Awakening

By Gold D. Lion

Dive into a realm of profound insights and unravel complex forces that shape our existence. This book offers a transformative journey beyond superficial views, revealing hidden truths that sway society, beliefs, and politics. Through a multifaceted lens, you'll explore the dynamic interplay of human nature, societal values, and power's laws. The journey goes beyond economics, fostering self-reflection, empowering you to transcend traditional thinking and attain a comprehensive world understanding. Question the norm, expand your consciousness, and reclaim your critical thinking. You'll be equipped with the tools to deconstruct manipulation and control, empowering informed decisions that align with your aspirations. This book awakens your potential for positive change and encourages you to shape a better future. It provides a road map to navigate our interconnected world's complexities, challenging your assumptions, and broadening your perspective. The time to awaken is now. Embrace this transformative journey and unlock the power within

• Language: English
• Publisher: Goldi
• Release date: Mar 11, 2024
• ISBN: 9798853339224

Book preview

Chapter 1

Economic Illusions

The Role of Banks, Governments, and Stagflation

Here we are, in 2023, standing on the edge of a financial cliff. As we turned the page to a new year, everyone was on edge. People were reading the news, scratching their heads, wondering what was happening.

The markets were worried about a big market crash or even a recession. We had seen the two first quarters with no growth in the year prior bringing us into a technical recession not necessary an actual recession.This however spooked a lot of investors who pulled out their money to buy bonds or just hold onto their cash.

With full employment, it didn't look like a crash would happen. Yes, prices were going up, but that didn't mean the economy was going to fall apart. Instead, we were seeing something called 'stagflation'. This is when the economy doesn't grow, but prices keep rising. This was new territory for a lot of investors.

Because of the rising prices, businesses would have to pay their workers more. Also, because of higher interest rates, borrowing money would get more expensive. This meant that stocks would perform at best sideways, and bonds would probably go down. With prices rising, holding onto cash wasn't a good idea either.

Looking at how things went the last time we had stagflation in the US during the 70s and 80s, it seems like the smart move would be to invest in real assets, like commodities. You don't want to be holding onto cash or assets that don't have real value when prices are going up during Inflation.

As people start to realize this, we might see a move away from tech and crypto and more towards businesses that sell stuff we need. But with the threat of a big crash gone, bonds will drop, and yields will go up. This could start a crisis with bonds, and the Federal Reserve (or the FED) will likely have to step in to manage the debt and monetize it. At the time of writing, they're already doing this sooner than they planned because of a banking crisis, which we will go into later.

We are at the precipice, witnessing the impending end of the West's fiat financial system. In this book, I will provide an overview of the events that led us here, explain their causes, and guide you on how to navigate through stagflation. You will gain insight into the interplay of politics, values, and human psychology.

This book will help you understand why such circumstances continue to occur due to human nature. You will learn more about your own nature and hopefully, I can help you to start thinking for yourself and live a better and more fulfilling live. We will go over why it is predictable for such a system to eventually buckle under its own weight. As we know it, the West and the prevailing imperialistic empire that has been ruling the world are both approaching their end. This narrative is as much a journey through time as it is a guide for the uncharted future.

We're in tough times right now. Certain ideas are shaping how people behave in the market as people are very sensitive to propaganda and what the crowd thinks. Unfortunately these behaviours are steering the markets, regardless of the fundamentals at that time.

One common idea was that inflation is caused because of supply chain disruptions, and not because of the insane amount of money that was printed between 2020 and 2022. Folks who believe this are missing the point, when you print a ton of money, you will get inflation. I will go into further detail later.

Another idea that was floating around was that inflation will just fade away once the supply chain issues are sorted. This is precisely the reason why wages are not going up, why would a business increase their wages permanently just to watch prices to come down again and now they are stuck in the situation where they can not lower the same wages again, here, the bigger picture is also ignored.

The way the Federal Reserve was handling inflation was also a significant concern. Even with soaring inflation, the Fed's super tough stance in their fight against inflation, represented by token rate hikes and fractional percentage increases of interest rates, made it evident that they were not serious. Some people believed that a recession was imminent, and we had to deal with the rather misguided recession narrative that had been circulating since summer 2022. Fears of widespread layoffs and unemployment were rampant, but the economy was sound with full employment. All you had to do was step outside and see the we are hiring signs, but don't trust your own eyes... just believe the propaganda.

People are searching for ways to make money, and no one understands stagflation. Computing wasn't a thing until the late 70s, and the financial charts people refer to for their financial decisions only go back to the 90s at best. No one truly knows how to navigate stagflation because it's been too long for anyone to remember accurately. We've become so accustomed to cheap money and bull markets — the good times — that we've lost the way to deal with the looming challenges. Eventually, people will realize they're losing money and start altering their behaviours. In the meantime, tangible assets like commodities are being sold cheaply due to market manipulation as a result of an economic war between the declining empire and the ascending powers.

Businesses will need to increase wages to keep up with inflation, which will exacerbate the problem. Everything will become more expensive, and good investment options will become scarce. But commodities will always retain their value.

Even though commodities are the go-to asset class during stagflation, most investors are out of their depth. They've never been in a situation like this before. They're unsure of what to do and are waiting for guidance from mainstream media. Until the media catch up, most investors will be holding onto their cash, waiting for a clear signal.

When the media finally catch on, everyone will start moving their money out of tech and crypto (which require cheap money and low-interest rates to turn a profit) and into businesses that provide the things we need.

People are under the impression that a recession will occur, resolve the inflation problem, and then the FED can cut rates and it's party time again! Everyone's just trying to time the market correctly so they can purchase their risk assets like tech and crypto at the bottom just before the new bull market begins with the central bank (the FED) lowering rates just after inflation has magically disappeared. This, however, couldn't be further from the truth.

The FED can't resolve a problem they didn't instigate. When the FED undertakes Quantitative Easing (QE), it results in asset inflation! This is why we've been riding a bull market since 2008, the year when QE was first introduced. The combination of low interest rates and asset inflation is what we've been witnessing. The general inflation that began to emerge in 2021 was instigated by stimulus checks, free rent, and complimentary unemployment benefits. It's as if US citizens were basking in a rain of free money. Just as I've mentioned publicly before, it would take a year or two for us to truly feel the repercussions of the inflation we initiated — and here we are in the latter half of 2023.

Inflation isn't simply about rising prices or supply disruptions; it's about an increase in the money supply! How this money is injected into the supply determines how it manifests in the economy.

Imagine a small island with a single banana tree. Bananas are valuable, right? Now, imagine I plant ten more trees loaded with bananas on that same small island. Are bananas as valuable now? Correct, they're not. Inflation works in the same way. It's as simple as that.

Understanding the true reasons behind what's happening and grasping the basics are crucial for long-term success. Of course, markets react to emotions in the short term, and this is why you should never, NEVER follow the herd off the cliff. I understand the temptation to do what others do and move your money around, you want to follow the market, not resist it, right? Especially when their investments are on the rise while yours are dipping because you're sticking to the basics. However, this approach is riddled with issues, which I'll explain:

If you chase the market, you'll end up paying more because investors have already bumped up the price. This means you'll always be behind, hence the saying, buy the rumour sell the news. Another reason is that when something happens that proves the market or investors wrong, and they panic and sell what they were investing in, you HAVE to sell too. Just like you bought with them, you have to sell with them. Without any buyers and no basic principles to base your decision on, you're left with nothing. You'll have to sell, and you'll sell AFTER these idiots crash it. That means you're guaranteed to lose money because you bought AFTER the rush and sold AFTER the crash. This is how most people lose out and why 98% of professional traders lose money.

It's crucial to understand current global economic trends to make better investment decision. So, what happened? Let me take you back to the events of 2023 to explain how things work.

Despite talk of interest rate increases, the markets aren't crashing, and a big recession isn’t coming in 2023. The Federal Reserve has been talking about raising interest rates, or in better terms the federal funds rate, which is the rate they charge banks for loans. Since the 2008-2009 financial crisis, the federal funds rate has been almost zero. Consumer loan rates, on the other hand, haven't really changed since then. This is because of the reverse repo facilities that the Federal Reserve opened with their QE programs in 2009. They also opened a permanent standing repo facility in July 2021 to make sure the banking system has as much liquidity as it needs to prevent a financial crisis.

But raising interest rates is how you fight inflation! by reducing liquidity. Normally, when inflation gets too hot, the Federal Reserve steps in and raises rates. Banks also raise their rates on customers because they need cash. Banks prefer customers to keep their money at the bank, so they start with deposit rates and certificates. As customers save more to benefit from the high rates, they spend less money in the economy, which reduces inflation. But there's a problem now with the second step because banks have unlimited liquidity from the Federal Reserve through the reverse repo facilities. So, they're not raising their deposit rates, and consumer debt is at a record high. If the inflation rate is 10% and you can get a loan for 4%, you make 6% by taking out a loan. So, it makes more sense to spend than to save, which leads to huge asset inflation. The Federal Reserve thinks that raising rates will tame inflation, but it doesn't, resulting in permanent inflation becoming stagflation.

The Federal Reserve can't close these repo facilities because that would essentially topple the financial system.

Silicon Valley Bank collapsed in 2023. Like many other banks, it had the majority of its assets in bonds and mortgage-backed securities. The government encouraged them to do so, but these securities plummeted in value due to rising interest rates. This instigated a run on the bank, which is now bankrupt. Even though banks have all the liquidity they require from reverse repo facilities, depositors grew anxious. Once a few people withdrew their money,