Is This It? - Part III -- Jim Rickards Offers His Thoughts

We have raised the question as to whether this new global crisis could be the "trigger event" that eventually leads to major changes in our monetary system. This blog has covered that topic now for many years. One person who has consistently predicted that at some point a new major crisis would lead to major monetary system changes is Jim Rickards. 

Jim has now written this new article and apparently seems to believe this new crisis will be the trigger event that leads to major changes. Below are a couple of excerpts from his new article. We have covered this topic extensively and have compiled an archive of various proposals for major monetary system reform or even a complete reset of the system. You can review that information here.  (note: I added underline below for emphasis)

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"Since Federal Reserve resources were barely able to prevent complete collapse in 2008, it should be expected that an even larger collapse will overwhelm the Fed’s balance sheet.

That’s exactly the situation we’re facing right now.

The specter of a global debt crisis suggests the urgency for new liquidity sources, bigger than those that central banks can provide. The logic leads quickly to one currency for the planet.

The task of re-liquefying the world will fall to the IMF because the IMF will have the only clean balance sheet left among official institutions. The IMF will rise to the occasion with a towering issuance of special drawing rights (SDRs), and this monetary operation will effectively end the dollar’s role as the leading reserve currency."                  

 . . . . . .

"Over the next several years, we will see the issuance of SDRs to transnational organizations, such as the U.N. and World Bank, to be spent on climate change infrastructure and other elite pet projects outside the supervision of any democratically elected bodies. (I call this the New Blueprint for Worldwide Inflation.)"

Please click here to read the full article

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My added comments: I have gotten input from other high credibility sources that suggest it is possible this crisis event might eventually lead to a new monetary system. Those sources also talked about this being the start of a process that could take some time (not a rapid event in terms of changing the monetary system).  Here, we just monitor events and watch for what actually happens. But given the high credibility of the sources, I did want to alert readers that there is a belief that this crisis could start the process for major change from more than one source I view as credible. 

Added note: Jim also has this new interview just out that dives into a variety of topics from what is happening in the gold market to the virus to the longer term impact from the current crisis. You can watch that interview here or just below.

Added news note 3-29-2020: The link below goes to the virus projection curve reportedly being used by The White House task force as a guide. This site also has a projection for each state. Using this guide, you can compare actual numbers over the coming weeks to see if the real numbers are coming in above or below this projected curve:

https://covid19.healthdata.org/projections


As some added information, my brother (who was to have an elective surgery procedure in Dallas, Texas) was told by his doctors that they hope to schedule him in about 3 weeks which would fit in with this projection curve and suggests his doctors are also using it as a timeline guide.

PSA - Reader Compiles News Digest on All Things Coronavirus - Corona Times

During this unusual time when everything is turned upside down for most people, I am open to posting information on the Coronavirus in case that may be helpful to anyone who reads the blog. 

One reader here has been working on The Corona Times which is a news digest of information from many sources related to various aspects of the epidemic. With permission, I am posting the set of information below exactly as received by email from the reader for anyone who can use it.

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Corona Times 

Vol. I  No.1.1

Table of Contents 

1. SARS-CoV-2 

The Atlantic:  “Why the Coronavirus Has Been So Successful"

News Items:  “Aerosol and Surface Stability of SARS-CoV-2 as Compared with SARS-CoV-1” / “How long can the novel coronavirus survive on surfaces and in the air?"

2. Detection

News Items:  “Covid-19 diagnostic based on MIT technology might be tested on patient samples soon” / “Pioneers of rapid diagnostic tests for epidemic fever viruses"

News Items:  “Team Japan develops 10-minute coronavirus test”

News Items:  “Coronavirus: Chinese supercomputer uses artificial intelligence to diagnose patients from chest scans”

3. Protection

The Atlantic:  “Why the Coronavirus Has Been So Successful”

News Items:  “Aerosol and Surface Stability of SARS-CoV-2 as Compared with SARS-CoV-1” / “How long can the novel coronavirus survive on surfaces and in the air?"

Warren's space:  "Protecting yourself from Coronavirus"

StillmanMD:  “COVID-19 Update"

4. Treatment

The Atlantic:  “What Will You Do If You Start Coughing?"

News Items:  “Hydroxychloroquine and azithromycin as a treatment of COVID-19: results of an open-label non-randomized clinical trial” / “An Open Data Clinical Trial for COVID-19 Prevention”

News Items:  “Coronavirus cure hope as 79-year-old Italian man successfully treated with experimental drug”

News Items:  “Experimental lung drug to be tested on UK coronavirus patients”

News Items:  “Doctors Have Now Mapped How Our Immune System Fights COVID-19” / “Breadth of concomitant immune responses prior to patient recovery: a case report of non-severe COVID-19"

News Items:  “Coronavirus patient shows encouraging immune system fightback”

Johns Hopkins Bloomberg School of Public Health:  “Infectious Disease Experts Recommend Using Antibodies from COVID-19 Survivors as Stopgap Measure to Treat Patients and Protect Healthcare Workers"

5. Public Health

Stanford Medical School - Lin Lab:  “How to fight the coronavirus SARS-CoV-2 and its disease, CoVID-19”

JPMorgan - Eye on the Market:  “Coronavirus (COVID-19) research compilation"

Virology Down Under:  “Past Time to Tell the Public: “It Will Probably Go Pandemic, and We Should All Prepare Now"

Slate Star Codex:  "Coronalinks 3/19/20"

News Items:  “Covert coronavirus infections could be seeding new outbreaks”

Stat:  “A fiasco in the making? As the coronavirus pandemic takes hold, we are making decisions without reliable data"

6. Economic Health

WSJ:  “Rethinking the Coronavirus Shutdown”

WSJ:  “What Victory Looks Like in the Coronavirus War"

7. Financial Health

News Items:  “Analysts Slash GDP Estimates as Coronavirus Ripples Through Economy”

News Items:  “How long will the coronavirus slump last?

JPMorgan - Eye on the Market:  “John Stuart Mill and the road from ruin to recovery"

UnHerd:  “Covid-19 has exposed our financial fragility"

NYT:  “This Is the One Thing That Might Save the World From Financial Collapse"

8. Social Order - L'Ordre Social

Foreign Policy:  “The Real Pandemic Danger Is Social Collapse"

Law and Liberty:  “Jacques Rueff’s Monetary Order and Us"

Off Topic - For Those Dealing With Stress and Anxiety Due to the Coronavirus Crisis

This post is completely different than anything I have ever posted on this blog and something I never imagined I would even consider doing here. But we are now in the midst of a historic situation. Fear and anxiety over the challenges that exist for all of us now is at a very high level and with good reason. The goal of this blog has  always been to try and provide a free resource of information in an effort to be helpful to anyone that finds the information and may be able to benefit from it in any way. The subject matter has always centered around the stability of our present financial and monetary system because I felt like I have come across a lot of potentially useful information over the years and wanted to make it available to anyone who might be able to use it. I purposely avoid any kind of political or religious agenda here because I know those topics can be so divisive and could make it harder to achieve the objective here which is to try and be of service. 

With all that background, I will explain that my initial motivation to do this blog and to keep it alive over the years came about from a challenge from my church. We were encouraged to try and think of some way to serve other people and this has been my attempt to do that to the best of my ability. Now we are all facing something no one imagined just a few months ago and it is obvious that many people are facing a lot of stress and anxiety, which is only normal for a crisis like this. As a result,  I have decided to post below a video that I hope might be helpful or useful to some in these times. This is actually a podcast featuring words of encouragement from the pulpit minister from our church (Jason Reeves), our Family Life minister (Dr. Ryan Smith), and one of the elders at our congregation (Dr. Ken Ford). Some of the message content in this video is mostly directed to our church members, but it also contains some general information on the virus, as well as some thoughts on ways to help deal with the potential stress that goes with it. Ryan specializes in therapy for people dealing with all kinds of stress and anxiety. Ken provides some good information on the virus and why we need to all work together to fight it. I know without any question I can rely on the integrity of these men and what they have to say which is why I am willing to post it here.

For those who are not religious, please do not be offended. This is not intended to as some kind of sermon or attempt to force religion on you. I know these three men and I know they have nothing but servants' hearts combined with a deep desire to help others whenever they can. That is the only purpose for the information and message in this video. 

With all that said, below is the youtube video podcast for anyone interested. If you have any questions about the information presented, please feel free to email me and I will try to clarify if anything they say is confusing or hard to hear. The first three minutes are more directed towards our internal members, so feel free to skip over that if you like. Also, at about the 23 minute mark the video portion freezes up, but the audio portion still works fine. 

I hope this can be helpful to some who are understandably dealing with anxiety and stress at this time.  I am sure all of us are dealing with that on some level so you are not alone.

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Summary of the Info in the Video

- Dallas Medical Doctor Ken Ford goes over some information on the virus, the concerns of health providers, and why we do need to take it seriously and each do our part to try to help contain it

- Dr. Ryan Smith (expert on therapies for dealing with stress and anxiety) offers some practical ideas on how individuals and families can deal with having their lives turned upside down and the anxiety and stress that can come with that

-all three participants in the video encourage people of faith to stay calm and look for ways to grow from this adversity and for ways to help others if possible


Important News note (3-23-2020): Fed Announces "Asset Purchases with No Limits". This is a huge step by the Fed in an obvious attempt to support the stock market and other markets.

Jim Rickards - Potential for the System to Freeze Up Does Exist

Readers here know that we have long featured the thoughts and writings of Jim Rickards over the years here on this blog. Jim has a rare ability to take complex subject matter and break it down so that those of us without a background in economics can better understand events and terminology used in that discipline. Jim has been saying and writing for years that our present monetary system is vulnerable to a so called "black swan" trigger event that could become what he calls "the snowflake that sets off the avalanche". 

Clearly, in the current situation, many people will want to know what Jim is thinking right now and if we are potentially seeing the start of the kind of major crisis he has long predicted. In this recent new interview with Daniela Cambone of Kitco News, Jim offers his thoughts on what is going on right now. You can watch the interview just below. After that a few added comments.

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My added comment: Jim covers a fairly broad array of topics in this interview ranging from his take on the current crisis to the impact on gold to the potential impact on the upcoming US Presidential election in November.  Readers can find his books on Amazon.com and his book that talks about "Ice Nine" (discussed in this interview) was The Road to Ruin which can be found here.

I had thought about seeing if Jim would do a brief Q&A type interview here to update readers on his take on the current situation, but this interview does that very well and saves him some valuable time which is limited. I can say that his books are well worth the investment in time and money for anyone interested in these issues. I can add that over the years Jim has always taken time to reply to questions I may have and offer his take on things based on the info available at the time. 

Added notes: This situation is constantly evolving so added notes may be needed. In the interview above Jim talks about how the system can "freeze up" in stages. At first, perhaps a closure of the stock exchange which removes that money as a source of liquidity. Then things like money markets can come under pressure from those who must have liquidity. Today the Fed steps in to try and calm that part of the system. It's very clear that the scenario Jim describes in this interview is absolutely a concern for the Fed and our government officials. You can see this just by observing their actions. It is very important in situations like this to stay alert to ongoing news and have some emergency funds available to tide you over in case, despite all the efforts of the monetary authorities, liquidity dries up and access to cash gets more difficult. 

The gold and silver markets - We should note that there is also unusual activity going on in these markets. While the futures prices for commodity contracts for gold and silver have fallen alongside other markets (although far less than stocks for example), there is a different story going on in the physical markets. It would probably not be accurate to say that there is a "shortage" of gold or silver right now since it can be purchased. But those who are selling gold and silver right now are demanding much higher premiums for the coins etc. to let them go to buyers. As an example, the spot price of silver is around $12 per ounce as I write this added note. But I would challenge anyone to find any one ounce silver eagle coins for anything close to $12. I could not find any lower than around $18 (for quantity purchase) and most sites were asking $20 or more per one ounce coin (if they have any in stock). Mints around the world are sold out and in back order for weeks including the US Mint. This is important to understand. This means there is a surge in buyer demand for physical coins due to the crisis and people are paying very high premiums to get coins. It's more anecdotal evidence that while people are surely hoping this crisis will be over sooner rather than later, they are also willing to start hedging their bets to get some insurance against the potential for massive fiat money creation and the risk that may pose to fiat currencies later on. Don't dismiss this kind of anecdotal evidence as meaningless. It is not.

Important News note 3-23-2020: Fed Announces "Asset Purchases with No Limits". This is a huge step by the Fed in an obvious attempt to support the stock market and to try and instill as much calm as possible in all markets.

Please note the comment just above made a few days ago:

"It's more anecdotal evidence that while people are surely hoping this crisis will be over sooner rather than later, they are also willing to start hedging their bets to get some insurance against the potential for massive fiat money creation and the risk that may pose to fiat currencies later on."

Is This It - Part II?

Not long ago we ran a post asking if we might be seeing the start of events big enough to impact the stability of our present system and then lead to major systemic changes. Now we can say that the events taking place are most certainly significant enough to have the potential to shake the stability of our present system. 

You don't need me to inform you of that since it is now on mainstream media every day now. Below I will attempt to offer some observations as to how to try and deal with what are now clearly historic events. I will again use a Q&A format.

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Q: Is this a legitimate non man made crisis or is it something that has been engineered to shake the foundations of our present system and lead us into major changes over the coming months?

A: This is a question I am getting and seeing discussed a lot now of course. I wish I could provide a highly credible and informed answer. I have gotten some input from a variety of experts and also read a variety of viewpoints everywhere I can in order to try and assess this. The honest answer for now is I just do not know if this is an engineered event or simply an act of nature that no one could see coming. Some believe this is exactly what is being presented to the public, a non man made legitimate public health crisis that requires all the drastic measures being taken to combat the disease. Others are skeptical. 

Most everyone accepts that the virus is real, is very contagious, and poses a severe health threat to the segments of the population most vulnerable due to weaker immune systems. The skepticism tends to surround whether this virus was a natural event or something man made to produce the global reaction we are seeing right now and to get the public into a mind set for accepting "a new normal" and major changes from the world we have known. There are a variety of culprits pointed to by those who are skeptical, but I prefer not to delve into that since I have no credible evidence to support any particular entity as being behind this as an engineered event. I do keep an open mind and will simply monitor how all this unfolds and what the end results are. I think that will provide a better guide as to how and why all this has emerged literally out of nowhere in just a few months time.

Q: What valid observations can we make about the public reaction to all this so far? 

A: I think the following bullet point observations are valid in regards to public reaction to his situation thus far.

- there is a very clear "fear" reaction going on with people who were living normal lives just a few days ago now terrified as to what their future may be - both from a health standpoint and from a personal financial standpoint.

- the elevation of this crisis to "war time status" as many leaders are now calling it is impacting the public such that people who would have challenged the government restricting their freedom of movement, freedom of assembly, etc. are now quietly accepting such restrictions with no signs of significant protest. This may be just  a sense of people wanting to do their share to pitch in and try to help contain the virus. But an interesting question is how long will this public reaction last if this situation drags on for months? Only time will answer that for us.

-suddenly almost no one cares how much it costs to try and combat this problem. People who would normally be upset about spending trillions of dollars, expanding government debt, and creating whatever money is needed for monetization are OK with that now. It would be political suicide to vote any other way in the current environment.

- so far the majority of the public reaction has been to promote a rare sense of unity of purpose (at least for this crisis) between groups that have been fighting each other like cats and dogs. Again, it will be interesting to see how long that lasts. For now, most people are accepting that their leaders are working on their behalf to combat the crisis and there is much more bi partisan political atmosphere than we have seen for some time.

- it's been interesting to see what items people are "panic buying" in response to this situation. It's not surprising to see things like milk, eggs, canned goods, paper products, and deep cleaning products disappear. What has surprised me a bit is how things like batteries and drinking water quickly disappeared and how fresh meats and produce have been relatively available. Nothing about this situation in our area has suggested that our utilities (water, electricity, etc) will be impacted and yet people bought lots of items that you would buy if you thought those things were going to be impacted. I am not sure what that suggests, but perhaps that deep down people are not confident this will be over quickly or that the damage to the system will be confined just to their health or short term financial problems. Maybe it's just wanting to err on the side of caution.

Q: A year from now, will our system and the world be changed in a major way?

A: This is a key question for sure. It's still too early to say from my point of view. The political leaders in the US are saying to expect this to last anywhere from a few more weeks to a few more months. They are saying that once the crisis is over, things will quickly return to "normal". I would assume normal means that long term we have not seen major changes to either our system or our way of life. 

But only time will truly answer this question. Leaders have to say that and would be viewed as creating panic in the public if they don't say that. In 3-4 months, we will probably have a better idea how to answer this question. By then, either things will be returning back to "normal" or it will be obvious the financial system is failing or will likely fail soon. The only advice we can offer here is what we have said here for years now. Try to stay informed, try to find credible information, and try to have a backup plan in mind in case the system fails. It may be that obtaining credible information is the most important thing you can do. It's certainly our most important objective here.

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Added note: If we come across credible information we feel may be helpful on either the healthcare front or the economic front, we will share it here. We will tend to be very slow to post anything here, especially on the healthcare front, unless we feel the information source is highly credible and we can verify the information presented to us. 

There is an enormous amount of misinformation and disinformation out there and we have no desire to contribute to that here. Obviously, political operatives on both sides will be trying to use this situation to gain political advantage so we have that to try and sort through as well. But I think that kind of behavior is actually pretty transparent and easy for most people to see through.

Fed Takes Increasingly Drastic Actions

Last fall we began to follow the story about the Federal Reserve starting up unusual activity in the repo markets. First, they said these were just temporary actions related to some quarterly tax issues. Then they announced these unusual operations would be extended in 2020 and we saw the amounts jump considerably from time to time. The Fed continually assured the public that there is nothing to be concerned about and that we should not label their actions as QE (Quantitative Easing). More and more skeptics have questioned if the Fed operations suggest trouble behind the scenes.

Fast forwarding to the present, now we have a full blown global pandemic and markets around the world reeling into what seems like free fall. Oil prices collapsed due to a combination of market anticipation that world oil demand would drop due to the pandemic and a dispute between Saudi Arabia and Russia over whether to cut supply in response to a drop in demand. 

Meanwhile, the impact of the virus pandemic on the US government continued to grow. At first it seemed as if government officials did not take the threat seriously enough. While they did begin to ramp up a government task force on the problem, the public seemed to sense that the threat from the pandemic was moving faster than the official response. This has led to a state of what I might describe as "mild panic" in the US with people reacting to their fears in a variety of ways including wiping out retail supplies of some key basic consumer goods. 

Of course this kind of sudden panic buying puts enormous stress on our "just in time inventory" distribution system for those products in high demand. All of this creates an atmosphere of public uncertainty and is conducive to the potential for the sense of panic to ramp up depending upon what happens in the coming weeks. A lot will be determined by how effectively the pandemic threat is contained and the public perception of whether our leaders and public officials handled the crisis well or not.

Now the Fed fires another major round of ammunition in an effort to support markets and ease investor fears that this crisis will spill over into the financial system and threaten its stability (Initial market reaction was not good). Clearly, the trust and confidence of the public in its leaders is going to be tested both on the health care front and the economic front. This is exactly the kind of situation we have written about here on this blog for years now. We have arrived at a key point in time where we find out if all this is just another bump in the road for the our current system or this leads to a lack of public trust and confidence that shakes the stability of the current system. It's important to recall that our entire present system fully depends on the public trust.

At this time, all we can do is make a few observations as we wait to see how all this actually unfolds. As we have said here many times, what matters is what actually happens, not what any expert or official predicts will happen. As we stand today, things could go either way and I doubt that anyone knows for sure which direction things will go in terms of whether our present monetary and financial system emerges from this in tact or radically changed. We will monitor it here as best we can. For now, here are a few observations:


- We need to watch the Fed very closely. They have continued to assure us that things are fine and stable even as we see clear evidence that markets are not stable and Fed actions in response are becoming more urgent, more drastic, and more frequent. The Fed will say no one could the pandemic coming, but so far it's not good look for the Fed. They seem behind the curve whether they are or not.

- We are getting an interesting peek into how the general public will react in a crisis situation where genuine fear is motivating daily decision making. I am observing how people are reacting to this (at least in my area) with interest. On one level, there is not a panic leading to any kind of civil disorder. But clearly there is a sense of unease leading people to flock to panic buy key consumer goods despite being told that there is no reason to fear being able to acquire necessary goods. This suggests to me that down deep, people don't fully trust that public officials will handle things well. So far, it's probably just people wanting to err on the side of caution. But if things continue on such that instability persists over time (on the health front and on the economic front), it will be interesting to see how the public mood may change in this regard and become more intense.

- There are plenty of suspicions out there that this whole crisis is an engineered event for the very purpose of testing to see how the US general public will react to a situation like this. There are a variety of proposed culprits. I don't view things that way at this time, but there are many people who have suspicions about it and I try to keep an open mind. I suspect that how officials handle this going forward will either ramp up the intensity of suspicions like that or quell such suspicions. Only time will tell us.

- We should continue to watch what happens in all markets. This includes not only stock markets, but the gold market and the strength of the US dollar. Combined these will continue to provide some hints as to whether public trust and confidence is holding up or faltering. 


Reactions to the Fed Rate Cut and QE Announcement:

Nouriel Roubini

Mohamed A. El-Erian

Jim Rickards

Jim Rickards #2

CNBC - Dollar Weakens after surprise rate cut

Gold is the only thing to own now (Kitco News)

Alternative Media Viewpoint from Egon Von Greyerz

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Added comment: The purpose of this blog has been and is to monitor events that might lead to some kind of change in our present monetary and financial system. While the current events certainly fall into that purview because of the potential stress to the financial system, it should be said that the financial and economic impact from the events are not as important as the health and safety of all people. This post on the Twitter feed of Dr. Judy Shelton is a reminder of what they are going through in hard hit Italy.

The health pandemic confronting the world right now is outside our area of expertise here so we have refrained from covering that to any significant degree. But as we come across information on this, if we feel it is credible information that might be helpful to anyone, we will certainly cover it here. If we do not post information, it will be because we do not feel we have the expertise here to determine if the information is credible. The recommendations that have been widely circulated to the public about how to combat the virus seem like reasonable common sense proposals and we would certainly encourage readers to follow them. As with any contagious disease, it makes sense that each of us doing what we can to try and limit the spread of the disease is just prudent behavior.

Former Dallas Fed Analyst Calls on Fed to Act Carefully (By preventing rates from dropping too far)

With virtually everyone calling on the Fed to do even more easing in the face of the global virus pandemic and collapsing oil prices, one former Dallas Fed analyst (Danielle Di Martino Booth) says the Fed can't let rates fall too far without potentially endangering systemic stability. She writes about it in this article appearing in Bloomberg. Below is an excerpt from her article.

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"The Federal Reserve has a lot to worry about these days. And while it's not often mentioned, at the top of the list should be preventing rates on longer term U.S. Treasuries, the world’s risk-free benchmark securities, from falling to zero."

. . . . 

"But if yields on benchmark 10-year Treasury notes go to zero -- a no longer ludicrous suggestion after Russia walked out of the OPEC+ meeting without a deal -- then all of those key roles get upended. Especially hard hit will be banks, insurers and pension systems worldwide."

Please click here to read the full article on Bloomberg

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My added comments: Once again we encourage readers to closely monitor current events. We have explained here many times over the years that we have a highly interconnected global financial system. Central banks have been using easy monetary policy for years trying to stave off a major deflation event and promote a 2% inflation rate. Critics have repeatedly warned that these policies, while perhaps maintaining order in the short term, could be setting the system up for a new major crisis if some kind on trigger came along and "popped the financial bubbles" that have resulted from all this money creation. It seems pretty clear the stock market bubble is currently popping, having now gone into bear market territory.

Now we are clearly in the midst of events where this becomes a realistic potential threat to systemic stability. As markets crash and are highly volatile, all kinds of computer algorithms and derivatives instruments that assume this won't happen may be impacted. We don't really have any idea what institutions could be in serious financial trouble. If one or more systemically critical institutions fails, who knows what counter parties they may have that could also be in trouble. We can assume the Fed will move heaven and earth to keep all that under control. However, can even the Fed handle things if the crisis spreads too far too fast? We simply don't know the answers and can just hope no major crisis emerges or can be contained if one does emerge. Jim Rickards offers this comment on the Fed response (click here to see his comment).

If these events still have not convinced you that everyone should have an emergency backup plan in mind to deal with another major financial crisis, the I don't see how this blog can be of any help to you. No one can predict the future with certainty and unexpected "black swan" type events can arise at any time as we are now seeing very clearly. Relying on "the government to fix things" is beyond naive. Hopefully, they will do the best they can, but relying solely on them (politicians and public officials) can be a horrific mistake.

Sometimes events can overwhelm governments or other large institutions that normally can stabilize things. The prudent and responsible thing to do is to try to become as self reliant as possible and have some kind of plan in mind to deal with an unexpected emergency. No one is immune from the potential impact of an event like we are seeing unfold now. Being able to sustain yourself for a period of time while the system is under stress should be a top priority for everyone to consider. These current events simply illustrate why that is important and why we have talked about having a backup plan in mind for years on this blog.

Added note: Whenever we see monetary officials clearly struggling to deal with stress in the system, it's time to keep an open mind as to what may unfold ahead of us. We can expect that these officials will tell us everything is stable and that they have things fully under control. After all, it's part of their job to discourage panic in the general public, especially during events like we have right now. They have done a good job of preserving stability over the last several years, but clearly we have significant new challenges emerging now.

I found this article in alternative media that attempts to make the case that this time monetary officials will fail and that our existing monetary system will actually come to end in the months ahead now that public confidence is starting to waver.  

I think it's appropriate to offer this article for readers to consider, not as a prediction as to what will happen, but rather as an alternative view that we can follow over time. If the bullet point projections in this article start to actually happen, then perhaps it would be worth considering allocating more available funds (for those that have them) out of the system and into hard assets. 

The article lays out several events to watch for over the coming months. So, readers can follow events and see if this scenario gains credibility or not over time. Below are a couple of extracted bullet points from this article:

"Few analysts have yet to understand the enormous consequences of the coronavirus for missed payments and accumulating current debt, which is and will rapidly drain liquidity from wholesale money markets."

. . . .


"To sum up, the following developments are likely in the coming months in approximate order, with some running concurrently:

Base money will be increased substantially to offset a contraction in bank credit and to give banks extra liquidity to compensate for becoming deficit agents as supply chains dislocate and retail sales of non-essentials goods and services collapse. We have already seen daily repos by the Fed increasing from about $40bn in recent weeks to between $130bn to $200bn currently."

. . . . 

"A declining dollar will increase portfolio liquidation pressures on foreigners, leading to indiscriminate offerings of US Treasuries, agency debt and equities. The Fed will have to take on not only the financing of an increasing budget deficit, but also absorb foreign sales of dollar-denominated securities if it is to retain control of prices.

At this stage it will become increasingly obvious to domestic bank deposit holders that the dollar’s purchasing power is being destroyed by the Fed’s escalating asset support commitments. In effect, the Fed will be the only significant buyer of financial assets, paid for through quantitative easing on a far greater scale than that which followed the Lehman crisis."

Please click here to read the full article by Alasdair Macleod

BIS Monthly Update - The Future of Payments

Below I have pasted in the monthly update from the Bank for International Settlements. It includes an article on the future of payments that may be of some interest.

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March 2020

Shaping the future of payments Introducing a special payments edition of the BIS Quarterly Review, Agustín Carstens explains why payment systems top policymakers’ agendas.

Central Banks and Supervisors Network for Greening the Financial System The BIS was proud to host the steering committee of the Central Banks and Supervisors Network for Greening the Financial System in Basel, building on recent work on climate change from the Financial Stability Institute. Property price dynamics: domestic and international drivers There is no global real estate market despite higher price synchronisation and international investors playing a growing role.

Central banks and fintech data Two in three central banks say the increased use of technology in finance creates data gaps.

On the global retreat of correspondent banks Tara Rice and Goetz von Peter explain the drivers and implications of the global retreat of correspondent banks.

More BIS publications  Podcast: Big data and central banks Bruno Tissot discusses the challenges and opportunities of “big data” for central banks and policy. Working Paper: The economic forces driving fintech adoption across countries This paper looks at how agents in different economies around the world are adopting financial technology ("fintech"). Working Paper: Operational and cyber risks in the financial sector This paper uses a unique cross-country data set to analyse operational risks that are related to potential losses from inadequate or failed internal processes, improper business practices, systems failures or external events. Announcement: BIS appoints Innovation Hub heads in Singapore and Switzerland Two key appointments to the BIS Innovation Hub: Andrew McCormack and Morten Bech.