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economic Armageddon now requires a 782 billion dollar repo bailout [Music] Martin north Jonathan's in the interest of people hello John closer well we're back sooner than I expected yes we are with the crisis is you know what everyone knows there's a crisis now and it's not just a public health crisis it is a financial crisis so we have seen some dramatic falls in the asx200 we saw some dramatic force in the sp500 I mean and you know in the first half an hour or an hour of trading with the Australian stock market we were already down 31 and a half percent obviously we've had a bit of a recovery and we'll get to that in a second but then when you look at the sp500 it's about a quarter twenty five percent down from where it was in terms of the peak and were only talking about in the space of about three weeks so so obviously the share market is falling massive concern about the impact on the coronavirus and obviously we're seeing travel bans where we're seeing basically economic activity grind to a halt and that obviously has a huge impact on this debt bubble because if you're not producing income you can't pay these debts and that that that's the catalyst to causing a loss of confidence and to causing the debt bubble to be a systemic crisis and we always said that the debt was the quantum of debt not just the quality of the debt but the quantum of debt was too much and that was going to cause the crisis now you know even last week the deputy governor of the RBA guide the bill was asked point-blank us an estimate about about the quantum of debt and he still said we're not nervous about the amount of debt now the amount of it is so critical to to this crisis and and we're now seeing it you know come to play and in their last show we're talking about the repo market and how we went over 600 billion last week and when we recorded the show earlier this week it was at 641 or in the last 24 hours we have flown past 700 billion all the way up to 782 and and so we're recording this on Friday night I dare say that if not by tomorrow morning Saturday morning which is Friday afternoon New York time or getting into next week we're gonna fly by 800 billion and we could easily next week be more than a trillion dollars as to how much money has been pumped into this repo market to keep interest rates down to ensure that this debt bubble doesn't blow up to smithereens yeah and a couple of points I want to make there the first is of course the Fed is demonstrating its capacity to push really hard right so they basically announced a huge number the other point I want to make though is all of those movements in the stock markets right people aren't noticing what's happened to the bond markets right it's the bond markets that have gone really out of kilter and that's where a lot of the problems are right not only are a lot of the interest rates rising quite fast in areas where they don't normally but there's now a disconnection between what's happening in the stock market in bond market which is almost unheard of and that's one of the reasons why we now have this liquidity crisis and why there are central banks around the world are having to respond yes and and on that liquidity crisis I mean what did we say in our last show what did we say three weeks ago the system is on life support it's been on lost point since the 17th of September and they continue to pump more and more money into it because if they stop we will have the biggest depression in the history of the world and again I mean you know I'm not sure whether when we talk about this in the studio modern weather our audience fully comprehends what we're talking about but but I mean we've spoken about this there's the social cost I mean the social costs are so extreme and we are on the precipice of you know such a cataclysmic cataclysmic breakdown on the market and the fact that they are you know the fact that we've basically gone injected an extra hundred billion within the space of a week I mean we're really you know getting up to a dramatic pace of liquidity that they have to throw at this yeah and it's worth underscoring also the European Central Bank also did stuff as did Canada right and the UK and the UK and guess what little the RBA did something as well exactly exactly so yeah so important point to make in terms of what happened today was so I had a few emails and phone calls and said what happened with the with the Australian stock market it was down about 8% and then the finished about was a 4% that have finished up so about a 12 point 12 percent movement from down to up well the RBA injected eight point eight and billion dollars today according to the AFR and why according to the article foreign hedge funds worth dumping the Australian government bonds and obviously when once you sell bonds this pushes the interest rates on the bonds up and we can't have high interest rates because that means the the interest servicing costs get too great and you're gonna start seeing defaults so out of nowhere we don't have just an eight point eight billion and we'll actually may put a tweet that I put up we'll put up on the screen because I actually asked the question which is the most obvious question which is something I've been railing about with you and others for a few years is well where did the money come from yeah well there it was appeared right and at the time that it was basically out there by the way the Reserve Bank on their website has no official notification and what they did write an important on that modenese when they did something similar in 2008 there was nothing on their website then either correct so we found it through the AFR but once it was out in public land and obviously it was on all the the the wires that was when the market moves right and so people responded in the market to that significant intervention from the RBA interestingly though if you look at the exchanges in Asia and in Europe they're not going the same way so essentially my suspicion is that on Monday we'll see it come back again potentially so so I think the Dow futures has the share market falling another eight nine hundred points tonight as in Friday night Friday morning New York time so we'll have to see what happens with with the Americans in the next twelve hours but but but but just to sort of get back to what happened in the US markets overnight so so let's just put a slide one on the screen so basically what what we saw overnight was a dramatic explosion in these term repos so there was three types of repos they were offered there was a a 14 day repo which is a two week there was a one-month repo and then there was a three-month repo and and that that's what we're all of this extra liquidity comparing where we're earlier the weaker 641 and now we're at 782 well a lot of the a lot of this came from these term repos that basically haven't been injected now important on this Martin is that the New York Fed in the last 12 hours said that they were willing to inject 1.5 trillion dollars into the repo market now they said they were going to do this in three separate lots of 500 billion so you and I had a phone conversation this morning I said I'm trying to find this money I can't find it so so what actually happened is they offered a three-month repurchasing agreement now the market putting bids for only 78 billion so so so just to be clear even though the headline says 1/2 trillion what happened today was the Fed said they were willing to offer today half a trillion so the so the so the market put in bids of only 78 billion dollars when they said they were willing to pay 500 billion so there are some headlines and there have been some people on YouTube some American commentators saying they've thrown one-and-a-half trillion dollars at the market now they haven't done that all they've done so far is through 78 billion and they've only done the first tranche of this 1.5 trillion now tonight as in Friday night sterling time they will proceed with the next tranche of this 1/2 trillion so we will have to see in the next 12 hours as to how much additional money is required by the banks and the hedge funds so so it could be an extraordinary man it could be a small amount so we just don't have to say so I just want to be clear because some people gonna look at this number seven eighty two billion and saying well but they announced one or half trillion well no they just offered half of that they offered half a trillion and and the banks like I said we only made 78 billion dollars yeah and my view is they went for the 1.5 trillion simply to demonstrate in a muscular fashion what they could do if they needed to do it right so it was partly about confidence as well as just the number and the other point I'd make is that the number of the market operators have alternatives at the moment because of where the bond markets have gone because they can unwind positions there as well so we need to watch this not just over the next one to two days but I think that's a couple of weeks because a lot of those the quizzes you'll come back to the fore over that period in my view one of the key points of today's episode modern ears is that the house viewers in the Eastern in public at large cannot fall for the coronavirus so so the coronavirus is the so just to recall in February and December of 2018 I had a meeting with the federal parliamentarian liberal in Canberra where we talked about this so there is no we didn't know this we didn't know this they all know who I am they all know my view I had many conversation with many people and one one in peace said was that the establishment when it's the PM or the RBI Treasury they know that things are stuffed this was about a year and a half ago and they're looking for plausible deniability now I always thought that plausible deniability would come in the form of a bank falling over like a Deutsche Bank or a foreign bank but but no but no one no one's I didn't say a pandemic and obviously I think the you know I think we said this in the last show the Prime Minister has been saying who could to see you know this this coronaviruses happening but but I just want to put this graph on the screen so what I did last night was I actually you know with my spreadsheet I actually deck backdated it all the way back to September just to show what has happened with this repo market so you know it started in September and we were almost at zero the amount of liquidity thrown to this repo market and and where we are now is more than three quarters of a trillion dollars so this crisis happened well before the corona virus it's been a trend for six months all that the corona virus has done is speed up the process and it's not just the corona virus it is earlier this week this dispute between Russia and Saudi Arabia on on oil production that also had that led to a crash in the oil market and then that obviously had is own ripple effects in the financial system so you know one of the things that we've discussed on multiple occasions Martin is what I didn't want to happen is that the elites in this country so let's be specific the politicians the RBA leadership governor deputy governor low and doable in particular APRA commercial bank CEOs etc I didn't want them to get away with blowing up so the the blowing up the debt bubble is a crime against the Australian people in my view and I didn't want them to escape accountability for this this gross mismanagement of the economy for for a couple of decades particularly since the GFC and and and what I'm afraid Martin is that I think the coronavirus is going to convince enough Australians that things were okay before the virus and the virus is the plausible excuse as to why the economy is going to you know go through a potential what not only just a potential it is going to go through you know a significant financial hardship and people will suffer whether it's whether it's there whether it's a the market crashes and the banks care go under and mr. de pression or whether they keep on printing to infinity there will be hardship that's what Armageddon is all about there's different types of hardships as to whether it's inflation or deflation but I but I thought it was important particularly this is kind of what I wanted to do these shows was to provide a series of time points where you and I are a camera are saying this is coming this is coming so when they say well we didn't see it well they could not deny that they they couldn't deny that it was coming and yet now they're all they're all gonna say well because if I went back with Switzer and joy they they're gonna say well you didn't predict a crime they didn't predict a pandemic you can say there was going to be a virus that led to a tool for nature crisis what I knew was a debt bubble was going to blow up and one from another we just needed a match now the match isn't the virus the match is the the 17th of September but but I think too many Australians are going to fall for the mainstream narrative and that means unfortunately I think that our elites are going to get a good way with the crime of the decade yeah if not the century no it's gonna save a century and the point there is that we know last September's when the things started right well before any viruses right that's right it was already falling apart and all the virus has done is essentially laid bare the financial stresses and strains that exist and probably have accelerated the process it's a bit like a catalyst but it hasn't fundamentally changed the trajectory which we were already on correct yeah correct but but to many Australians what hopefully our viewers who watch the show will know their message but I think too many Australians won't get that message and that's why our elites are going to get away with it and so we'll probably say a little bit more about that moving forward but the other obviously important important point is and let's put this on the screen is so in the last show we talked about the balance sheet of the US Federal Reserve so again 800 billion to four and a half trillion they promised they could reverse it they got down to 3.8 and so these numbers come out on a weekly basis so I saw the numbers this morning so these are for Wednesday u.s. time and we're in the balance sheet is above four point three trillion dollars so I think we are rapidly going to get back to four and a half trillion and we're going to smash through that previous peak and again they always said that this was always temporary it was reversible there were skeptics who said that no this is like what happens in the Banana Republic where you print your currency to oblivion and you just expand your balance sheet to uncontrollable proportions well this is where it looks like the Americans are taking their back the balance sheet of their central bank yeah and it has to be said I think John that just dropping the rates like the Fed did by 50 basis points and then throwing all this money out of it they'll burning all of the ammunition that they've got right way too soon because I think this coronavirus thing is going to play out over the long term through the recession right so they're actually using the ammunition they've got for the wrong purposes indeed indeed now I just want to sort of finish the show is a couple points Martin the first one is a few people on Twitter today said what other option does the government have now now here is here is the here is the endgame in terms of public policy in terms of macroeconomic policy we you and I and Sean Quinn had it had a conversation back in September and at some point will replay that for the audience and we said that based on the experience of Ireland bailing out the banks that that is not good public policy in the long term and we would let the system go what I in particular said I would let the system go have a depression and then and then actually try to reestablish the economy on a more sound footing and obviously Professor Kate Steve King said that household debt needs to be reduced by two-thirds in order to have a healthy economy and you yourself when I put it to you you said we need to have you know alt controlled delete and we need to start again so so we said master social cost suicide drug abuse homelessness we know you k ow we're not pussyfooting around we know what that nationally means but but that is in the long-term health of the economy so but but but the alternative is is that you bail out the system and again you know just look at the 8.8 billion where did the idea come from that they're printing it and printing money you know that does come at a cost and so I talked about this with Robby barwick on the CC report last April and and I thought I summarized a quite war so let's actually play that for the audience now we have a mass amount of foreign debt a lot of that foreign debt is in the it is in particular short-term foreign debt it's tied in the banks that have gone into the households so the establishment doesn't want the housing market to collapse because they'll be blamed for it because they blow up the bubble in the first place so my big concern is that they are going to effectively sacrifice the dollar so if unemployment formal that type justice or that right on yes sir so that in the formal take is if unemployment goes up if you start to see an increase in the recent defaults if if the bank starts it look shaky they will they will lower interest rates I think to zero potentially they will do quantitative easing they will get the new what I think will be the shortened government two weeks to start spending big in Canberra to prop the market up and all of these things do not bode well for the value of the Australian dollar it doesn't bode well for the serviceability of the foreign debt and if we get to a point in which confidence in our ability to service at alpha on there and just for the audience we have 2.2 trillion dollars of growth foreign debt so you know net it's like one point zero eight trillion it is it is a record at the amount of foreign debt we have if there is just a smidgen of death in in our among foreign invest ISM as to ability to services that the dollar will crash and my big concern is there's not a voice in Parliament who is expressing concern about the dollar concern about that that all of these suggested policies around quantitative easing zero interest rates negative interest rates and more spending but also loose Bank Bank standards what what what this could potentially do to to to the the foreign debt and then in terms of door so this is why it just just to highlight this point this is where in the debate I kept on saying the policies prescription that the financial strain Financial Review and Christopher joy and others are saying these are things we would do to stay was a housing market it comes at a cost yeah and in my big concern is no one in the public sphere but also in Parliament is actually wrecking telling the public there's a cost and what are the consequences of this particular course of a home yeah that's pretty clear John yeah so so so the key issue is is that there is a cost to fiscal stimulus there is a cost to monetary stimulus that cost has not been explained to the Australian people because every person in power whether it's the press like the AFR whether it's the banks whether it's the RBA with Treasury whether it's opera all the prime minister they all have an interest to save this debt bubble and what it also remains is it's going to lead to a currency crisis because because yet we did a show our third show which is the most I think it's the most important show we have a deal where we explain when you have a currency that's unpacked a fake currency we have seen more than 3,800 examples in the last thousand years when a government wouldn't when bureaucrats print too much of it it leads to currency failure and that's where not only I mean that's where the world is headed to because everyone's doing this but in the Australia's in Australia's case the Australian dollar is is going to be smashed in terms of its purchasing power and and that will manifest itself in all sorts of inflationary problems going forward and and you know if the government wants to do that it's important that the government actually tells the people this is what we're doing and explain to people what are the consequences and yet the public have no idea all the public knows is there have huge cost of living problems for the last few years and obviously your you know mortgage stress and some of the other indexes you do with the FA you know that they all play that out and people don't understand why I mean I had a conversation with someone who's you know who's a sophisticated investor and he kept on saying to me inflation is low because the government says it so so so we're gonna talk about these CPI numbers going forward but know there is an inflation problem today that inflation problem is gonna get worse the currency is gonna be in a lot of trouble and no one in the in Australia has actually explained you know what is the consequences of all of the stimulus madness yeah unfortunately you're right John and we're gonna find out the hard way aren't we yes yes we're gonna find out the hard way because because because I don't think there's a genuine discussion among the masses and then we have a reasonably good audience on this channel but but when you think of 25 million people have millions of people actually been told of what happens when you print too much of a currency no all you get is a reserve bank with no public statements no accountability with Parliament that they just basically click a button and they just created 8.8 billion dollars out of nothing yeah and they despaired of it I mean because because when they give it to the banks well what is that that's effectively a bear of the banks because if they didn't the banks could purchase potentially could collapse and that's oh yeah so you know when we talked about bail out bail in or bail out is when there is an external injection of funds into the banks that's what happened today an eight point eight billion dollar bailout of the banks and no doubt that if the stress is this really based get worse that's that number will intensify and get larger hmm I'm thinking we spoke to Harry dent remember just over a year ago and he basically said he thought that people would stand up and rebel when effectively the central banks did it again indeed indeed so Harry dent said that this is I think 2018 when he was in Sydney we had a conversation on camera Harry dance thesis on why we would have a depression he said that you know after the GFC the US Federal Reserve printed about 15 16 trillion dollars to bail out the global financial system he said that the next hung round it could be 50 trillion to a hundred trillion dollars and he said there would be people who will stand up against the central banks and because that level of money won't be printed and injected there won't be enough liquidity to keep the banks open and that's why we'll have the biggest depression in world history so that's Harry's position now theoretically that is still possible but the key issue is is that the the central banks are printing you know well look we're now talking billions but soon it's going to be trillions and and and millions of people around the world if not billions have no idea what the central banks are doing why because the press are not actually explained to people what they you know about this money printing and what it actually means yeah and my you know bottom line is this the interests of the people are not being served by what the central banks are doing no they're protecting the elite that protects in the banking system but it's everyday Australians and other people around the world who get crushed in the in the process absolutely and that's why in the interest of people is so important absolutely Martin north Jonathan's interest fuel we'll see you again next time [Music] [Music]