Many claim the central bankers are clueless. They say the Fed "kept interest rates too low for too long" or they "raised rates too quickly" and inadvertently caused a banking crisis. But let's not pretend the men who rule the earth are that foolish, or that they don't know what they're doing.
I'd wager to bet that the bankers have known, since the Great Financial Crisis (GFC) of 2008, that the monetary system is on an unsustainable path, needs to be reset, and they have been planning a solution all along.
Of course, our financial system is so intertwined with the global economy that it cannot be uprooted overnight - it takes time. And the bankers have managed to buy quite a bit of time (12 years, in fact with QE, ZIRP, and NIRP) to assemble a team together to engineer a new system.
Never let a good opportunity go to waste, they say. The GFC was a chance to consolidate power into fewer "too-big-to-fail" banks, controlled by an even smaller number of people. And although the gap between rich and poor has widened greatly over the past decade, there is still room for consolidation.
A number of financial and economic experts had been pointing out that the experimental policies of QE, NIRP and ZIRP were unsustainable, and that eventually the system would collapse under the weight of so much debt. They were expecting the system to reset and some point... but how?
The Covid-19 pandemic presented another opportunity to consolidate even more power.
Starting with an intense expansion of the money supply - bailouts for businesses and individuals that were forced to shut down and stay home. Trillions of dollars were added to the system in a short period of time, and this led to a noticeable increase in consumer price inflation, because this time the money went directly to consumers.
Of course, the Fed had to come to the rescue and fight inflation by raising interest rates. The problem is that, historically, whenever the Fed raises rates some economic disaster occurs, whether that be a dot-com bubble burst, housing crash, or stock market crash. Since 1980, the Fed has never been able to raise rates higher than the previous point that caused a crisis.
If the Fed couldn't raise rates past 2.5% in 2019 without causing a disaster (they crashed the stock market), why would they be able to raise them up to 5% this time? This final spike in rates doesn't follow the graph's trend:
Since about 2019, governments worldwide have been publicly announcing their intention to launch central bank digital currencies (CBDCs). A CBDC gives the government complete control over what you can and cannot buy, or whether you're allowed to purchase anything at all, depending on your social behavior.
Similar to how they didn't want the population to freak out about mask and vaccine mandates, they don't want everyone to freak out over CBDCs either. And one way to get the population used to the idea of a CBDC without outright rejecting it, is to use reverse psychology to make everyone think the government won't mandate them:
Sounds pretty evil, right?
Well, one could argue that the bankers are implementing this solution benevolently. After all, people won't voluntarily stop flying, driving their SUVs, or barbecuing steaks all summer. Fossil fuels are a finite resource, carbon dioxide is apparently heating the planet, and the world is overpopulated.
Therefore, they need to take drastic measures in order to save the planet, right? Or, is it just that they're power hungry, and want complete and total dominion over the world, which has been a common theme throughout human history?
Anyways, I digress... Whether or not you believe the banker's solution is right (I'd say most of us are opposed), the question is how to persuade the population to transition from the old system into CBDCs, because people don't like change, they naturally resist it.
Another crisis, perhaps?
Problem. Reaction. Solution.
What if banks were encouraged, even regulated, to load up on long-term treasuries when interest rates were at zero during the covid crisis, and then rates were hiked up to nearly 5% in the span of about 9 months, causing the value of those bonds to plummet in value, to the point where the bank could no longer cover the deposits of their customers?
That's what happened at Silicon Valley Bank just last week, and I find it hard to believe that the leaders of the central banks, with their dozens of finance PhDs, didn't see this coming.
The question now is, how many other banks have balance sheets with similar unrealized losses?
The situation has triggered a panic, and a mass movement of deposits from smaller banks to bigger ones like JP Morgan and Bank of America, where people feel their money is much safer.
To make matters worse, even though interest rates have risen from zero to nearly 5% in less than a year, bank customers are still earning fewer than 25 basis points on their deposits (less than 0.5% interest).
To counteract this, a lot banks' customers have started to convert their savings into short term high interest government treasuries in order to make decent interest on their money, further lowering bank deposits on hand.
The objective of the CBDC is to have the money completely centralized, and under the control of a single government. It would seem this panic is causing people to voluntarily push their deposits closer to the center, the central bank.
Instead of having to force people into CBDCs, depositors are voluntarily moving their money into more centralized institutions, or directly with the Fed in the form of treasuries.
A lot of people are betting that the Fed will stop raising rates, to put an end to the crisis. Or, in other words, to kick the can down the road just a few inches further. But the central banks know that's only a temporary solution that would most likely lead to out-of-control hyperinflation.
Despite these banking failures, the Fed could continue hiking rates, using the excuse that inflation is still running too hot (which it is, obviously). They could state publicly that all deposits are guaranteed, while continuing to jack rates higher, pushing more banks into insolvency.
In this scenario, eventually all the periphery banks fail until only one remains, the central bank. The depositors of regional banks are bailed out, but under what conditions exactly? Will they be getting traditional dollars, or perhaps programmable CBDCs with an expiry date instead?
The next question is, what could possibly get in the way of the central bankers' plan for a CBDC?
What's this nasty rat poison we have here? Bitcoin, shitcoin, crypto-crapto, crypto shit. Yes, they have been taking notice of this alternative form of money that has also been in planning stages since 2008, and we can see how they are starting to react emotionally to it - and that's a good sign. It means they're no longer ignoring, dismissing, and laughing at it anymore. They're starting to feel threatened by it.
I'm sure they're infuriated when their top talent quits the CBDC research teams to launch their own public cryptocurrency, or to join existing teams who are building decentralized solutions. The smartest, and most ethical, understand that trustless, decentralized cryptocurrencies are the future.
What other option do they have other than to launch a coordinated attack on it? They ridicule it publicly in the mainstream media, have the SEC declare it a security, shut down small banks that support it. They will do anything to tarnish its reputation, and sway public opinion against it.
https://twitter.com/MarketWatch/status/1635425590240071681?s=20
- MarketWatch
Crypto is most definitely a thorn in their side. I imagine they must be pulling their hair out over it. No matter what they do, it just keep bouncing back, getting stronger and stronger.
Eventually, after they realize none of their attacks have any long lasting effect, they're going to get desperate and try to outright ban it. But that won't work either, because we have nations like El Salvador and Central Africa Republic which have embraced it.
No doubt more countries, states, and cities will be opening themselves to it in the near future, and the ones who realize this is the inevitable future of money will prosper in the long run.
Even within the U.S. itself we have pro-crypto states at odds with the federal government. States such as Texas, Florida, Wyoming, and South Dakota, whose governor recently vetoed a bill that would outlaw anything other than CBDCs as money:
In the end, we have the governments attempting a controlled demolition of the dilapidated traditional banking system, with a simultaneous launch of their pre-planned CBDCs as a replacement, while smaller regional governments oppose it, and opt for public cryptocurrencies instead.
This trend towards self-sovereign money will only continue as the madness progresses. Perhaps we go to war eventually, and nations split apart over the issue, but there's no doubt in my mind that decentralized cryptocurrencies will be the ultimate winner here.
How do you think the CBDC vs. crypto war will play out? Let me know in the comments.
Image source: 1
Source: 1
