“Only when the tide goes out do you discover who’s been swimming naked.” – Warren Buffett
Here is a paradox.
The area round the plughole remains the last place to dry out when you are emptying the bath. The place where the actual hole is, is the last place to feel the effects of the hole. All the rest of the bath dries out first. You would think that the place where the hole first appeared would be the first to become dry, wouldn’t you?
Same with money.
In previous pieces I have described the international war on state issued currency led by America. Interest rate reduction (Zero Interest Rate Policy), and quantitive easing have been used to lower the value of all state issued currency in comparison to stateless Democratised Money or derivatives.
When the Derivatives boat started sinking in 2008, International Monetarists used ZIRP and QE to blast a massive sinkhole in the financial earths crust draining out state money liquidity. The theory was that if the sea level could be made to drop faster than the derivatives boat dropped, the boat could not sink!
State money liquidity flowed into the massive financial chasm caused by Monetarists. But it flowed from the periphery first. It is the developing world that became dried out as the sea emptied. The plughole still has liquidity at this time. Ironically, Despite the fact that USA is leading the war on state money, it is their national currency that remains one of the strongest.
Here is another metaphor:
When an atomic bomb detonates you can see the shockwave blast pushing outwards, but this is rapidly followed by a vacuum that develops at ground zero, which then sucks IN all the stuff that was initially blasted outwards. QE and ZIRP blasted ‘free’ money out from America into the developing economies- the initial shockwave. Now that money is being sucked back into the vacuum at ground zero. First the periphery was blasted one way now it is being blasted the opposite way.
It is this flow, first outwards and then inwards that is causing all the devastation. It is this flow that is the real cause behind the oil price shocks that are causing financial carnage among oil producers. But it is not just the developing nations that are feeling the effects of this flow.
Basel, Switzerland is the home of the Bank of International Settlements and the Financial Stability Board. In fact they share the same building, which is incongruously shaped like a massive Roman boot. It is ironic that the Swiss franc has been caught up in the blast, exploding in comparative value compared to the Euro and destroying Swiss export viability.
It is the Bank of International Settlements and the Financial Stability Board that are creating the legislation for the new Democratised Money World Order. Yet in doing this it seems they are laying waste the very territory they are situated on and protected by. Do you think the time might come when even the Swiss population have had enough of them and break out the pitchforks?
Perhaps the most appropriate metaphor would be that of a magma chamber that forms the reservoir for a volcano. First the magma chamber expands upwards then it contracts, then it blows.
The first hole in the financial earths crust was planned by the Monetarists. Now It appears that another fissure has opened up . This one was unplanned and unforeseen. I wonder what is going to happen next…..
‘Painting’ by George W Bush..