Global Economic Collapse Began in Fall, 2019: COVID-19 Fraudulently Presented as Cause of Collapse – WFFJ-TV News –

July 8, 2020

 

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Global Economic Collapse Began in Fall, 2019

COVID-19 Fraudulently Presented as "Cause" of the Collapse

 

By:  David Deschesne

Fort Fairfield Journal, July 1, 2020

 

 The global economy was set for a massive crash and reset last year and predictions from leading economists were for it to begin by the end of 2019 into 2020.  At the time, the dreaded and over-hyped coronavirus, COVID-19 hadn’t even been thought of either locally or on the world stage - at least not publicly.  Market forces from various sectors of the world’s economy were swirling together to create the ‘perfect storm’ - a storm which was being exacerbated by the international trade war with China -  promulgated by President Donald Trump - and an untenable global debt level in the public and private sectors with the U.S. leading the way.

   The United States was the first domino to fall in this global event and it tipped in September, 2019 - several months before the media’s superstar  COVID-19 virus was unveiled in China.  On September 17, 2019 the U.S. Federal Reserve was asked by financial system leaders to step in to help secure the house of cards in order to prop up the banking system and prevent a catastrophic collapse.  The Fed began pumping money into the system from September through December, but the problem continued to worsen by the day.  They continued their efforts through at least April of this year, but to no avail.

   Meanwhile, the COVID-19 narrative was being built and crafted by governments and their accomplices in the mainstream theatrical news media around the world.  What we now know to be a virus with albeit horrible effects in the frail, elderly segment of society, but the fatality rate of a really bad seasonal flu, and barely affecting children and young adults, was ultimately co-opted and used as a scapegoat for the collapse - a collapse that began months earlier from economic conditions which started brewing years earlier.

   Bailing out the banks (again) not only in the U.S., but worldwide, since many other countries are in the same situation, would have been a difficult sell to the public.  So, it appears the COVID-19 narrative was co-opted by governments and magnified in the mainstream media to be much bigger than it was to allow for a pretext to create bailouts to the public and business sector. These bailouts ultimately ended up in the banks where they were intended to begin with, but without the public outcry since some financial breadcrumbs were filtered through the public’s hands first.

  Ergo, blaming COVID-19 for the current global financial system collapse, is akin to blaming an innocent passerby for a house fire while the true arsonist sneaks away into a nearby forest.

 

The Run-up/Back-story

   There were literally dozens of news stories and economists warning of the dire economic conditions throughout 2019.  Without wading into the minutia of the articles too much, the headlines were enough to get a picture of the financial and economic landscape.

   In December of 2018, the Financial Education channel on YouTube was already looking at some problems with the global economy which would be manifesting in 2019 and 2020 with a video entitled, “Global Economic Collapse Coming 2019?”  That same month, the New York Times published an article entitled, “Are You Ready for the Financial Crisis of 2019?”

   On January 5, 2019 The Guardian published an article entitled, “Pessimists are Predicting a Global Crash in 2020.  In a March 6, 2019 article on newstatesman.com, the headline was, “The Next Crash; Why the World is Unprepared for the Economic Dangers Ahead.” 

   Highlighting issues outside the U.S., Reuters published an article on April 12, 2019 entitled, “Turkey’s Economy to Contract in 2019, Longer Recession Ahead.”  Meanwhile, in the UK, the Metro published an April 30, 2019 article entitled, “A ‘Second Great Depression is Coming’ and ‘Recession 99.9% Likely in Two Years.”

   On June 9, 2019 - now still over a year ago - the South China Morning Post published a story entitled, “Brace for a Global Recession Unlike Any Other Amid a World Polarized by the U.S. and China”  The article pointed out how the 2019 recession will be different, “in a heavily leveraged global economy with already slowing trade.”

   Paul Weinstein, from Promontory Interfinancial Network was interviewed by CNBC in June, 2019.  In a survey of US banks done by his group, he found the Confidence Index among bankers was dropping.  “It has been dropping quite consistently throughout the year.  What comprises it is demand for deposits, loan demand - which has not really reached the levels that banks had expected, access to capital, access to funding, on all these things basically, banks are sort of becoming a little bit queasy about what's happening out there.”

   Domestically, the U.S. is in pretty bad financial shape.  Despite the pre-COVID-19 roaring economy, the U.S. national debt currently stands at over $26 trillion; there is nearly that much debt again in the private sector.

   According to the Federal Reserve Bank of New York, total household debt in the U.S.- counting mortgages, student debt, automobile loans, home equity loans, credit cards and other debt instruments - was $14.15 trillion at the end of 2019.  The St. Louis Fed listed state and local municipal debt at $3 trillion in the fourth quarter of 2019 and The U.S. Federal Reserve bank noted a combined $8 trillion in corporate, industrial, banking and mutual fund and derivatives debt.  This brings the total U.S. debt to around $51 trillion - not counting the nearly $240 trillion in unfunded government mandates and derivatives absorbed since the 2008 crash.  According to the Fed, the entire Gross Domestic Product of the U.S. was only $21.7 trillion in 2019.

   But U.S. debt isn’t the only storm cloud on the horizon, since this situation is global. In an April, 2020 documentary on CNBC, Sam Meredith explained, “Global borrowing has been growing rapidly; so rapidly that many are concerned that it's quickly becoming unsustainable.  The Institute of International Finance estimates total worldwide debt, which is made up of borrowing from households, companies and governments surged to a staggering $253 trillion at the end of September, 2019.  That's a whole lot of debt, more than three times the debt of the output of the entire world.” [global Gross Domestic Product for 2018 was $84 trillion].

  Meredith described how there have been three waves of global debt increase followed by economic collapse since 1970.  The world is currently in a fourth wave, by far the largest, which began in 2010 with the 'Quantitative Easing'  [debt money] introduced by the U.S. Federal Reserve.  “The World Bank says we're currently in the fourth wave of global debt and if we're to avoid history repeating itself yet again, governments must make debt management and transparency a top priority,” reports Meredith.  “This wave of global debt is thought to share many of the same characteristics as the previous three; including long periods of low interest rates and changing financial landscapes which encourage more borrowing.  But, the World Bank has called the current wave, the 'largest, fastest and most broad-based' of them all and involves a concurrent buildup of both public and private debt, involves new types of creditors, and is much more global.”

   Democrat presidential hopeful, Elizabeth Warren was quoted in a July 22, 2019 CNBC article saying the “warning lights are flashing” for the next economic crash.  Three days later, zillow.com issued a press release stating “Next Recession will begin in 2020.”  Again, this is the summer of last year - way before the COVID-19 world-wide societal meltdown was even thought of in the general public; but it could very well have been in the planning stages of the Globalists’ inner circle.

   But, cheer up, it gets worse.  August of 2019 saw a flurry of news articles preceding the start of the global collapse.   CNN reported on August 14, 2019 that “5 of the World’s Biggest Economies are at Risk of Recession.”  On August 15, 2019 wbur.org reported “’The Global Downturn Has Already Begun’: Bracing for Recession” where the U.S. stock market had its worst day of 2019.   A day later, CNN Business reported, “A Global Recession May be Coming a Lot Sooner than Anyone Thought.”  On August 19, 2019 businessinsider.com reported “More than 70% of Economists Think a US Recession will Strike by the end of 2021.”  This story was echoed by the Washington Post in an article entitled, “3 out of 4 Economists Predict a U.S. Recession by 2021, Survey Finds.”  The Atlantic published a report by Annie Lowrey on August 26, 2019 entitled, “The Next Recession Will Destroy Millennials” which pointed out how millennials are already deeply in debt with no savings.

   “Though headline U.S. growth seems to be holding up so far, Donald Trump is plainly upsetting global investors and businesses.  This shows how measures of trade policy uncertainty have been driven up sharply by the President's trade hostilities towards China.  The same is true for economic policy uncertainty,” said Ben Chu, BBC Economics Editor.  “Outside the US the picture is clearly weak.  China's economy is growing at its slowest rate in thirty years.  Growth in Europe has also been softening.  The German economy contracted in the second quarter, the continent's export powerhouse hit by those global trade tensions.”

   In September, 2019, Joseph Stiglitz, Nobel Laureate economist told BBC Newsnight, “We are on the verge of a significant global showdown.  Germany's already poised to go into recession and that will weaken all of Europe.  China's slowdown is pivotal in the slowdown of the global economy.” 

   Stiglitz also spoke on Trump's economic policies.  “The protectionism, the trade war, clearly have repercussions.  But it's a broader problem.  He's trying to redefine geopolitics in a chaotic way, problems in India, Cashmere, Iran are all related to the instability of Trump's foreign policy.  We live in an interconnected world where a slowdown in any country, significantly, has global repercussions.   I think you're going to see unemployment going up, you're going to see real wages stagnate maybe even going down.” 

   Again, this was in September of last year - three months before COVID-19 burst onto the world stage with the theatrical news media’s red carpet treatment.

   Manufacturing had begun to stall in 2019, as well, due to the ongoing trade war with China precipitated by President Trump's nationalist policies.

 

   In a November, 2019 Motley Fools documentary on YouTube, it was noted,   “The Institute for Supply Management releases its purchasing manager's index every month which is a gauge for how the manufacturing sector is doing in the U.S.  In September, the PMI fell to 47.8%.  That's the lowest it's been since June, 2009 and any reading below 50 signals a contraction.  There's little doubt that the ongoing trade war between the U.S. and China is the biggest headwind in this confidence collapse in manufacturing.  Peter Boockvar, Chief Investment Officer at Bleakly Advisory Group said, ‘We have now tariffed our way into a manufacturing recession in the U.S. and globally.’”

   On September 2, just two weeks before the collapse began, Fortune magazine published an article entitled, “Why the Next Recession May Feel Very Different than 2008.”  On September 16, as the collapse was beginning, bankrate.com published a story by Sarah Foster entitled, “How Likely is a Recession by the 2020 elections?  Here’s What the top Economists Say.”
Then, the shoe dropped. While 10-year U.S. Treasury notes were suffering under a yield curve inversion the Repo market, which is a pipeline of money that banks and financial institutions use to loan money amongst themselves, began to dry up and the collateral used in those short-term loans - namely U.S. Treasuries - had seemingly fallen out of favor as security for those loans, pushing the interest rates for Repo loans from an average of 2% to more than 10% practically overnight.

 

The Collapse Begins

   There were several problems conspiring together leading up to that fateful day of September 17, 2019 that converged to produce the start of what governments worldwide are hesitant to admit - a worldwide, international economic collapse.  In addition to the burgeoning debt loads around the world, some of the more immediate problems were;

 

Yield Curve Inversion in Treasuries

   For a few weeks prior to the collapse, 10-year U.S. Treasuries were bouncing back and forth under what is called “yield curve inversion.” 

   A Yield Curve Inversion is where the interest on the ten year treasuries goes below the interest of a two year Treasur.  This is important because lenders usually expect to make more money if they tie their money up longer, but in September, 2019, the ten year Treasury suffered an inversion and dropped below the interest rate of the two year note.

   A YouTube documentary by the Motley Fools channel illustrates the history of yield curve inversions;  “Every single recession in the U.S. since World War II has been preceded by an inversion of the yield curve.  But not all yield inversions have necessarily been followed by a recession.  Nevertheless, yield curve inversions don't come about unless there's some serious concern about the health of the economy.”

   

Debt to GDP issues

   Treasuries, which are essentially loans investors make to the government, maintain their value in the marketplace so long as investors believe the government has the ability to pay them back.  However, in 2018, the U.S. Debt to Gross Domestic Product ratio reached 110% - that means, the U.S. government owes ten percent more in outstanding debt than the entire economic output of the country for a year.  But, it gets worse.  When one considers the unfunded liabilities that government is also on the hook for - such as Social Security, Medicare and Medicaid, the debt increases to nearly $80 trillion.  This makes the Debt to GDP ratio around 300 percent - or three times more than the entire annual economic output of the country.  The more debt the government takes on, the less ability it will have to pay any of it back. 

   “It is questionable, how are they going to pay this debt?  We're not just having good years and bad years [where] the debt goes up and down, it just goes up, and up, and up,” said Nabors.  “The banks know something we don't know about the government's ability - or lack thereof - to pay its debt, which is what's required for these treasury bills to perform.”

 

Rehypothecation

   Another reason banks may be viewing treasuries as too risky to take as collateral is because some don't actually “exist.”  What that means is some banks may have pledged their treasuries as collateral on another loan already and thus are “double dipping” the collateral.  The analogy would be if you took out a home equity loan on the value of your house, then went to another bank and took out the same loan, pledging your house again, causing there to be more total debt against that collateral than the house actually has in value.

    Now, these fundamental issues with U.S. Treasuries are important because Treasuries are the primary financial instrument used as collateral in what are called “Repurchase Agreements” - also called, “Repo” loans - where banks and other financial institutions loan cash to each other in times of need.

  By some estimates, some banks have pledged the same treasuries as collateral on Repo loans up to three times.

 

Bridled Banks

   Banks that did have cash, in many cases, weren’t allowed to loan it out due to new Federal Reserve regulations which required them to keep more of it on hand.

    In a January 20, 2020 article posted on nasdaq.com, Colin Harper explained, “Ironically, the cash crunch that necessitated the Fed’s repo intervention arose from regulations that are meant to keep cash in reserves to prevent a run on banks or other liquidity crises.  Reuters, for instance, reported that bankers and analysts believe that J.P. Morgan, the largest bank in the U.S., may have had liquidity to finance these repos itself if it hadn’t withdrawn 57 percent of its cash ($158 billion from the Federal Reserve throughout 2019) and if new regulations didn’t mandate stricter reserve requirements.  Without enough cash in the bank to finance the repos and satisfy these reserve requirements, J.P. Morgan was more reluctant to lend out what it had left. During this time, J.P. Morgan had the money, but it couldn’t legally lend it out.”

 

Crash of U.S. Repo Market

   Under the current fractional reserve system of banking, banks are only required to keep around 10 percent of their assets as cash on hand, the rest is  issued out as loans.  However, if during the day too many checks have cleared, or too many people have withdrawn cash from a particular bank, it may end up short of its reserve requirement.  In order to maintain that reserve level, the bank will then go to the Repo market to make a short term loan with another bank that has excess cash.  The borrowing bank then pledges some of its securities - usually U.S. Treasuries - as collateral for a loan that can last from one day to two weeks.  The borrowing bank then repurchases those Treasuries back with about a two percent interest fee.  This process is in effect very similar to the way a pawn shop operates, only banks are not pawning televisions, cameras and wedding rings, but rather, U.S Treasury notes.

   What happened in September  2019 is the banks were no longer as willing to lend their cash to each other and they were getting skittish on the continued devaluation of U.S. Treasuries.  This caused the Repo interest to explode from around a Fed-recommended 2 percent rate to 10 percent in some cases.  On September 17, 2019 banks that needed money petitioned the Federal Reserve to step in and loan it to them in the Repo market at the Fed's 2% rate.  The Fed agreed and initially pumped up to $75 billion into the Repo market in the first few days. 

   Nearly a month after the crash, on October 14, 2019, Bloomberg published an article stating in its headline, “U.S. Recession Model at 100% Confirms Downturn is Already Here” (this article was later revised on April 8, 2020 to conform to the COVID-19 media hysteria narrative and deflect attention away from financial institutions, central banks and government practices in the global meltdown of the financial system worldwide.)

   A day later, the Guardian in the UK published a story entitled, “World Economy is Sleepwalking into a New Financial Crisis, warns Mervyn King.”

   Finally, on December 4, 2019 omfif.org  published an article by Desmond Lachman entitled, “Signs Point to Global Recession.”

   At this point, a new type of flu virus was just beginning to surface in an obscure province in China and media attention was still focused on the Presidential race, and whatever fictitious “crime” they could pin on President Trump, in their 24/7 coverage.  A couple of months later, they started giving COVID-19 a little more attention, then by March it was full-blown hysterical, hyperventilated reporting of COVID-19 in the midst of perhaps the largest global financial meltdown in the history of the world - but not a word about that from the mainstream media.  In fact, the coronavirus narrative was very effective at absorbing all of the media’s attention except for this publication, the Fort Fairfield Journal, which published an article in the April 22, 2020 edition entitled, “Coronascam ‘Plannedemic’  How Governments Exploited Coronavirus to Camouflage An Economic Collapse and Pre-Sell Mandatory Vaccinations.”

   “The big picture answer is that the repo market is broken,” said James Bianco, founder of Bianco Research in Chicago, in an interview with MarketWatch. “They are essentially medicating the market into submission,” he said. “But this is not a long-term solution.”

   What was supposed to be a temporary fix until the Repo market calmed down ended up lasting for months.  By the end of the 2019, the Fed had extended $500 billion into the Repo market.  By April, 2020  they had agreed to provide another $500 billion. 

   The Federal Reserve also ramped up its purchases of U.S. Treasuries - to allow the now bankrupt U.S. government to continue borrowing money to pay its bills. 

 

The Diversion

   Propping up the Repo market was understood not to be a permanent fix.  It was merely a stop-gap measure until something could be done to increase liquidity (i.e. put more cash) in the banking system.  That would have to come as a taxpayer-funded bailout similar to the “Quantitative Easing” debacle that the Fed undertook ten years ago, after the 2008 economic crash.  However, asking the public for more banker bailout money would be a hard sell to a public who has grown weary of bailing out Wall Street and banks, so the feds had to figure out a way to effectively market their plan. 

   A very clever theatrical-media marketing plan was then developed:

 

ACT I

-Cue the coronavirus;

-enter stage left;

-raise the curtain;

-bedazzle the audience with smoke, pomp and viral flair. 

 

  By March, COVID-19 was on the fast track to becoming a media superstar.

   The mainstream theatrical news media’s marketing division went into overdrive selling the fear on the COVID-19 coronavirus under the guise of “news.”  With government mandated “lockdowns,” face mask mandates and  social distancing of 3 feet, 4½ feet or 6 feet (it varies by country) keeping the population off balance with no ability to focus on anything but the 3D reality TV virus show they were all literally living in; the mainstream theatrical news media continuously pushed the government narrative while also incessantly hyping death numbers - numbers that are now being found to be dramatically over-counted by many governments’ health departments to keep up the political façade.

   The public, petrified with fear by a novel flu virus and out of work potentially for months due to mandatory government-inspired lockdowns of nearly the entire business sector and economy, was easily cajoled into “accepting” the banker bailout in the form of a personal check written directly to them.  That marketing scheme is what was known as the “Payroll Protection Plan” where everyone in the U.S. each received their own, personal check for $1,200; many unemployed workers received subsidies of $600 per week to voluntarily remain unemployed and at home for months; and businesses applied for billions of dollars worth of ostensibly forgivable loans providing they didn't lay off workers while they were shut down.

   All of this money - over $2 trillion all at once - was issued at lightening speed.  As people and businesses cashed those checks and spent them, the money ended up where it was originally intended...in the banks.

   This clever sleight-of-hand to pump more than $2 trillion into the banks in less than a month's time could never have been achieved without the assistance of the COVID-19 virus and the fear generated about it via the mainstream theatrical news media.  The non-living virus particle unwittingly lent its persona to the governments of the world as most other governments commenced with similar “economic stimulus” programs in their own countries to help shore up their own banks.   In a June 21, 2020 CNBC article by Hugh Son, the headline reads; “U.S. Banks are 'Swimming in Money' as Deposits Increase by $2 Trillion Amid the Coronavirus First Hit”  In the article, Mr. Son points out how in April alone, deposits “grew by $865 billion, more than the previous record for an entire year.”

   Meanwhile, the U.S. taxpayers, elated to have received the $1,200 pittance, failed to realize they were unwittingly helping the government launder the banker bailout money into the banks and barely a cry of protest was heard. 

   This clever tactic was beautiful enough - the crowning achievement of sophisticated government prowess coupled with an even more sophisticated mainstream theatrical news media propaganda-marketing industry.  But now that the banks have been covered, there’s still a worldwide economic collapse to own up to, with manufacturing shutdowns, food shortages, personal debt and business debt still raging like an out of control forest fire around the globe.  Rather than admit it was government and financial system mismanagement, the marketing arm of government and media went back to the spin cycle for Act II and rolled out the coronavirus COVID-19 boogeyman once again.  This time, to blame all of the world’s financial crises on it, thereby shifting the blame and attention away from the real perpetrators.  In Orwell’s 1984, the boogeyman was called Goldstein. But, for today’s purposes, COVID-19 will do nicely.

 

The Scapegoat

   Now, one year after the economic collapse was predicted, it has happened.  But nobody knows about it outside of the context of the COVID-19 coronavirus lockdown.

   Looking at some of the media headlines today, we see the narrative has been completely co-opted across the board by the coronavirus, COVID-19.

   On April 9, 2020, the BBC published a report entitled, “Coronavirus: Worst Economic Crisis Since 1930s Depression, IMF Says.  But that release may have been a timing error since the International Monetary Fund  didn’t publish that report online until April 14.

   On May 11, 2020 sciencedaily.com published an article entitled, “How is COVID-19 Affecting the Global Economic Order?”  A week later, reason.com reported, “The COVID-19 Economic Collapse is Absolutely Wrecking State Pension Systems”

   On June 8, 2020, worldbank.org published a story entitled, “COVID-19 to Plunge Global Economy into Worst Recession Since World War II.

  And the list goes on.

  Now, every time the public hears “economic collapse” in the news, it will also be dutifully blamed on “COVID-19.”  But, was COVID-19 really the root cause, or just a convenient passerby to lay the blame on?

 

 

 

 

 

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