That repo article helps to de-mystify what has been happening in the repo market, and the Fed's dramatic response since September.
So it thankfully isn't the finance ghouls purposely trying to induce the SDR transition. But it may mean that the financial system can't function without some type of 'QE-forever', which suggests that we've entered into the endgame. Like a heroin addict, the financial system can no longer survive without constant infusions from the Fed.
So at minimum, we can probably forget about the Fed's dream of 'normalization'. The Fed's balance sheet was 800 bil in 2007, and ballooned dangerously to 4.5 trillion, then was briefly trimmed back to 3.8 tril, but now is back to 4.5 tril and heading higher.
As Rickards points out, there is an upper limit to how high the Fed's balance sheet can get. The limit is determined by confidence in the dollar. A completely fiat currency like the dollar only has 'value' for as long as people have confidence in it. It's a confidence game, so at what level will confidence be lost? A Fed balance sheet of 8 tril, 10 tril, 15 tril? Looks like we're going to find out.
Rickards has discussed the ways this can end -- either the Fed gradually reaches the tipping point where confidence is lost, or more likely, a financial crisis or recession hits that is too big for the tapped out Fed to handle, and then the IMF has to bail out the Fed and world with SDRs.
Rickards thinks the crisis scenario is most likely, but says that another possibility (fairly remote) is that the global financiers will realize their predicament and proactively move to a new system, similar to how the Bretton Woods agreement occurred after WW 2. This new system would likely be the SDRs, so either way, our future will be with the SDRs of the IMF.
AI
