Today’s Market Bloodbath Explained: The Financial System Foundation is Cracking

One Domino Event is All it Takes

I get it. You’re not an economic analyst and the financial system foundation can be a complicated thing.

I am not expert either but I will try to make this simple because it’s important.

The whole fiat currency system lives and dies on a chain of events. Once you see how everything is connected, the whole thing will make sense and you’ll have what you need to know as we approach the logical conclusion of the global fiat currency experiment.

To illustrate just how fragile today’s financial system foundation has become, let’s take a look at how one economic event today triggered widespread damage across the entire structure.

While the above data is far from a crash scenario, the cause of accelerating weakness across all primary sectors of the financial system foundation stemmed from just one, relevantly minor event this morning.

Today’s “New Job Openings” Report and Its Bloody Effect on the Financial System Foundation

Here’s the key takeaways from this morning’s report:

• The US Department of Labor’s job openings data for August showed a significant increase from 8.827 million to 9.61 million.
• This represents the largest monthly increase since July 2021 and came as a surprise to markets, strategists, and economists.
• Job openings saw a surge in professional and business services, finance and insurance, state and local government education, nondurable goods manufacturing, and federal government sectors.
• The market reacted negatively to the news, with yields and the dollar rising, and stocks declining.

So What’s the Big Deal?

Inflation, Inflation, Inflation

The fiat financial system foundation is so tightly interconnected today that only minor pieces of economic news can trigger massive volatility – more so in these times than ever before.

INFLATION is the granddaddy of all fiat financial system foundation indicators.

It’s the Original Gangster of fiat currency racketeering and an absolute requirement for a debt-based system to function.

However, too much inflation erodes purchasing power, creates uncertainty, and hurts those on fixed incomes, while too much deflation can lead to economic stagnation, increased debt burdens, job losses, and asset bubbles.

The bottom line is that too much inflation or deflation leads to fiat financial system disaster. This is why central banks consistently strive to maintain the 2% constant inflation rate they always talk about.

INFLATION CONTROLS EVERYTHING in the fiat currency ponzi scheme.

The Over-connected Financial System Foundation

We are in a period of high, persistent inflation at this time so here’s the breakdown of the key connections:

A) Persistent inflation above 2% causes central banks to raise the overnight funds interest rate to banks and credit unions with the goal of slowing the economy. Jobs and employment are key factors in determining how much and how long they raise this interest rate.

The FED has raised interest rate higher and faster over the past 18 months than in recent history.

B) This raises all key interest rates (debt payments) to people, businesses, and governments throughout the financial system foundation.

Take a look at the trend of the 30-Year Mortgage rate.

C) This causes Treasury markets (government debt) to see prices/value fall and bond yields rise. The 10-year U.S. Bond yield is the highest rate (lowest value) it’s seen in decades.

D) Higher bond yields cause investors to begin moving cash out of stocks and into money market funds (typically denominated in US Dollars) because they offer high returns at near zero risk.

E) Global demand for dollar-denominated money market funds and bonds causes the dollar to strengthen dramatically against other global currencies.

F) Lower bond prices/valuations begin to increase the unrealized losses at banks across the board because they hold long-term treasury bonds as assets. As the value of these bond assets decreases, banks take losses at an accelerating pace.

G) Increasing losses cause banks to get stingy with issuing new loans, and if they do, those new loans are at much higher interest rates (profits to the bank) to offset their growing bond losses.

H) Fewer loans from banks, at higher interest rates, inflict serious damage on personal and private real estate financing (the cost of borrowing goes way up). Consequently, housing, office and retail real estate markets begin to steadily devalue.

I) Because everything becomes so expensive throughout our debt-dependent system, people buy less stuff, business sell less stuff, and this should lead to fewer jobs, higher unemployment and lower pay to workers.

J) At this point, central banks would begin lowering the key interest rate which begins to reverse all points 1 through 9 above.

At least that’s how it’s supposed to work. But not this time around!

Even at the highest central bank interest rate levels we have seen in decades, it’s not having the historical effect it should have on today’s economy.

Unemployment remains at record lows and today’s new job openings report came in shockingly high which means the FED will not lower rates any time soon. In fact, they will probably keep raising rates.

Consequently, the financial system foundation of stocks, bonds, dollar strength and banks are all in turmoil simultaneously.

This is just the beginning as the global fiat currency system comes to its logical conclusion.