{"id":2378,"date":"2020-12-27T01:00:00","date_gmt":"2020-12-27T06:00:00","guid":{"rendered":"https:\/\/www.mindhacker.com\/?p=2378"},"modified":"2021-03-27T15:12:34","modified_gmt":"2021-03-27T20:12:34","slug":"legacy-financial-system-talk-by-mindhacker","status":"publish","type":"post","link":"https:\/\/www.mindhacker.com\/2020\/12\/27\/legacy-financial-system-talk-by-mindhacker\/","title":{"rendered":"Legacy Financial System Talk by MindHacker"},"content":{"rendered":"\n
What I call the Legacy Financial System is what most people call the Financial System. It’s a Fiat Currency system, which is been divorced from being gold-backed for many decades. Which means it’s been entirely under the control of government spending, lending, and borrowing.<\/p>\n\n\n\n
It is subject to the influence of governments borrowing, governments inflating and governments deflating their currency through trade, and all sort of methods.<\/p>\n\n\n\n
Central Banks<\/strong> have a lot of leavers to try to control the inflation or deflation of their currency. But they are bound within some constraints. For example:<\/p>\n\n\n\n So, every year they say right now they are trying to target about a 2% inflation. And, the truth is: nobody really knows what the true amount is. <\/p>\n\n\n\n They rely on a basket of goods that people are buying in a grocery store, and other elements too, to try to calculate what the actual inflation rate is.<\/p>\n\n\n\n Apart from all that complexity, my main point is:<\/p>\n\n\n\n Central Banks<\/strong> have a way of controlling how currencies are inflating and deflating. However, those controls are bound by certain constraints, and those constrain are what I want to talk about. <\/p>\n\n\n\n Because of this little event that happened in March of this year: I’m definitely not going to name it, because we are not looking to get banned, or blacklisted, so\u2026 <\/p>\n\n\n\n He Who Shall Not Be Named (or Voldemort, for connoisseurs lol)<\/em><\/strong><\/p>\n\n\n\n That thing happened, WORLD WIDE. And precisely, world wide there have been shotdowns in businesses, perhaps even more than what is necessary.<\/p>\n\n\n\n If we look back, a hundred years or so, there was a method developed called: The Circuit-Breaker Method, that was quite effective in breaking the spread of He Who Shall Not be Named<\/em> or his predecessors 100 years back.<\/p>\n\n\n\n And, I don’t see that happening right now, this Circuit-Breaker Methodology, it’s just a long bleed. <\/p>\n\n\n\n Regardless of the reasons for that, there’s a lot of theories about it (but, we are not going to get sucked into that debate at the moment).<\/p>\n\n\n\n I want to talk about the Financial System’s impacts of such a long drawn out experience of He Who Shall Not Be Named.<\/p>\n\n\n\n And that is, that governments have to pay people. <\/p>\n\n\n\n For example, I have several businesses, one of which is a Micro-greens Business and it has government support:<\/p>\n\n\n\n We lost 90% of our revenue\u2026 Our customers were high end restaurants; they are not doing so well right now, so they have been cutting back on their menus.<\/p>\n\n\n\n All that government money has to come from somewhere. The way the Legacy Financial System works, with respect to how governments borrow, lend, and spend is:<\/p>\n\n\n\n Guess which one hasn’t been happening in the past few decades?<\/p>\n\n\n\n Paying down the debt load during good times hasn’t happened in over 20 years; we’ve had some ups and downs, and in the ups and in the downs the governments have been borrowing.<\/p>\n\n\n\n The debt loads of Global Governments<\/strong> have been going up and up. And part of the reason for that has been this artificially depressed interest rates. <\/p>\n\n\n\n Now, we won’t get into the reasons for that, it’s rather complex. Let’s say interest rates have been at historical lows for a long long time now.<\/p>\n\n\n\n In a sense, it makes sense not to pay off debt, because it’s cheap, money is cheap. The problem is that so many countries have been increasing their debt load for so long that even the province of Manitoba, Canada have their credit rating reduced\u2026 Twice, because the debt:GDP ratio is so high, and that means that they are at higher risk of defaulting.<\/p>\n\n\n\n Now, look at this from the Federal Government’s perspective<\/strong>: they also have one of the highest debt load ratio they’ve ever had.<\/p>\n\n\n\n And, guess what?<\/strong> They are now dramatically increasing their debt load because of: He Who Shall Not Be Named, all of these businesses are shut down, and they are having to support all of these businesses. And to make matters worse, income tax, and business taxes will be at an all time low this year.<\/p>\n\n\n\n Basically without this government support, 80% of small businesses (please note that I pulled that number out of my ass) in Canada are going to get wiped off of the map, and I’m sure this is the same worldwide.<\/p>\n\n\n\n Now, think about this for a second: WORLDWIDE? <\/p>\n\n\n\n Worldwide, countries are borrowing money like it is going out of style, and their debt load is going up, and interest rates are still at an all-time low, but they’re not going to be able to pull much money out, there’s going to be a limit.<\/p>\n\n\n\n So, how do Governments solve this? Well, there are a couple ways:<\/p>\n\n\n\n With the increasing taxes by increasing business<\/strong> option, they don’t actually have control over. Especially, if they are not putting more money into the economy, as to increase the amount of work and productivity that is been done, and that is kind of hard.<\/p>\n\n\n\n With the increasing taxes by increasing the rate at which people are taxed<\/strong> option if you’ve already increased the marginal tax rate to the hilt, as they have in Canada, there is not much room for growth there.<\/p>\n\n\n\n They most likely are going to try to increase taxes\u2026 I just don’t think that’s going to go very well, because I think that is trying to squeeze blood out of a rock story. Thus they must print more money.<\/strong><\/p>\n\n\n\n You are probably going to see interest rates dropping even more, and you probably gonna see a lot of destabilization happening with the Legacy Financial System.<\/p>\n\n\n\n What happened is that you’ve seen that in the last two months, Billionaires and Global Financial Institutions like HSBC, Continents like Europe, Countries like China, Australia… And, even the US are starting to look into cryptocurrency. <\/p>\n\n\n\n And they are starting to think about how to regulate and use it. <\/p>\n\n\n\n There has been more money pouring into Cryptocurrency by Big Financial Institutions and Billionaires in the last month than it ever has historically.<\/p>\n\n\n\n Historically when crypto has popped up has always been because of advertising and small investors getting excited and putting their life savings into it. Generally this hasn’t gone well for them because these investors are looking for quick money, and pull their gains out crashing the market and causing chaos.<\/p>\n\n\n\n Banks and Billionaires tho……<\/p>\n\n\n\n Now? Now, it’s Big Movers<\/strong>, as far as who is going into cryptocurrency. <\/p>\n\n\n\nCentral Bank and Control<\/h3>\n\n\n\n
Impact on the Legacy Financial System<\/h2>\n\n\n\n
Legacy Financial System in the past 20 years<\/h2>\n\n\n\n
The debt loads of Global Governments<\/h3>\n\n\n\n
The Federal Government’s Perspective<\/h3>\n\n\n\n
How do Governments go out of this conundrum?<\/h4>\n\n\n\n
So, what’s going to happen?<\/h2>\n\n\n\n
What just happened that supports my theory that this is going to become the big reset of the Legacy Financial System?<\/h3>\n\n\n\n
What’s different now?<\/h3>\n\n\n\n
Bye Legacy Financial System?<\/h2>\n\n\n\n