means we are likely to experience deflation; more can be bought with our existing money. More and more things to sell chasing fewer currency bills. Stay in bills at 20 or less; a 20 will/may buy more (perhaps much more) than a 100 today. The 100s and 50s may not be redeemed at face value (or not at all).
China was the first to implement the Central Bank Digital Currency (CBDC). How did that go? In China, no one has any privacy anyway, but the CCP had total power to track what everyone was buying, when, and where and could zero out anyone’s account with a keystroke. When the CCP wanted to inflate the Yuan, it could be done with a few keystrokes; they have “printed” trillions of Yuan digitally. Just imagine if a bank that was Woke and did not agree with your opinions (like Paypal) could seize your money. Now take that to a much higher level; say your Central Bank (and we all have one) does not like your attitude or your beliefs. Can they cut you off from your money? Perhaps they will not seize it, but they can stop you from using it. What about a political party that happens to be in charge (at the moment); could they mess with your digital money because you oppose them?
CBDCs are tyranny waiting to happen. They will try to outlaw currency/ies. Guess what. currencies will become very much more valuable. They will still be regarded as money for exchange. Hold on to your dollars/currencies; they will become very valuable indeed; people will be desperate to get around the tyrannical controls. Bartering will be outlawed as well. Do you think they can stop that?
Think about it, if they can outlaw currencies and bartering, what is next? You got it, silver and gold coins/bullion. Same for Bitcoin and other cryptos. Can’t have the serfs/slaves trading their time, effort, and creativity for anything but the CBDCs.
Last thought, how about credit cards? The banks are in trouble; do you think you will have a credit card (let alone two) when the CBDCs roll out? Will any of us have an individual credit line at all? Oh sure, the Elites will have them, but the rest of us will be using CBDC Debit cards. Start thinking of ways to get something better than CBDCs.
Love, Light and Laughter,
