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March 23, 2018 - Health Ranger - Mike Adams
21:33
2015 Systemic Market Crash
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I can tell you right now what the news headlines will be in the aftermath of the coming global debt collapse.
Now, I can't see the future, and I don't claim to be psychic, but I do know something that the mainstream media and the Wall Street bankers and the government regulators of financial institutions will not even acknowledge exists, much less tell you about it.
And that is the following.
The global debt collapse will be a cascading systemic failure that will ultimately be blamed on a failure to accurately model systemic risk.
Economists, like most experts, vastly overestimate their intelligence.
They overestimate their grasp of reality.
This is common in the medical profession where doctors overestimate their knowledge of human health and the causes of disease and disease prevention strategies and so on.
It's also very common in economics.
An area of specialty that, for whatever reason, tends to make people incredibly arrogant.
Maybe that's because they win Nobel Prizes for developing flawed economic theories that cause market crashes and bankruptcies, and yet they still win prizes for that kind of work.
It's very intellectual, it's very highbrow, academic type of stuff.
And so they think that they are masters of the universe.
They think that they command the economy by tweaking little knobs and gears that then control the way the economy works.
And when it comes to individual bankers or investment houses or desk traders, for example, they probably do have a good grasp of the risk of their one financial instrument that they are selling a client.
In other words, their computer model for risk is probably very accurate when it's limited to the boundaries of the immediate context in front of them, which is usually the seller of the financial instrument and the buyer of the financial instrument.
Because remember, on every financial trade, there must be two parties.
There must be two sides.
There are very complex models in place, computer-driven models, to try to determine risk of these instruments and I'm not saying those models are wrong when limited to the scope of the instrument itself.
What's wrong?
And this is the fatal problem in the global debt system today is that no one has been able to really grasp or accurately calculate the systemic risk.
Now what is systemic risk and where does it come from?
In any complex system of interdependent nodes, and I'm talking about any system, it could be food production systems, it could be finance, it could be oil production, whatever.
When systems are interlinked and interdependent, You get a multiplication of systemic risk because one failure in one node of the system is able to rapidly multiply and cascade throughout the system Causing a domino effect of failures.
And in fact, it's not just a multiplication.
It's much more than that.
It's actually a logarithmic type of relationship.
If your system doubles in complexity, for example, the risk of systemic failure may actually be the square of that or four times what it used to be when it was a simple system.
Now if you look at the history of debt and money creation and banks and financial instruments, you'll notice that the interdependence of these systems is at an all-time high in world history.
In the 1960s and 70s, for example, bank interdependence was very, very low.
There were a lot more small independent banks at both the domestic level and internationally.
This interdependence increased throughout the 1980s and the 1990s and then really, really took off in the 2000s and now here we are in 2015 where we have more bank interdependence than any time ever before in the history of the world.
Now, what's wrong with this?
Well, just as I described, it allows systemic failures to function almost as viruses or Trojan horses infecting a computer system.
They can now rapidly multiply and spread across the system, functioning as a financial epidemic, if you will, a systemic collapse moving at the speed of electronic trading, which can cause a cascading flash crash In a way that no human being could have anticipated because it's way beyond the risk modeling systems that are programmed by humans into today's computer trading systems.
Hope that all makes sense.
There are a couple of points in what I just said that I want to revisit.
One of them is the fact that we have electronic trading.
In other words, computer-controlled trading now dominates stock markets and debt instrument trading, commodities trading even as well, stocks and bonds as well as option trading.
The fact that these computer-controlled systems are conducting most of this trading means that they are making decisions faster than a human being can make a decision.
This also means that in a scenario that could not have been anticipated by human beings, computers can conduct trading in a catastrophically rapid pace, moving in the wrong direction or creating a catastrophic outcome that humans can neither anticipate nor stop.
Once it's underway, except perhaps by pulling the plug, closing the markets, that's sort of the final, the act of last resort.
Shut down Skynet, pull the plug, set off the EMP weapon, stop the Terminator.
That's really all that Wall Street can do and in fact they have done that in the past when there was a computer controlled flash crash automated trading disaster that took place.
They literally pulled the plug, shut down the stock exchange and then tried to debug the bad computers that were causing these trades to happen and they did identify them and they shut down those computers and in fact That was happening from a trading house that ended up losing hundreds of millions of dollars because of a bad programming error on the part of one of their analysts.
So it's important to understand that we are not dealing with systemic risk that spreads from person to person.
We're dealing with a global debt system that has now an inherently elevated systemic risk that is multiplied by the speed of the electronic trading, which happens, again, at the speed of, well, electricity, the speed of computing, you might say, which is much, much faster than the speed of human observation, decision-making, and reaction.
Now the other fascinatingly important point to understand in all of this is that the complexity of the global debt system and the global asset trading system, again, stocks, bonds, debt instruments, derivatives, you name it, the complexity of all of this now vastly exceeds the the complexity of all of this now vastly exceeds the grasp of any single human mind on our planet.
Living today or having lived ever in history, even Albert Einstein, the genius that he was, could not have grasped the complexity, the interdependence, the cause and effect subtleties of the global financial debt system that is now operating the cause and effect subtleties of the global financial debt system that is
And because no human being alive today can properly grasp the complexity of this system, it is therefore virtually impossible for any such human being to program a computer system to accurately assess the systemic risk that exists.
Now, we do have human beings who are smart enough to recognize that they can't possibly grasp the complexity of the system.
In other words, they're smart enough to know what they don't know, to paraphrase Donald Rumsfeld, but it doesn't mean that they're able to accurately program computer systems to assess systemic risk.
And as a result...
We have entered a realm of global finance and global economies and global debt creation and money creation and central banker fiat currency creation that has never before been observed in the history of the world and yet also at the same time is a giant question mark.
It is an unknown terrain.
It's a minefield that we're all walking through, nations and cities and individual investors alike.
We're walking through a financial minefield built on debt, little debt bombs in the ground everywhere, and there are these economics elitists, you might call them, who think that they have mine detectors, and they say, come on in, walk across the field with me.
It's no problem.
I have a debt collapse mine detector, and I'm going to Help you navigate this minefield so that you don't step on a landmine and blow your legs off.
But the problem is that they are arrogant and they don't know what they don't know.
So they think they can detect the mines but they can't.
They're leading you through a minefield that they say is safe but it isn't.
So the end result of all of this is not difficult to predict.
This is the simple part.
It's not difficult to predict the catastrophic systemic collapse of this system, followed by the blame game.
And the point of the blame game will be to blame somebody, because when this crash comes, the mainstream media will report, oh, no one could have seen this coming, or somebody must be to blame.
Where did all our money go?
How did all this money disappear?
What happened?
You know, who did this to us?
There must be some criminal!
In Wall Street, who made this happen?
Really?
Gee, have you ever imagined that there might be criminals in Wall Street?
No.
Say it isn't so.
But the truth is, this collapse isn't going to be caused by, well, criminals.
It's going to be caused by arrogance.
It's caused by everybody just slogging their way forward through this debt-ridden minefield, pretending...
That they know the answers, living under the delusions that because they're academically gifted and they've won Nobel Prizes and they've graduated from famous universities like Harvard and Yale, that they must therefore know exactly what they're talking about even when they don't.
A little bit of knowledge, they say, is a dangerous thing.
Because you tend to overestimate how much knowledge you have, thinking that you've mastered a subject when you're still about to be schooled in it big time.
And we, human civilization living today in the year 2015, we are all about to be schooled in a very painful way, in a very expensive way, in the humility of systemic risk.
And I can say this with confidence even before the crash has happened because the inevitability of this is a mathematical certainty.
And although I'm not a genius economist, I am intelligent enough to understand that the rules of mathematics and the rules of Economics have not been altered by human propaganda and spin and delusional thinking and wishful thinking and Jim Cramer hawking the latest stock price on CNBC. We have not changed the laws of economics or finance or mathematics or physics for that matter to imagine,
to believe that a crash isn't coming would be equivalent to thinking that we have overcome the laws of gravity.
The belief that we're not going to crash this global debt pyramid is just as loony as a belief thinking that you have a time machine in your living room and you can travel backward in time by pressing buttons on a control panel in front of you.
It's absurd.
You don't have a time machine.
We haven't changed the laws of economics.
Mathematics still apply in this universe, which means that it's all coming down.
And my purpose in sharing all of this with you is not to scare you about this, but to prepare you for what's coming in the hope that maybe one in a thousand people out there who listen to this will actually do something to reduce their exposure to systemic risk and thereby protect their assets, survive the crash, thrive through the crash, maybe even profit as the crash is happening so that you can go on and contribute to a better society afterward.
So think about your own life and where you have systemic exposure to the systemic global financial debt risk.
For example, if all of your deposits in banks are held in one single currency, which is the case for 99.99% of all Americans who have all their accounts in dollars, right?
They have a systemic risk exposure to the value of the dollar.
And they don't even know it.
They've never even thought that you could have a bank account in a currency other than the dollar.
They've never thought that you could reduce your dollar exposure risk by, for example, buying other currencies that would fluctuate in the opposite direction of the dollar, such as the Canadian dollar in many cases.
And finally, most people aren't thinking about systemic risk because it's invisible to them.
They don't see it.
They can't see it.
No one talks about it.
And most people imagine that it doesn't exist.
Systemic risk is only unveiled during so-called black swan events, which are big, unpredictable, and unlikely events that happen all of a sudden, out of the blue, out of nowhere, something is a game-changer.
And usually these are accompanied with press headlines that say, no one could have seen this coming.
It's some kind of game changer that happens that suddenly makes your assets or your savings or your investments obsolete or losing a tremendous amount of value.
And I'll just give you an example of here during the dot-com boom of the late 1990s, during which, by the way, I was warning people, watch out, this is going to come crashing down because these valuations are unrealistic, pie-in-the-sky delusions.
But everyone was swept up in the delusion.
People were selling their homes in order to get money to invest in dot-com stocks thinking they were going to get rich and retire.
In fact, people who drove taxi cabs were putting money into the dot-com stocks.
Everyone was doing it.
Everyone thought they could get rich.
By trading each other pieces of paper with larger and larger numbers written on them and that no one would ever have to work again because we would all get rich off the dot-com economy.
This was the status quo wisdom of the day.
This is what people told each other.
This is what was reported on CNBC. This was what was in the financial media.
Everyone sell everything you own, take the money, put it in dot-com stocks and you too can become rich and achieve the American dream.
But all of this, this dot-com bubble that eventually did crash, losing over 99% of the value for many stocks that were previously celebrated as incredibly valuable dot-com companies that actually had no revenues and no business models and not even any customers.
But nevertheless, they had billion-dollar valuations.
But what happened was the Black Swan event What was the public's loss in the faith of the bubble?
It began to cause a sell-off.
And when the sell-off accelerated, the bottom dropped out of the market so fast that it became a crash, which, again, the mainstream media reported, no one could have anticipated this.
How did this happen?
Well, the way it happened is because there was systemic risk that was not modeled in the systems.
So all of these investors that were telling people, and by the way, there were investors in every city, every street corner in America, who would take your money to manage your assets, manage your investments, and even manage your retirement funds, and they were convincing people to turn over their retirement funds to them, and they were getting amazing returns for a while.
What, 10%?
20, sometimes 30% annual returns on your investment funds.
It sounded amazing.
And they did not model the systemic risk.
And they did not understand it.
Because they were all told that stocks always go up.
How could this ever fail?
We've entered a new era.
We've changed the laws of economics and finance.
The old laws no longer apply.
We'll never see the stock market anywhere near 5,000 or 10,000 ever again.
The Dow's going to be 30,000, 40,000, 50,000.
Get on board this train, they would say.
And they never understood the systemic risk, which is exactly why systemic risk bit them all in the ass.
That's exactly why the crash happened.
Because it was built on a mountain of false psychological faith in a system that had no underlying fundamentals to support it.
And that is precisely the description of where we are today yet again.
Fourteen years later.
Fourteen years after the dot-com crash, and seven years after the too-big-to-fail Goldman Sachs-Bear Stearns crash of 2008.
We are now on the second wave of a seven-year cycle.
And it's worse than ever before.
The fundamentals are more wrecked than ever before.
The government statistics are more deceptive and fabricated than ever before.
The dot-com bubble is back.
It's in a whole new form.
It looks a little bit different now, but it's the same old bubble just for a new generation of suckers.
History repeats itself because human psychology is predictable and cyclic.
It goes in cycles, in other words.
And the complexity of the systems that we're operating today now vastly exceed the grasp of any human mind.
So, by definition, no one living today can actually accurately assess the risk levels in the interdependent trading systems, banking systems, computer-controlled trading systems that are now driving all of our investments and retirement funds and pensions.
So everything that I've explained here will all become news After the crash.
It will be obvious after the crash that this explanation was correct.
Before the crash, however, it will be denied because it is inconsistent with the delusion that has given rise to the faith-based market boom that is exacerbating the systemic risk in our world today.
It's made worse by the fact that people want to believe it.
It's made worse by the fact that the Fed keeps pumping money into the economy.
It's made worse by the fact that everything is so interconnected.
So get ready, my friends.
This will be the most catastrophic and most rapidly spreading economic crash in the history of our world.
It will be fascinating to watch.
It will be devastating to those who are caught up in it.
And yet it will be entirely consistent with the laws of economics and mathematics.
And so none of us, ultimately, should really be surprised.
If you are surprised that the sun comes up every day, if you are surprised that gravity still operates when you get out of bed, then yeah, you might be surprised of a market crash.
But if you understand these laws of the universe, laws of physics, laws of mathematics have not been suspended and will never be suspended by wishful human thinking, then you should not be surprised at all by the crash that comes.
And you should not be caught with your pants down by that same crash.
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