It appears that the point of no return has been reached.
August 27 (King World News) – Greggory Mannarino, writing for the Trends Journal: Let’s just start off with this… The debt spiral can’t be undone. With that, “the system” can only live by devouring itself faster.
The last trick is played and now comes the reckoning.
This is what’s happening:
We now have a rapidly worsening, circular, financing Doom Loop in progress.
The Treasury issues new debt, the Fed backstops the funding. The Treasury then buys back older debt to smooth the market… and repeat.
Without this loop, debt auctions FAIL, yields SPIKE, and the machine FREEFALLS. (Enter a FULL ON economic and stock market meltdown on a scale never been seen before).
The system is now addicted to permanent support, which must increase from here… Why? The Law of Diminishing Returns Applies. Therefore, This Mechanism Cannot Stop.
A Further Breakdown:
As interest costs compound, debt maturities roll faster, and tax receipts can’t keep up. A debt-based system survives only by ever-larger credit/debt creation. If credit stops expanding, the model collapses.
What this means IS coming next…
More “temporary” tools become permanent, stealth QE increases, along with further yield-curve control.
Expect rate cuts to artificially liquify/prop-up markets but debase purchasing power faster.
Expect new waves of inflation, followed by re-acceleration.
Moreover, expect accelerated “government” spending to soak up the real economy to a much larger degree. This precipitates yet another Doom Loop scenario in the economy.
This situation will create an even GREATER need for the US Treasury to buy back even more of its own debt. Therefore, expect buyback size increases.
And who funds all this? The Federal Reserve.
What I expect (base case):
Policy theater… with rate cuts framed as “stability,” (A LIE). We will see more and increasing stealth monetization of ever-expanding debt, with Treasury buybacks increasing.
Why?
Because there is no other alternative.
Expect larger #FAKE NON-PRODUCTIVE liquidity injections/support for the stock market to cause the real economy to crater FASTER… with commodities and monetary metals to outperform.
Babylon can’t stand without VASTLY INFLATING THE DEBT. The Fed is now THE lender and buyer of last resort… and now using The US Treasury as yet another mechanism to buy back its own paper to keep markets calm!
That’s not stability, it is yet again another Doom Loop.
They will cut, attempt to smooth-out, and cover up the fact that the system is officially dead!
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