FORBES.COM: Some things have changed radically over the last decade, however, the most important being the structure of financial markets. The Great Financial Crisis was arguably caused by the digitalization of finance–the technology that enabled financial practitioners to convert every piece of financial information into 1s and 0s.
EARTH CUSTODIANS: Partially true. The crises of capitalism dot human history, and the experts call it “creative destruction” to subjugate populations, and normalize to the boom and bust cycles. After the bust, the boom always come back. Digitalization of the economy has accelerated the velocity of money, and the entire planet is now navigating uncharted waters.
This led to the explosion in derivative financial instruments that drove the global financial system to the brink of collapse. Despite claims to the contrary, regulators failed to address the risks posed by derivatives after the crisis, and they still pose significant systemic risk.
The exponentiality of debt is a reality and bury one’s head into the sand, is not going to make it go away. While derivatives are hard to explain, they merely act as an insurance against risk. EC do not claim any expertise in the field but it is mathematical. The increasing risk (caused by exponential debt) is being edged with more exotic derivatives (sold to investors) and so on.
But how sound is this? For how long will the ponzi-debt scheme find enough cupidity to stay afloat, and avoid a double whammy?
As long as financial markets are stable, this disconnection doesn’t cause problems. But when markets encounter strains, the leverage embedded in these products becomes highly problematic because financial instruments divorced from the fundamentals of their reference securities are little more than simulacra without substance or meaning. This is particularly troublesome in a world draped in legal excuses that protect immoral and unprincipled economic players.
Here we go… this is a recipe for financial doomsday. It only is a matter of time. Talking of “immoral and unprincipled economic players”, only a few were sent to jail in the wake of the 2008 crisis, remember?
Most likely they will walk away without impunity because there is always somebody else to blame for down the chain of command. Alan Greenspan’s Infectious greed will come to mind again but at the top, little will be done about it.
Add to ETFs the tens or hundreds of billions of dollars of stocks owned by central banks, sovereign wealth funds, and other non-economic buyers as well as nearly a billion dollars a year in corporate buybacks financed with cheap borrowing and markets no longer provide genuine price discovery or reliable signals about corporate performance. None of these factors existed before the financial crisis, certainly not to the degree they do today.
Exchange-traded funds (ETFs) … if the mechanism sounds complex, lets focus on the essential instead: hundreds of billion owned by central banks, in other words made of thin air… corporate buyback financed with cheap borrowing, meaning that corporations indulge in the repurchase of outstanding shares with credit, these corporations do not even have the cash available to buy their own shares, but who cares as long as the numbers look better.
So what is the REAL VALUE of the corporate sector as it appears to be a “common practice”? Allo?!
Unfortunately, these companies are not changing the world in the way that people think they are. iPhones or Facebook, or Google search, or Netflix, or shopping for stuff online at Amazon is not improving the quality of life on earth; instead, these allegedly miraculous inventions mostly promote solipsistic and unproductive human behavior.
CORRECT! And EC would even say that at this level of finance, they merely gobble up the real currency: hard human labor and sweat.
Even electric cars, which are supposed to save the earth, create their own environmental problems (electricity production causes pollution and we are going to have to dispose of those batteries somewhere) and are sadly led by a profoundly flawed prophet in Elon Musk.
The solar industry is just another deception. Exactly, EC pointed to this huge problem ahead, a few weeks ago. You can watch the video here: This Is How We Destroy Everything https://www.earthcustodians.net/blog/2018/09/05/this-is-how-we-destroy-everything/
America is not as strong economically as current economic data suggests. Growth has definitely improved from the Obama years, but it is based on rising debt levels and unsustainable wealth inequality. We are heading straight into another financial crisis resulting from too much debt and too much speculation.
All it will take is that a critical mass becomes aware that wealth extracts its power from ignorance. And then monetarism will be over. Forever. Knowledge is infinite, so banking on ignorance has to stop.
People who reject the concept of a money-free society being the only way out are too scared to look at the” real data”, and accept that corruption is pervasive…. or are among the top 15-20% of population still doing reasonably well and regard others as idiots.
… the blockchain is a potentially revolutionary technology in its early stages that poses a threat to existing technology regimes….
One way or another, if blockchain is really revolutionary, just be careful what you wish for… the transition will be very brutal. And 90% of world population do not own any cryptos, they cannot afford speculating as they struggle to pay the bills already. Mass poverty like unseen before in the West will be the aftermath. Or wait, there comes the Universal Basic Income And Programmable Cashless Servitude https://www.earthcustodians.net/blog/2017/04/30/programmable-cashless-servitude/
But the “financial illusionists” are at least 1 generation ahead of the game… and they will make sure to remain ahead. They have their hackers working on every scenario possible as you read this.
The same about a money-free society, its supporters should not argue about changing the world overnight but gradually to allow a transition that is as smooth as possible. A generation get to there is likely. But who knows, the odds are tied and perhaps a major disruption is needed to open people’s eyes.
FULL ARTICLE |Financial Crisis 2.0: Beware Of Derivatives For Dummieshttps://www.forbes.com/sites/michaellewitt/2018/10/08/financial-crisis-2-0-beware-of-derivatives-for-dummies/
AMAZON.COM: The Committee to Destroy the World: Inside the Plot to Unleash a Super Crash on the Global Economy is a passionate and informed analysis of the struggling global economy. In this masterfully conceived and executed work, Michael Lewitt, one of Wall Street’s most respected market strategists and money managers, updates his groundbreaking examination of the causes of the 2008 crisis and argues that economic and geopolitical conditions are even more unstable today. His analysis arrives in time for the impending economic and geopolitical debates of the 2016 election season. Lewitt explains in detail how debt has now overrun the world’s capacity, how federal policies of the past few decades have created a downward vortex sapping growth and vitality from the American economy, and how greed and corruption are preventing reform. The financial crisis created tens of trillions of debt, leaving investors to pay a huge price for these policy failures