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Emergency Alert! The System is quickly breaking

On Friday, the exposing of the monstrous lie that inflation has peaked was a game changer. The reaction in the markets was a swift and fundamental economic and financial market relationships altered.

US Inflation for May 2021 came in at 1% for the month vs expectations of 0.7% or 8.6% vs expectations of 8.3%. CPI came in at 0.6% for the month vs expectations of 0.5% or 6.0% versus expectations of 5.9%.

Over the weekend, there is a lot of more chatter that inflation is going to continue going higher – including on mainstream financial channels such as CNBC – over the coming months.

This has put immediate pressure on the US Federal Reserve who meets on Tuesday-Wednesday US time to be more aggressive in rising rates. This could include by raising rates by 75 or 100 basis points. It is important to note that quantitative tightening is expected to commence this week.

The exposing of the monstrous lie that inflation has peaked has now resulted in a breakdown of the financial system. All three risks inflation risk, credit risk and liquidity risk are now all coming into play.

There will be more pressure on central banks to deal with inflation risk – if they do, this rises credit and liquidity risks – which can easily result in markets freezing and economic agents (households, corporations, banks and government) defaulting on debt.

A material credit and liquidity risk event can easily plunge the financial system into a new financial crisis. Any attempt to prevent this will lead to soaring stagflation – with a major crash in the share market and cryptocurrencies.

The timetable for the pivot (which Adams is anticipating) has just dramatically quickened. All eyes on what the FOMC does on Wednesday, US time.

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Comments

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  1. 40.24 Deflation – Inflation choice

    This is the pivotal matter of course.

    Huge congratulations to you both gentlement.
    A brilliant, brilliant show.

    It is probably the best show I have seen for the year.

    Many thanks for all your hard work.

    Best regards as well 😀

  2. So, as in the early 1930s, governments globally are having to choose between deflationary or inflationary depressions.
    Except a rise in bond rates will bankrupt US, EU, Japanese & Chinese governments.
    So they will all choose an inflationary depression with financial repression, yield curve control & regulated capital controls.
    What will Australia do?
    Politically, it must do the same or else Albanese’s wafer-thin majority will evaporate.
    This is now a purely political matter of sovereign monetary capitulation.

  3. I call BS! look at the performance of silver and gold over the last week and month in both AUD and USD.

    I doubt most money is actually going into gold.

  4. The Americans have been running a monstrous lie for decades, and we here in Australia have fallen for it hook, line and sinker. It's called neo-liberalism, or as I prefer, inflationism.

  5. I would expect the FEDS to print more money than to tighten more so not to let it collapse IMO, the easy option and delay the correction that is needed.

  6. We knew this day was coming ever since the original GFC. My money's going on rampant inflation option. They're too weak to make the decision to reel it in – it will be easier to deflect blame elsewhere that way. Just look at the garbage being spewed daily by Karine Jean-Pierre at the White House press conferences.

  7. No, no, no. Rising rates per se does not mean rising credit risk, at least up to a point. Rising spreads means rising credit risk. A subtle, but vital distinction.

  8. What is coming has been planned over many many years going back to the second and first world wars In more recent times and much further back than that those enterties controlling this planet have been telling us what their intention is over all this time through every means possible we have been asleep we are coming out of our slumber now it is time to reclaim our sovereignty individually and as a great diverse collective

  9. "Liquidity risks" shouldn't be a thing. "Providing liquidity" and such are just market manipulation. Keeping bond rates stable benefits one side and hurts another. That's not a free market.
    Perhaps, if an illiquid market is crushing someone, they've made some terrible choices and don't deserve to remain in business?
    Nothing should be too big to fail.

    As far as US inflation, it's not going to improve. At all. Biden just signed an EO (iirc) mandating 20% ethanol in all petrol. Ethanol is costly to produce and eats into the food market, pumps up the prices of basically all goods.
    Translation: the US gov is actively pushing cost of living up now.

    The crash will be biblical. As Michael burry has been saying, "largest by 2 orders of magnitude"

    Edit: "all the hands outs" US people got? US citizens recieved 2k in stimulus. And that was just to add collateral to banks sneakily.

  10. Does it make any difference if mortgagors can't make repayments due to rising rates, or hyperinflated cost of living? I suppose the latter at least gives them a chance wage rises will find mortgages.

  11. Whatever our RBA and our useless governments do, you can be assured it will be wrong and make things worse in the long term. This has been going on since the 80s' and now the chickens are coming home to roost.

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