01 Apr 2020
Gordon Brown made a speech just last week reiterating exactly what all globalists want. A specific phrase he used repeatedly when he was Chancellor. “A New World Order.”
Almost overnight, the landscape of the world we knew… changed. What we are witnessing in our world today would have been unimaginable a few short months ago. And it was only unimaginable because this had never happened before in our lifetime. It is an unprecedented event that we are experiencing simultaneously. An event that in some form or another affects each and every human being the world over. Yet, if we were to go back in time, we would quickly see that it happened so regularly in the past that we would have not only considered it possible, but inevitable.
While it may seem like a fruitless exercise to look back rather than forward, as past examples are of relatively little use to us where we find ourselves today; the opposite is true. The biggest and often the most painful mistakes that many investors make in the markets is mostly due to not studying historical periods of time past and taking notice of the patterns and cycles that are there as teachers of the present. More specifically, the branches of our governments who control fiscal policy, and the central banks who control monetary policies who announced unprecedented (there’s that word again) amounts of both fiscal and monetary stimulus packages that will include massive amounts of what is known as helicopter money. The yet to be disclosed ‘finely printed details’ of how this huge injection of money and credit will flow is important. And to understand this better we need to look at the bigger picture for perspective, because understanding the future lies in understanding the lessons that are embedded in history.
For example, if we were to look into history and study past epidemics and their effects on economies and markets throughout history, the information would be eye opening. Disease along with famines and floods were far larger than anything else affecting markets and economics, including wars. So, how could we have overlooked something like a Pandemic? It hardly makes much sense, does it?
The fiscal policy makers and the monetary policy makers (the Fed and central bankers) have just created a huge stimulus and with this will come, huge debts, and the monetisations of these debts. While this is an unprecedented event in our lifetimes, it is not an unprecedented one in history. To see this we only have to look back to the period between 1930 and1945 where then, just as we are witnessing today, interest rates crashed to 0%, debts were through the roof, the global economy was fragile, there were huge wealth and political gaps, and a rising new world power was emerging to challenge the existing world power.
In the war years, there was an enormous amount of fiscal spending that produced a lot of government debt, so central banks needed to monetise that debt. Take the U.S today. The government deficit will be over 20% of GDP. Couple that with the seemingly infinite amount of money printing that’s going on, not to mention the FED debt-buying, and this will raise the debt holdings to a whopping 30% of GDP… possibly even higher.
With all of this debt and money creation, will interest rates and inflation rise? Who is going to bear the burden of all of this additional debt and the money being created from nothing?
Central governments have tremendous powers and get very deeply into debt. They have central banks buy that debt or facilitate the buying of that debt by others in order to keep interest rates down and the economy operating in an orderly way. How?
In the 1930-1945 period, it was achieved by the Fed making a pledge to buy bonds to put a lid on interest rates (which is similar to what we are seeing the Bank of Japan, and to a slightly lesser extent the ECB) doing right now.
Starting to feel the Deja vu yet?
According to a recent survey conducted in Italy, a large part of respondents’ fear that they or their loved ones could lose their jobs due to the impact of coronavirus (COVID-19). As of February 2020, the share of respondents worried about this possibility was 21 percent. Thereafter, this fear among Italian interviewees increased, reaching 51 percent in March. -Source statista.com
On his way to a Covid-19 meeting to negotiate a relief package, U.S Treasury Secretary, Steven Mnuchin said…
"I expect that with all of this liquidity we're putting into the economy to get through the next couple of months, when we're ready, we'll be ready, and the economy will surge back." -Source-investing.com
Let’s all hope that’s an indication that he knows something we don’t and it’s not just the ‘bankers’ who will benefit from the bailouts again this time round with the trillions that have been allocated to fight this crisis. However, the ‘when we’re ready’ comment as with many lacking the same urgency that we are hearing from our world leaders all too often of late - won’t go very far in helping the millions who will lose or have already lost their jobs and businesses while decisions are being made and announced, to then be retracted or deferred for yet more negotiations.