Rate Spike Theory

Your visual guide to the unfolding stages of an economic collapse.

Everyone needs to realise that if the US is the hardest driving on rate hikes, their currency may be one of the stronger currencies.

Their debt however is and will be one of the worst fallers for First World nations leading to divestment from treasuries.

Tavi Costa shared good images of China’s positioning below.

Simply stated – Sell US-T’s and buy Gold.

US 30 yrs has fallen 45% from its high, at our top call for bonds in 2020. The blow off top is in. The parabola began after 1981, once gold was tamed, and we went into the financialisation of everything.

Some like The Dollar Milkshake currency supremacists, love to talk about the ‘Power’ of the Dollar and how bad China, Russia are and also how lame the BRICS are.

When bragging of the Dollar strength, they rarely mention the rout in the US debt markets, as illustrated in the image below, where ‘FatBoy’ is deeply under water on a rising fishbowl water level too.

Some YouTube influencers talk about how little inflation you would have had in Japan, if the Japanese just bought Dollars in 2011.

They don’t refer to how little inflation the Americans, British & the rest of the world would have had if they just bought Yen in the 50’s and held through to 2011 ‘however’.

The Japanese chose a different kind of manipulation to the US. They held up their debt markets and let their currency go. The USDJPY should have as its twin shadow the chart of US-T vs JGB, debt performance addended, but there are many half fish bowl watchers

A Microcosm event of collapse case study

The UK Pension crisis was also a currency and debt crisis – they go hand in hand. The new Prime Minister & Chancellor wanted a stimulus budget, allowing debt markets to expand.

The BoE that had lagged the FED on rate hikes meant the UK debt markets were already under bid.

Pensions with insufficient yield needed to sell debt holdings for payouts. There weren’t any buyers.

Macro hedge funds can move global flows, to where they feel treated best. A firm USD, with higher yields, saw UK debt sales which was both outflows of debt and the currency, especially as UK debt supply was likely to climb on a stimulus budget.

The Fiat/Debt see-saw became a windmill of collapse. The GBPUSD and UK30Y illustrated below.

A full collapse was avoided at the last minute by Prime Minister and Chancellor sackings, budget reversals and BoE liquidity provisions. It postpones the inevitable ‘that’ all will likely face as shown below – both ends of the see-saw sinking, although we saw this for a spell, amidst great hand-wringing and fanfare.

For those that think it was just a UK issue, the largest US teachers pension in the US decided not to sell their US-T’s due to ‘adverse market conditions’, and a bank was provided that permitted billions of dollars to be borrowed against the illiquid debt holdings for their payout needs.

Boomer retirement demographics make the maths on pension funds a complete FAIL. GAME OVER

So our theory, as result of US-T debt devaluation, is that US rates will spike disorderly to the upside, to attract a disappearing bid back to an asset class, that was once sold as a ‘risk-free’ rate of return.

The likely collapse of the debt markets and associated loss of capital is now such that a far higher ‘risk premium’ will need to be attached to the yield to tempt bond bids back in.

The surge in rates will spike the Dollar whilst drowning the debt market. The see-saw in the fish bowl swings near vertical with the currency in the air, for now, and the debt market drowning. The water level of the fish bowl will however edge ever higher to the rim to claim both.

During this period the Dollar will be like an exploding star, initially expanding and consuming the FX emergings who can’t make dollar debt-based payments, before scorching many other majors.

A visual series to illustrate this concept follows:

Stage 1:

Stage 2:

Stage 3:

Stage 4:

All this time US debt values are collapsing as rates spike.

Post the collapse a new ‘star’ is born

So how does this look in terms of physical commodities and monetary precious metals, alongside the collapse of the legacy system into the ‘Control Structures’ desired slavery system of fully digitised ‘Surveillance Finance’, tax extraction and UBI welfare.

Here is a visual stream for this sequence of events.

Firstly people need to realise the ‘Legacy System’ is indeed collapsing in on itself and contracting.

The see-saw is in fact broken and both sides are devaluing, The Dollars buying power compared to gold, and the last 4 years of the 30 year US-T in debt market performance (without inflationary adjustment) show this.

Physical things remain however the same, an ounce of gold or silver is still an ounce of gold or silver.

The obvious positioning for the end game instead of long USDJPY, is long physical Gold and short the Yen. Be over-invested in physical items (illustrated in purple below) and short the contracting items (illustrated in red)

As the paper Fiat & Debt market deflates…

The smart people realise this and seek to hit the escape slides out of the collapsing fiat & debt system.

However there is a serpent seeking to guide most into the more advanced restrictive, ‘Super Digitised Financial Slavery System 2.0’.

This is a biometric, social credit-scored trap, of digital ID and utter restraint. A digital communism of immense power for the overlords of this new creation, with the associated extreme loss of sovereignty for all who fall under it. This would eventually lead to, we suspect, bodily-embedded chips as we spiral out into a transhumanistic nightmare as robotics surge. A ‘Mark of the Beast’ moment lurks!

The entrance to Digitised Slavery System 2.0 is littered with gifts to seduce such as Bitcoin and Alt coins rocketing in value. You would only need to KYC with facial biometrics on an exchange account, collect your free airdropped crypto tokens, that somehow surge on a wall of money pouring in. Money and resources that are exiting ‘The Legacy System’.

The slide exit to the left of the above diagram keeps you clear, for now, of the digitised realm. The god of this realm is the original money of them all, and one of eternal confidence – gold!

The slide exits quickly become far more established ‘plumbing’ for the draining of the collapsing old worlds liquidity.

The fattest, simplest piping straight into the upper echelons of the new digital Financial System 2.0 is the VIP exit of comfort and luxury into the best seats, reserved on special terms for the Insiders, BlackRock, Vanguard, State Street, FANGS and other oligarchial mega-corps along with the WEF, WHO, Central Bankers and other ‘Chosen Ones’.

The narrowest, most winding route to the lower echelons of Digital Slavery System 2.0 for the everyday man in the street is full of hurdles to be completed, checks and balances, biometric and identity requirements, cross referenced with every conceivable tax agency. In short, there is no making it in with out full disclosure of who you are, how much you have, the current state of your tax affairs, with additional new taxes and other fixed-cost extractions being levied along the way. Social media synchronisations and public profiling will all be part of a paradigm of 360 degree data collection for an individuals social score.

Again the best path is to forego these initial overtures of great wealth and attractiveness for the physical investment option.

Here is where money will hold its value especially amongst the patient.

However don’t think for a minute the people of the ‘Serpent’ will be letting you carry on in the physical realm unimpeded. That capture plays out in the chaos of the legacy system, which is likely to have a global conflict which the West loses, all baked into the ‘Shock & Awe’ of the creeping octopus tentacles.

As both the physical universe and the Digital Slavery System 2.0 expand on the collapse of the legacy system:

Expect to see many ordinary folk bemoan the ‘Hyper-Stagflation’ of reduced economic growth with a long painful recession and an onward inflationary march of escalating living costs as the legacy money system devalues.

For many reading this who think, ‘this guy is over the top, nothing will be this bad’.

I remind you that nothing of this scale has ever happened economically, financially and what is likely to go with it geopolitically and socially. The events awaiting you will be case studies for millennia across most disciplines and social sciences.

With all collapses it is like the Ernest Hemingway quote: “How did you go bankrupt?” Two ways. Gradually, then suddenly.”

As a technician and a chartist the visual for Hemingway’s quote is very much like paying a long term mortgage off, only more exaggerated.

Very little happens in the beginning, then suddenly quite a bit.

The trajectory for US debt collapse has already entered the ‘Quickening Phase.’ This is the inflation and hardship that all feel and that will accelerate.

The most worrying part of the decaying public finances is this dire prediction that we make.

The governments of the legacy system, facing collapse of state finances, pensions, private pensions and inability to fund public services will do what all distressed junta’s do who are willing in a technological communism. They will react in three ways to attempt to extend their survival:

• They will RENEGE ON & DRASTICALLY REDUCE on PUBLIC SERVICES. This will happen substantially and across the board on welfare, medical and public services, leaving very little provided by the state services as local municipalities go bust.
• They will create a swathe of new DRACONIAN TAXES in a desperate attempt to harangue fresh new amounts of capital to meet at least political pensions and perquisites. Never mind the over-promised commitments which were always over-stated with actuarial impossibilities to meet, and with each generation kicking the can further down the road.
• PRIVATE PENSIONS will be raided and EXTENSIVE PROPERTY TAXES will be levied to force distressed property sales into the waiting arms of hedge fund subsidiaries of Larry Finkelsteins’s DARK STAR asset-extraction entity, Black Rock.

An extended period of hunger, warfare and civil unrest will be the perfect set up for the technological communist global order that has been sought from the beginning by the mercantilist slave traders and opium dealers.

The reaction to this period of hardship will see the emergence of an aggressive tyranny seeking absolute compliance in exchange for their UBI hand outs and complete acceptance of their CBDC and social scoring system. All done ‘for your safety’ after great insecurity at the cost of all true freedoms.

Tokenisation will be the octopus tentacles of registration for all assets including property. This will have a specific blockchain or Hashgraph-driven online register of all your belongings. It will come with a prepacked sale agreement embedded so that the digital derivative proxy purchasing of the token, or NFT, will immediately transfer ownership to the online buyer. In the case of property this could happen quite feasibly with an embedded rental agreement that triggers with immediate effect.

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