The Multipolar Alliance has demonstrated a profound understanding of the oncoming collapse and has made many maneuvers to establish a new financial, security, economic architecture, Matt Ehret writes.
During the past weeks, the world saw Eurasian nations take great strides towards the inevitable creation of an alternative financial system capable of withstanding the effects of the onrushing blowout of the $1.5 quadrillion bubble that some still wish to call the “western banking system”.
Contrasted with those ideologues committed to preserving the unipolar hegemon propels in a bid towards hyperinflationary (and possibly thermonuclear) hell, the BRICS nations have announced three new members (UAE, Bangladesh and Uruguay) to the membership roster of the New Development Bank. Additionally Russian ambitions for a new Arctic development vision that entails a multi-generational grand design for the far east and northern-most regions of Eurasia has also created a climate of long term thinking that is in total synergy with China’s 130-nation strong Belt and Road Initiative.
The Roots of the Oncoming Collapse
While many a myopic economist treat the oncoming collapse of the western banking system as a non-event (or the unavoidable effects of a pandemic), the reality is that this blowout has been a long time coming. Events associated with the Coronavirus-induced economic shutdown may prove to be the pin prick that blows the bubble, COVID-19 cannot be said by any honest person to be the actual “cause”.
It is difficult to pin-point the exact “moment” in time that the trajectory of the system found itself on a path towards a self-implosion… but it wasn’t a virus.
Months before anyone had heard the name “COVID-19”, former Bank of England Governor Mervyn King was already looking at the newly revamped bailouts begun in September 2019 and screamed of a “financial Armageddon” ahead.
But was this the beginning of the end of the financial system?
Not at all.
Case Studies in Folly #1: 2008
Some have argued that the 2008 blowout of an over-extended speculative bubble in the subprime housing market was in truth never resolved, but merely papered over with a new regime of bailouts of private gamblers and loop-hole-filled regulation like Dodd-Frank that only protected the derivatives assets which had already ballooned to 10 times the world GDP in less than two decades.
While this would certainly be a valid thing to observe, it wouldn’t be the full truth.
Case Studies in Folly #2: 2000
Others might point to the meltdown of the dotcom/Y2K bubble in 2000 when the new millennium hit and the world kept spinning. The burst of the dotcom bubble at this time sent markets into a potential tailspin… although it didn’t trigger the systemic chain reaction that many had been afraid of at that time.
Those choosing to point to this moment as the “start” of the collapse might also note that it was only the 1999 repeal of Glass-Steagall that allowed for the merger of commercial and investment banking activities into new Universal ‘Too Big To Fail’ structures which created a new dynamic of fictitious growth of economic value that allowed the world to avoid the abyss in 2000. The ensuing deregulation of ‘over-the-counter’ derivatives under the Commodities Futures Modernization Act of December 20, 2000 are after all what allowed for a new sub-prime housing bubble to grow under Greenspan’s watch. From 1999 to 2008 when the new bubble began to collapse, derivatives had inflated from $70 trillion to $708 trillion which is no small thing.
But that wouldn’t be the full truth either.
Case Studies in Folly #3: 1987
Others looking at more subtle systemic shifts might look to the Black Tuesday of October 1987, when stock markets collapse by 25%, and the world watched with bated breath as a new bank panic threatened to replicate the devastation of the 1929 meltdown that ushered in the Great Depression.
These people might take note that the only “fix” in 1987 was caused by Alan Greenspan’s normalization of “creative financial instruments” which took junk bonds, and derivative speculation from the slimy illegal gutters that had sent scam artists like Michael Milken to prison earlier, and rehabilitated the practice in perverse ways which some credulous tools still believed to this day “saved” the economy.
What did he do? In short, Greenspan accomplished this Herculean task by bringing derivative bets (aka: forms of gambling on infinitely divisible types of insurance on securitized debts including junk bonds) into the mainstream economy giving supercomputers and quantum mechanists new roles to play in creating “value” without producing anything at all. While this could be said to be the “starting point” for the now-impending collapse, even that wouldn’t be the full truth.
Case Studies in Folly #4: 1971
One could easily go back in time to the systemic changes that were introduced by the floating of the U.S. dollar and destruction of the gold reserve system in 1971 under the careful guidance of Henry Kissinger and George Schultz.
It was after all this destruction of the foundations of the Bretton Woods system that ended the 25 year post-war “industrial growth” model that defined economic value between 1945-1971.
This shift from a fixed exchange to floating exchange system thrust society into a new paradigm of consumerism, post-industrialism and deregulation which increasingly detached the individual members of western society from having any involvement in long term goals of the societies they were parts of.
Case Studies in Folly #3: 1987
Others looking at more subtle systemic shifts might look to the Black Tuesday of October 1987, when stock markets collapse by 25%, and the world watched with bated breath as a new bank panic threatened to replicate the devastation of the 1929 meltdown that ushered in the Great Depression.
These people might take note that the only “fix” in 1987 was caused by Alan Greenspan’s normalization of “creative financial instruments” which took junk bonds, and derivative speculation from the slimy illegal gutters that had sent scam artists like Michael Milken to prison earlier, and rehabilitated the practice in perverse ways which some credulous tools still believed to this day “saved” the economy.
What did he do? In short, Greenspan accomplished this Herculean task by bringing derivative bets (aka: forms of gambling on infinitely divisible types of insurance on securitized debts including junk bonds) into the mainstream economy giving supercomputers and quantum mechanists new roles to play in creating “value” without producing anything at all. While this could be said to be the “starting point” for the now-impending collapse, even that wouldn’t be the full truth.
Case Studies in Folly #4: 1971
One could easily go back in time to the systemic changes that were introduced by the floating of the U.S. dollar and destruction of the gold reserve system in 1971 under the careful guidance of Henry Kissinger and George Schultz.
It was after all this destruction of the foundations of the Bretton Woods system that ended the 25 year post-war “industrial growth” model that defined economic value between 1945-1971.
This shift from a fixed exchange to floating exchange system thrust society into a new paradigm of consumerism, post-industrialism and deregulation which increasingly detached the individual members of western society from having any involvement in long term goals of the societies they were parts of.
Mathew Ehret
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