In 2008, the monetary authorities were taken by surprise and didn't have time time to adjust. They had to improvise over a long weekend and decided to flood the market with liquidities.
Not so this time. They have been thinking for almost 20 years about what to do and consequently, we are about to see the result of all this "thinking" soon.
What I think it will end up being, is everybody being distributed worthless CBDC backed up by even more worthless government bonds and they (and the people in the known) having in the meantime bought all the tangibles assets; gold, metals, resources, shares and land with QE money offered liberally. Think about it: It cost "nothing" literally since you buy "stuff" of value with money you know will be inflated away and you have no intention whatsoever to pay back. Need more money to buy real assets? Just double the money supply, buy everything you want, sell all the worthless crap you do not want to pensions, funds, insurances, banks and clueless individuals stupid enough to buy, and you're done. Now you own the assets and "they" own the debt. Instead of reducing the debt to zero with inflation, the good people may express they concern violently at being robbed so brazenly, you just let the real assets inflate away out of reach to the majority of the population.
You have some gold or silver put aside? Great for you. But 99.9% of the people are not gonna get paid in gold anytime soon. In Japan, net salaries haven't changed in over 40 years which means that real salaries have dropped almost 50% during that time. No wonder the Japanese do not fell as rich as they used to be. Soon, the Europeans and Americans will join them. Then everybody with a few rare exceptions. Welcome to a world with no inflation except for everything you truly need!
In the end, that's the solution they found: Instead of inflation as in the good old days, we'll get mild inflation (deflation is not good at all as we learned in the 1930s), and a huge repricing of real assets so that in the end, they achieve what was needed: Shrink the debt relative to the total value of assets.
Post by No Limit
The probability of what is happening is near zero.
Three 6-sigma events occurred in one week.
– Bonds
– Silver
– Gold
We are currently living through a statistical impossibility.
Let me explain:
Last Tuesday, Japanese 30-year debt recorded what’s called a “6-sigma” session.
2 days ago, silver did even better: it was at 5-sigma on the rally, then reached 6-sigma on the drop. IN A SINGLE SESSION.
Gold right now? It’s up 23% in less than a month. We’re getting very close to a 6-sigma event.
That’s three 6-sigma events in ONE WEEK.
To explain quickly: in finance, we measure price moves around an average using the standard deviation, which we call sigma.
1-sigma: mundane
2-sigma: common
3-sigma: becomes rare
4-sigma: exceptional
5-sigma: extremely rare
6-sigma: supposed to occur once in 500 million
Here are the 6-sigma-type episodes we saw previously:
– The october 1987 crash, 22% drop in 1 session
– March 2020 covid crash
– The swiss franc’s surge in january 2015
– WTI oil turning negative in april 2020
But we’ve never had 3 events occur in one week.
Do you see the point?
A 6-sigma event is almost NEVER triggered by a simple macro headline.
It almost always comes from the market’s structure: leverage, positions that are too concentrated, margin calls, collateral problems, and forced selling or buying.
That’s important to understand because we’re talking about internal strains in the system’s mechanics.
As you know, the Japanese bond market sits at the heart of the global financial system, and I won’t go back over the whole topic, but a 6-sigma move in a market that enormous doesn’t go unnoticed.
Seeing a 6-sigma move in silver a few days later gives one a lot to think about.
And now gold?? That’s absolutely insane.
Why are we seeing extreme statistical events, only days apart, in such different markets?
When a pillar of global funding becomes unstable, leverage tends to contract, and two things happen at the same time: forced selling in certain assets and forced buying of protection in others.
Historically, precious metals are often among the beneficiaries.
Long-term rates say something about the credibility of states: that is, their ability to honor future debts without resorting massively to inflation.
Precious metals say something about the credibility of the currency itself, and when both become unstable at the same time, we’re looking at a challenge to the monetary framework.
I won’t go on, because I want to share the rest in another tweet tomorrow, but generally when a regime starts to crack, the adjustments are BRUTAL.
It’s exactly in those moments that several high-sigma events appear across different asset classes.
I’ll repeat it: seeing three 6-sigma events back to back is not normal.
Gold and silver are telling you, explicitly, that we’re living through a real paradigm shift.
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