ELITES RAISE DEBT ALARM: Can They Avert the Crisis They Encouraged?
what oh oh i'm told tick tick boom that's what we're going to talk about today i'm lynette zhang chief market analyst here at itm trading a full service physical gold and silver dealer because if you don't hold it you don't own it and particularly when we are looking at all of the debt that is about to explode and some is already exploding let's talk about that because the elites have raised the debt alarm wow and i'm wondering do you think that we can have a soft landing do you think that they can avert the crisis that they encourage especially when if you look at everything on tv the surprise inflation surprise this surprise that okay i'm scared you should be too quite honestly because those at the top raise that debt alarm as options vanish and the reason why the options are vanishing is because the whole world is between a rock and a hard place they've used interest rates and dropping interest rates for decades to encourage more and more and more debt and now oh i guess we've reached a point because they have to raise central bankers have to raise rates or at least i mean there's lots of experimentation going on let me tell you but at least in theory they have to raise rates to combat the inflation will it work this time we'll find out but frankly i don't think so but they still have to raise rates for their credibility the problem is really in the weakest link at the moment although honestly whatever i'm going to show you here so much of it is applicable globally because right now there are 13 emerging markets ems emerging markets that have bonds trading at at least a thousand basis points over treasuries in other words they have to get paid for the risk that they're taking we haven't nobody's been getting paid for the risk that they're taking but these 13 emerging markets are in deep doo-doo to put it bluntly and here's the piece of it the urgency to avert what georgieva has termed economic collapse for some countries is growing after the group of 20 biggest nations reprieve on debt service payments for about 70 struggling nations it went in place since may 2020 and it expired at the end of 2021. so you see when everybody asks well will they just forgive the debt here's an opportunity you think they're going to forgive that debt i don't think so but they did suspend the debt payments now these countries have to make these payments and they can't do it they're having a lot of trouble with it does this sound familiar because it's really happening on so many different levels we're just talking about emerging markets but we could be talking about student loans we could be talking about any level of debt frankly real estate etc emergency market emerging market banks government debt holdings pose financial stability risks do you remember the doom loop that was created when greece uh couldn't make their sovereign debt payments but you know we've got this issue and and we see it right now with the central banks right the government's issuing all of this debt to create all of this money so that they can move on with their programs at the same time foreigners used to be buying that debt but quite honestly the federal reserve has been buying it since the end of 2002 december i think 13th i could be off on that date but december 2002 because there have not been enough buyers so we're talking about emerging markets but you got to think us too because we are definitely losing the status as the world reserve currency a lot of a lot of chatter about that more than i've ever heard before but let's take a look at that what that looks like so this dark blue oops this dark blue are advanced economies like the us this other the lighter blue are emerging markets and that would include china and you can see how much of the bank's domestic sovereign debt exposure well right now it's at a 15-year high but it's going to get higher because they got to have buyers to issue all this debt but with a large share of that sovereign debt sovereign is government a large share of that sovereign debt denominated in foreign currencies hmm which these are emerging markets these are advanced economies let's see oh gosh most of that debt is issued in terms of u.s dollars do these emerging markets all these countries does china do they work with the dollar do they earn dollars no so these emerging markets don't earn dollars but they've issued debt in terms of dollars and now the dollar is strengthening right against against their currency and that makes this debt a whole lot more expensive to service you're starting to see the problem here they have way too much of it and it's denominated in other currencies and with the fed's stance the dollar is getting stronger against other currencies so here's the result hunger and blackouts are just the start of an emerging economy crisis because they can't afford those dollars fed hikes right so if they hike the interest rates that makes those the government our dollar look more attractive attracts foreign buyers of our currency and debt and that makes it stronger that makes the dollar stronger against these other currencies okay so fed hikes and pandemic debt piles add to the risks for developing nations some are already sliding into turmoil we've talked about sri lanka quite a bit a barrage of shocks is building that is unlike anything emerging markets have had to confront since the 1990s when a series of rolling crisis sank economies and here's the real here's what keeps them up at night toppled governments but this is this is what i want to point out this is something that we haven't seen since the 90s but you know what else we haven't seen since the 90s the integration on a global scale because globalization was just taking off in the 80s i remember in 1986 i became a stock broker at shearson and all the talk was of globalization then all the talk was of globalization right well today we're watching globalization fall apart but the interlinkage between the banks this crisis can start anywhere and spread everywhere and that's really why this matters the most to you because it isn't just oh that's over there and we're fine over here we're not fine and it's been years and years in the making risks for emerging markets have multiplied this year global food inflation oil price shocks overall that's a risk indicator and you can see that that's on the rise and the number of countries in debt distress that will grow and it'll be very interesting to see now look if you're sitting in gold and you're sitting in something that can protect you okay i mean it's gonna happen it puts you in a position to take advantage of the opportunities that will present in these markets but not yet it's not yet but globally investors are scared right they just pulled a massive 17.5 billion out of global equities and they're just getting started really because you can see that shift can't you these are the global equities flows so this is the accumulation so much since 2020 right and then these this is the index and you can see the shift you can see where the pattern change is happening right now investors also pulled 8.7 billion out of bonds 55.4 billion from cash wait i thought cash was king oh pouring 900 million into gold and that was before last friday's stock market rent they're going to safety and it's just getting started how do you feel about that because emerging market bonds have wiped out gains of the last two years count them two as the sell-off extended into a fourth month in the longest streak of losses since what year 2006 as we were setting up for the financial crisis and emerging market debt sales plunge amid ukraine war and rising rates and so developing nation april issuance fell to the lowest in 10 years they can't sell the bonds so they got to stop issuing wait a minute can a government that's got to fund its spending really stop issuing bonds or will the central bank just go into this vicious doom loop along with the with the government with the banks that are forced to buy the government garbage oh i mean government debt surging yields are deterring emerging market issuers because it's getting more and more expensive to buy it so you've got increased interest rates along with if they've been issuing or if they want to issue dollar denominated debt or foreign currency debt so you have like a double whammy because you have the currency that you must buy to service that debt going up at the same time that you have interest rates going up no wonder these countries are in trouble but it's not just over there because we are incestuously interlinked when will it overwhelm what we're seeing in the what we're seeing in the derivatives markets i i don't know but i feel like we're really really close it was faced with the impact on sentiment of the intensifying conflict in ukraine and central banks turning more hawkish in other words raising rates as they try to bring inflation to heal which hasn't been working very well developing market borrowers have become more skittish and they're going to the safety of gold because gold has been a proven safe haven for thousands of years and i just pulled these both of these are from the imf latin america hit by one inflationary shock on top of another but is it just latin america that's been being bombarded with inflationary shocks because we've been pretty surprised by the numbers here in the u.s too and wow
in turkey wow they've raised their forecast from 23 inflation to 43 or something like that inflation so and we had the world economic forum and the imf i mean everybody's cutting growth and increasing inflation expectations one shock after another but here's the real key in this well we'll look at that and then we'll come back to the key price pressures so this is latin america this is the current forecast this is the previous forecast so the blue is the previous the red is the current and you can see that the far the current forecast for inflation has spiking right well and guess what they're probably going to be under bidding it or it's probably going to be even higher than what they're forecasting and here's really the problem for the governments and the central bankers imf urges latin america to address inflation to curb here it is unrest risk because that's how they lose control and how they lose power that could work to our advantage the little people maybe maybe we can get a more fair monetary system if we come together and we we say no we won't accept this garbage we won't accept the cbdc's we got a shot we got a shot it's talking about the revolution we've talked about the revolution potentially starting and by the way it's really never a good idea to poke a hornet's nest every good idea but u.s blasts china support for russia and vows to help india so we're going right in there and and at the same time wow this just came out april 20th former head of state-run chinese newspaper claims high probability of war with the u.s whoa in his most recent comments about the highly tense u.s china taiwan situation we've talked about that as reported by newsweek who asserted that there is a very high probability that there will ultimately be a direct military confrontation so we have the raw the war between well you know world war iii can you see it can you see it he noted that there was a sense of crisis in taiwan as the situation of the taiwan strait deteriorates we must prepare for a military struggle prepare for a military struggle a commentary on saturday urging chinese citizens to prepare for a military struggle in the near future when is it going to happen i have no idea is it going to happen maybe yes maybe no this kind of sounds like it very likely is to happen so are we going to be dealing with war on multiple fronts is this really world war three time is going to tell us but it's the perfect time war is something that always accompanies a currency life cycle a currency regime shift it's those repeatable patterns that's what the whole strategy is based on the repeatable patterns that happen every single time because i cannot guarantee tomorrow that's way beyond my control but i do believe that if something has happened the same way every time and we're doing the same thing our most likely outcome is we're gonna get the same result i mean that just makes sense so what else is one of those repeatable patterns well gold provides down downside protection this is not rocket science this is global equities uk gilts and gold returns in british pounds during periods of systemic risk because gold is a proven safe harbor and you can see how it's performed dot-com bubble 911 great recession sovereign debt crisis one sovereign debt crisis too remember sovereign's government brexit 2018 pullback and covet 19. what do you want to be holding because this on top of the end of the currency's life cycle means that that we're quickly approaching a point where the dollar will have zero count it zero value last its most widely recognized feature is its potential value and highly adverse scenarios and it's called the war chest argument but it's been proven over and over and over again so i'm good with it and that's how i'm protecting myself and my family that's also how i'm positioning to take advantage of the opportunities that present and there will be many opportunities that present because right now with all of the new money that's been flooding into the system the system died in 2008 i don't really care what anybody says it died and they just put it on life support and that life support was massive money printing to reflate the targeted assets stocks bonds real estate because of the massive amount of derivatives that sits on top of all of it minimum 610 trillion notional notional means nobody knows the true value at risk i don't know it you don't know it they don't know it they admit they don't know it you've got to have a wealth shield here at itm trading we have a well shield and that shield is made of metal physical gold and physical silver in your possession this is critically important it's not the only thing you need but it's the foundation of what you need because with gold you can maintain any of your fiat money assets that you have you can protect against the collapse in the markets and with the silver you can maintain your day-to-day living there are different types of gold and different types of silver so it always has to start with your goals but the first goal is it should always be protection and there's your foundation then you also need food water energy security you've got the barter ability the wealth preservation that community piece is critical and your shelter that's what beyond gold and silver deals with but these are all the things that we need to maintain a reasonable standard of living get it done please get it done i'm so grateful that i'm in this industry and know how deeply i dig into stuff believe my work so many people could tell you what you should do when they're not doing it i'm only telling you what i am doing for myself you make the choice on whether or not that works for you but i feel so strongly that you should always do what the smartest guys in the room do for themselves and there are many things i don't know but one thing i do know is currency regime shifts that i 100 know i've been studying it since 1987. know anybody else that has so this is the last week the last opportunity to join me or participate in the uh event that i'm doing very small intimate at the grand waialea in maui on saturday june 11th we're going to have some very deep discussions and we're going to be talking about a lot of things that i don't get to talk about and if you haven't started your gold and silver strategy click that calendly link below make an appointment with one of our consultants have your goals in mind and get started and get finished if you've started already i'm so happy get it done just get it done i don't like what i'm seeing and you know i mean you can look and it's just crisis crisis crisis and everything is speeding up speeding up and the loss of purchasing power is speeding up so if you like this please give us a thumbs up make sure you leave us a comment and make sure you share share share share share because ignorance doesn't make anybody immune it just leaves them vulnerable and i know this is not fun to talk about or think about but it's not going to be fun if you end up in abject poverty i guarantee that one i can't give you a lot of guarantees i'll guarantee you're not going to like it if you end up in abject poverty so get your wealth shield intact get it done today while you still have choice while you still can because it is a hundred bazillion percent time to cover your assets and until next we meet please be safe out there bye bye
2022-05-07 04:07
