In Part I of this three part interview between Elijah Johnson and Dr. Jim Willie, the interview starts off by with Elijah asking Dr. Willie about the unprecedented dumping of U.S. Bonds by China and Saudi Arabia in recent weeks. By “unprecedented” dumping, Elijah is referring to several weeks ago when the markets witnessed never before seen numbers as $28 billion in U.S. Treasuries were dumped in a single week, followed by another $23 billion a week or so later.
One of the key focal points in Part I of the interview below, is on the U.S. Dollar’s soon to be loss of its status as the World Reserve Currency. In short, Dr. Willie explains that the reason the Dollar is being pushed aside, is because we are the largest debtor nation on the planet, and our creditors are aware that the Fed has been engaged in non-stop printing of money out of thin air.
Domestically, the short-term effect has been the “successful” propping up of the U.S. economy, however our creditors know history, and they know that just like other countries who have engaged in the same kind of reckless monetary policy in the past, eventually when the QE (printing money out of thin air), is removed, hyperinflation will set in, and there will be massive devaluation of the same Treasuries that were artificially propped up for so long.
Our creditors also know, that the ceasing of QE (printing money out of thin air), will be timed with the after the election. Once Hillary is safely in office, expect the bottom of the markets to fall out once the Fed raises interest rates immediately after she is sworn in at their first post inauguration meeting in December. Recall that last time the Fed tried to raise interest rates in December by a mere 1/4 of 1%, it began 2016 as the worst start to a year in stock market history… so Americans consider this your warning!
In Part II of this interview between Dr. Willie and Elijah Johnson, Dr. Jim Willie continues to explain how the Western banking system is utterly broken, and what United States, U.S. banks, and ultimately the U.S. Dollar can expect to see from the broken system. To begin Part II, a viewer asks the following question:
With the lions share of derivatives held by the largest banks in the world being interest rate swaps, what does that mean is to be expected from the largest banks moving forward?
To answer the question, Dr. Willie uses Deutsche Bank as an example, mainly because Deutsche Bank is widely known to have an enormous exposure to derivatives, one that literally has the global banking system on the edge of collapse if Deutsche Bank should fail, a possibility which looks increasingly likely.
After all, Deutsche Bank’s exposure to derivatives is now estimated to be somewhere around $75 TRILLION. Compare that with the GDP of all of Europe combined, which is only $16 TRILLION, and the magnitude of the problem becomes quite evident. Therefore, it goes without saying that a bailout is out of the question, so what happens?
Dr. Willie goes on to explain that the derivatives are eventually going to get marked to the market once reality strikes, and then the big banks will all get plowed under. It shouldn’t take a PhD to understand that. Any big bank that holds significant derivatives on interest rate swaps, might be forced into seeing the reality that the U.S. interest rate moves up to 5%-6% (post election of course), which is actually historically the norm for interest rates in the U.S.
Then ask yourself: What happens to the derivatives when we move from sub 2% to 5% interest? All the derivative swaps become worthless! The problem here, is we’re talking about over $1 QUADRILLION DOLLARS of derivatives floating around in Western banks! Even though their value would be ZERO, pretend for a moment they only lost 25% of their value? We’re still talking about U.S. and Western banks losing over $250 TRILLION DOLLARS, which wipes them all out.
Before answering a few more questions and further explaining the carnage likely to result from the U.S. banking system being caught on the wrong side of the trade when it comes to derivatives on interest rate swaps, Dr. Willie makes what should be a rather obvious conclusion, yet somehow one that is totally missed by most Americans: As the U.S. banks collapse, get ready for foreign banks to take their place, and that’s just the beginning of the American nightmare to come…
Finally, in Part III of his interview with Dr. Jim Willie, Elijah Johnson asks Dr. Willie about a prior report Dr. Willie had made that the U.S. Navy was being denied diesel fuel overseas if it tried to make payment in U.S. Dollars, and the initial report originally was stated that foreign ports were requiring payment in silver, rather than U.S. Treasuries.
In his answer to the question, Dr. Willie admits he got the information from a low ranking naval officer, and after talking to a source much higher in the Navy, there doesn’t appear to be any truth to that rumor, and Dr. Willie apologized for any misinformation.
With that said, that doesn’t mean for one second the U.S. Dollar is not in a tremendous amount of trouble. It has been widely reported that in U.S. ports around our own country, Asian ships are starting to turn down payment in U.S. Treasury Bills. A member of Bobcat’s Board of Directors, said that on shipments of Bobcat forklifts coming in from Korea, the ships were no longer accepting U.S. Treasury Bills.
For anyone not convinced the Dollar is well on it’s way to losing its status as the World Reserve Currency, think about that for a moment. Other nations are refusing to accept U.S. Dollars as a method of payment, and for good reason! Other countries know that the U.S. is printing Dollars (figuratively) out of thin air like it’s going out of style, because the Fed is trying to artificially prop up the economy just long enough to get Hillary in office.
The American people are in for a VERY rude awakening once this election is over, regardless of wins. The damage has already been done, and much like he did in the post titled, Dr. Jim Willie: The U.S. Will Lose Global Reserve Status, Expect 80-90% Devaluation of the U.S. Dollar, Dr. Willie continues to explain how the devastating effects of U.S. monetary policy are nipping at our heals, and sooner than later, Americans will realize they’ve been had.
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