Why does the world make so little sense? How come there seems to be so much contradiction?
The answer lies in the simple fact that most people do not understand who runs the world or how it works. Instead they are overwhelmed with a lot of noise. We are taught to believe certain things, most of which are untrue.
In this blog, along with the different videos, we try to cover a great deal of what is happening. Even the mainstream financial networks get it wrong. After all, how often have you seem someone interviewed on there who works in the Repo market? I would venture to say it is most likely never.
Nevertheless, if we are going to get to the core of how things work, then we have to understand who is truly pulling the strings and what the system does.
Of course, we are not going to cover near a century worth of financial and economic affairs in a single article. The important point is that, if we are going to create an alternate system, we best understand how the present one operates.
The sad reality is that the overwhelming majority of cryptocurrency, like 99.999%, have no clue how this stuff works. It is a similar story with all the online world of conspiracy theorists, instant economists, and the Twitter army of financial gurus. For this reason, few have any idea what is taking place.
Consider for a second the Repo market. Let me ask you this: how much do you know about it? What level of understanding do you have?
For most people, this is nothing. We know the Bitcoin maxis along with the Twitter gurus are completely unaware of any of this. After all, that is no surprise since they believe the US Federal Reserve prints dollars. If they muck up this basic concept, how can they grasp anything that is taking place?
The reality is the Repo market is a major piece to the puzzle. It gives us a glimpse into how things actually operate. This is a market that does $3-$4 trillion daily in loans. Isn't it interesting that everyone is watching, and talking about, the Fed raising the Fed Fund rate when nobody actually uses it? Does that make any sense to you?
Of course, the financial media fawns all over it. This is the problem. We are being sold a bill of goods because they have no idea what is taking place. These people are completely clueless.
Another truth is the numbers just mentioned for the Repo market is a small sliver of what takes place. The total numbers are completely unknown. It is impossible to size up the overall market since most of the agreements are bilateral. The only glimpse we get is into the trilateral ones that go through the custodian (Bank of NY Mellon).
This might sound like something out of the conspiracy theorists mouths but it is the reality of the situation. Now, this is not some Rothschild worth trillions idea. Instead, it is the actual picture into what takes place.
Everything is based around what we are discussing here. When we are talking about creating money out of thin air, it is not the major central banks doing it. For the major currencies, the commercial banking system is responsible for creating the currency through loans. This is how USD, GBP, EURO, and YEN hit the economy.
However, this is nothing also. When it comes to the banking system, they change what money is. This started in the 1950s and never stopped. Of course, it got to the point, by the 1970s, where the Fed even started to question what money was. It had no idea. Yet the people online claim to be able to tell you exactly what it is.
Ultimately, the banking system has made it clear. What the Fed and other central banks print, reserves, are nothing. We consistently see T-Bills trade higher than reserves on the Repo market. Why is that? The market clearly states that T-Bills, the best of the best when it comes to collateral, trades at a premium because of that property.
This is the decision of the bankers.
Another harsh reality is that the situation with Russia is also noise. Certainly, we can't make light of war since that has real world consequences on people's lives. However, when it comes to the global financial system, it means nothing.
Russia is not cut off, or at least their banks aren't. This is something that is impossible. The reason is because the international banking system operates outside the reach of any government, central bank, or coalition. Nothing that Biden, the EU, or anyone else does can alter this system except.....
suck out the collateral.
This is where the system faces fragility. It is not war, famine, or political conflict. It is the fact that without collateral, market activity slows. Here we see the cost of operating increasing. This, naturally, has an impact on real world financial and economic operations. People are unaware until something such as money markets freezing up occurs. Then they know something is wrong, just they do not know what it is.
Contrary to what the media is telling everyone, both Russia and China are dependent upon the USD. In other words, they need to get it from somewhere. If they cannot get it through the traditional avenues, then the international banking system is where they need to focus. Of course, if this is short USD, then major problems arise.
Look at the collapse of the YEN. Did you know that the path of the YEN and Repo fails almost mirror each other? When there are a lot of Repo failures, i.e. collateral scarcity, the YEN plummets. This is exactly what we are seeing right now.
Of course, this coincides with the carnage placed upon the YUAN. This is no surprise since the Japanese banks, dating back the the GFC, were the conduit for this market through to China. Since the banks had room on their balance sheets, they were able to use that as money for investment in China. Remember, in this world, collateral is money. When a bank can increase its balance sheet, it can expand operations.
This tie by the Japanese to China puts their currency on a similar path, for the moment at least. With the international banking system very fragile, those who operated in dollars but without actually having any are going to have issues. This is exactly what we are seeing.
Here we have a brief insight into some of what takes place. Obviously, none of this is stuff you see written about on the websites of CNBC or Bloomberg. Nor is it going to be covered on CNN.
Yet this is a market where we likely see tens of trillions of dollars daily in agreements. This operates in what the parties agree suffices as "money".
A final point to make: most of this occurs off-balance sheet. This is why it is so powerful.
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