BRITT GILLETTE
A little over a week ago, a financial crisis erupted into the headlines as the unraveling of the Japanese yen carry trade led to the biggest two-day drop in Japanese stock market history.
While everything appears calm for the moment (at least, as I write this article), know this - it's not. What took place last week is only the beginning of a much larger financial crisis, and it's going to get far worse before it ends. The only question now is how quickly will it all unfold? A growing crisis is inevitable, and the reason is simple...
The Bank of Japan is trapped.
Back in May, I wrote "6 Potential Triggers for the Next Global Financial Crisis." The second trigger listed was a Japanese currency crisis:
"Meanwhile, the world's fourth largest economy is on the verge of a major currency crisis. The Japanese yen currently sits at its lowest level relative to the U.S. dollar since 1990. To prevent the situation from getting worse will likely require the Bank of Japan to raise interest rates or the U.S. Federal Reserve to lower interest rates. Given the recent persistence of inflation, it's unlikely we'll see the U.S. lower rates in the short-term (absent a major financial crisis). This means the Bank of Japan may be forced to raise rates and take other measures to defend its currency.
But this will cause a number of problems. First, the Japanese economy is in recession. Raising rates will only make the problem worse. Second, Japanese government debt stands at over 260% of GDP. Believe it or not, that's twice as bad as the United States.
Raising rates means more interest on the national debt, potentially sparking a debt spiral that could destroy the country. Furthermore, if the Bank of Japan starts hiking rates, this could cause a reversal of the yen carry trade (succinctly explained here), which could quickly lead to a disorderly unraveling of financial positions all over the world. Along the way, we could see margin calls and exploding derivatives positions that crash global financial markets."
As you can see, the Bank of Japan can choose one of two roads:
1) Raise Interest Rates and Destroy the Domestic Economy - Raising rates will strengthen the yen. But as we saw last week, it will also lead to a reversal of the yen carry trade with enormous implications for global financial markets. It will also weaken the Japanese economy, and increase the interest paid on a Japanese government debt load too onerous to ever be paid back. In addition, it puts further strain on the Japanese banking system by increasing the amount of unrealized losses on bank balance sheets - likely resulting in bank runs. Ultimately, raising interest rates will destroy the Japanese economy.
or
2) Lower Interest Rates and Destroy the Domestic Economy - Likewise, lowering rates will cause the yen to depreciate relative to other currencies (in particular, the dollar). While it will decrease the stress on Japanese bank balance sheets and the amount of interest paid on the Japanese government debt, it will unleash domestic inflation sure to ravage the finances of the average Japanese citizen.
In case you missed it, the big takeaway is this - no matter what the Bank of Japan does, the result will be the same. And, as the fourth largest economy in the world, the destruction of the Japanese economy (whether through a deflationary spiral or hyperinflationary collapse) will severely weaken the entire global economy. Moreover, this is happening while almost every other industrialized nation in the world is on the brink of economic calamity due their own problems with over-indebtedness.
That's why this crisis is far from over. In fact, just ahead of us is the greatest economic and financial crisis in history.
When the dust settles, the world will find itself trapped in a system indistinguishable in both capability and function from the mark of the beast system outlined in Revelation 13:16-17 - setting the stage for the roll out of the actual mark of the beast system. How will that happen?
Several interim steps stand between the current crisis and the global financial tyranny the Bible tells us is coming. I believe those steps are as follows:
STEP #1 - Continued Volatility...
STEP #2 - Debt Hits Its Limit...
STEP #3 - Limited Bank Runs...
STEP #4 - A Massive Government / Central Bank Response...
STEP #5 - A Bank Bail-In
That single attempt - and that's all it will take, one attempt - to "bail-in" a bank will spark a panic run on all but the largest banks. As individuals and businesses move their cash deposits above the FDIC insured threshold to larger, "too-big-to-fail" banks such as JP Morgan and Wells Fargo, regional banks and smaller banks will fail in mass. In the end, only a handful of banks will control the overwhelming majority of deposits, and all this will be the result of a contagion sparked by a single bank "bail-in."
Think I'm exaggerating the extent of the banking crisis? Just remember this - when the bank runs begin, most banks will have nothing in reserve to pay out to depositors. They'll be forced to sell underwater assets at a loss to raise cash. Why do I say they'll have nothing? Because in March 2020, the U.S. Federal Reserve lowered the reserve requirements to zero. That's right. Zero.
STEP #6 - Something Big Blows Up...
STEP #7 - Bank Holiday
At this point, the global economy will come to an immediate, grinding halt. With credit markets frozen, trucks will stop making deliveries, factories will stop producing widgets, and every node in the global supply chain will freeze. In response, governments will announce "a bank holiday." Global financial markets will close. All banks will close, and all electronic financial transactions will cease.
So what does this mean? A bank holiday last occurred in the United States in March 1933 at the height of the Great Depression. Markets and banks will remain closed until government regulators implement new measures to jumpstart credit markets and restore the orderly functioning of the financial system.
STEP #8 - Roll Out the New System
The "solution" they will roll out has three elements:
1) CBDC - The first of these elements is central bank digital currency (CBDC). CBDC is centralized, digital fiat currency. But unlike the currency of the past, CBDC will be fully programmable. This means central banks can manipulate it in real-time. They'll have the ability to raise and lower interest rates on your currency in real-time. They'll have the ability to put restrictions on your currency in real-time, such as where you can spend it and on what. With CBDC, governments will have full insight into every financial transaction you make.
They'll claim CBDC will give regulators much needed insight into the "shadow banking system" and systemically important non-bank financial institutions (entities that don't currently fall under the same regulatory standards as banks). And with this new oversight, such a crisis will "never happen again." Ultimately, the public will embrace CBDC as a "safeguard" against future financial crises. It's an empty promise.
2) Tokenized Assets
The second element of the new system will be tokenized assets. Every asset on earth will be digitized. This includes stocks, bonds, precious metals, art, real estate, and anything else of value which can be catalogued, tracked, and traded.
Again, the public will embrace tokenized assets. They'll claim they're necessary to prevent another financial crisis like the one that just unfolded. Remember, when the system breaks, many people will realize for the first time that they didn't really own the stocks they thought they owned. The failure of several Wall Street brokerages and settlement entities will reveal an epic game of financial music chairs where concepts such as naked short selling led to multiple people thinking they own the same share of stock.
3) Digital IDs
The third element of the new system will be digital ID. Governments will roll out digital ID's as a means to verify the identities of those transacting in CBDC and tokenized assets. They'll claim digital ID's will prevent fraud and abuse. But because digital ID's will centralize all information associated with an individual, they make a person more vulnerable to identity theft.
A single hack, and every aspect of your life is compromised. In reality, digital ID isn't about what's best for you - it's about what's best for government. By centralizing all information associated with you as an individual, it streamlines their ability to surveil your life.
If that's the case, why will anyone go along with the digital ID system? Simple. They'll make digital ID a requirement to receive CBDC and tokenized assets. And people will gladly adopt the first two elements of the new system in order to rebuild their financial lives. Those deposits you lost when the banks went under? You can have them back. But only in CBDC...
STEP #9 - The New System Becomes "Mandatory"...
STEP #10 - Roll Out of the Mark of the Beast System...
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