Rags Make Paper

Yesterday, the world’s oldest central bank, the Riksbank in Sweden, suffered a similar fate. Riksbank governor Erik Thedeen told the Swedish parliament “that the now insolvent central bank needs a capital injection of at least SEK80 billion, or just over $7 billion, representing a little over 1% of Sweden's GDP.” ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ October 26, 2023 |  [View Online]( |  [Sign Up]( Rags Make Paper “Never spend your money before you have earned it.” — Thomas Jefferson Dear , “Good luck with the bond market,” reader Scott S warns us. Markets move in cycles. During bull markets, the moment bears capitulate to rising prices, stocks tend to fall. In bear markets, when bulls give in to fear, the market bottoms out and starts to rise again. Investors who aren’t paying attention get caught buying too high on the one hand and selling too low on the other. They call them “the greater fool”—or getting caught with your pants down.  Yesterday, we asked the question of whether bonds have sold off enough to start buying. “We’ve seen how the bond market has been turned upside down,” Bill Bonner wrote in this morning’s missive at Bonner Private Research. “The world’s safest credit—the US Treasury 10-year bond—lost 40% of its real value.” CONTINUED BELOW... POWERED BY WEISS RATINGS You Didn't Miss Out on AI—Yet. You see, there's a three-step pattern to the adoption of any technology and artificial intelligence just moved from Step One to Step Two. That means there's still time for you to get in on the AI boom. But the window of opportunity could be shrinking fast. I expect AI to move to Step Three by the end of this year. [Click here to find out which three AI stocks I believe have the most potential.]( CONTINUED... Bill Ackman, billionaire founder of Pershing Square Capital, has seen enough. He’s “covering his shorts” by buying treasuries at .37 cents on the dollar after selling them for the better part of this year at higher rates. In a brief explanation, Ackman cited uncertain geopolitical risk as a reason people might be willing to pile into treasuries despite the US government’s terrible balance sheet. Which could mean a short-term low in Treasuries… and a good time to take profits. That said, if you haven’t been shorting them during [the sharpest sell-off in 236 years]( then we may confidently agree with Scott, our reader, and say “good luck!” You’ll recall we’ve been connecting these dots since we released our report [Anatomy of a Bust: The Banks Go First]( in a live webinar in early March before Silicon Valley Bank (SVB) went bankrupt. “Thanks to soaring interest rates,” Zero Hedge summarized this morning, “the staggering losses on global fixed income securities—which according to the IIF amount to $307 trillion—have risen to a staggering $107 trillion.” That means folks banking on “safe” government or corporate bonds have seen a syphilitic bear ravage its way through more than a third of the global capital meant for retirement and pension funds. The only reason the banking crisis in the United States has been kept off the front pages of financial websites is because of a “lending facility” called the Bank Term Funding Program (BTFP). Some background, though a reminder is not needed: By May of 2023, the banking industry had seen 3 of the largest 5 bank failures in US history. In an effort to stem the contagion, the Federal Reserve agreed to buy up Treasuries and corporate bonds at their “face value” instead of what the market has been willing to pay. The Fed is saving banks from writing down losses, but in doing so is losing money itself.  “The risk has been transferred away from commercial banks to the Fed,” Tyler Durden (sic) writes. “The cumulative losses at central banks are now absolutely staggering, starting with the biggest and baddest one of all, where the Fed operating loss is now $111 billion and rising with every day.” That the Fed has been losing money for over a year was only made clear about a month ago when data was released on September 15. At that point, the Fed losses crossed the nice round number of $100 billion and captured headlines for about a minute. According to a Reuters article then, Fed academics expect losses at the central bank to “peak” at $200 billion by 2025. “Meanwhile, Derek Tang of forecasting firm LH Meyer said the loss is likely to be between $150 billion and $200 billion by next year.” The Fed is, in effect, shooting itself in the foot. They are subject to the same rapid increase in rates they themselves have initiated to fight inflation. The crisis is systemic. And global. The Bank of England had to be bailed out in November of last year by the British Treasury. The bank still had assets on its books stemming from the QE program it put in place in 2009. Rising interest rates caused them to sell those assets at a loss, the Treasury stepped in to keep the bank afloat. Yesterday, the world’s oldest central bank, the Riksbank in Sweden, suffered a similar fate. Riksbank governor Erik Thedeen told the Swedish parliament“that the now insolvent central bank needs a capital injection of at least SEK80 billion, or just over $7 billion, representing a little over 1% of Sweden's GDP.” Historically, in the U.S. the Federal Reserve books a profit and returns that money to the US Treasury to help offset the annual budget deficit. In 2021, the Fed contributed $109 billion to the nation’s coffers. In 2022, they sent $79 billion to 1500 Pennsylvania Ave. The year, because the Fed has lost money… The non-existent “remittances” actually contributed $109 billion to the national deficit. Not that anyone’s really concerned about the deficit. Congress has proven its incapable of reigning in spending. What’s another $109 billion lost? Besides, the Fed and Treasury survive to another day by virtue of being stewards of the world’s reserve currency… and the printing press. CONTINUED BELOW... POWERED BY THE ESSENTIAL INVESTOR CONTINUED... “Only a small group of Republicans,” Mr Bonner sums things up fairly well this morning, “has shown any interest in cutting back on spending.” He continues: And even they are deeply conflicted by their desire to maintain the empire at all costs. Fund the Ukraine…fund Israel…fund a new war against China! The result is: no serious cost cutting is ever considered…and no serious effort is made to ‘balance the budget.’ In fact, there is no budget to balance…just a series of ‘omnibus spending bills’…stumbling…improvising on the way to catastrophe. The financial disaster is so clear…so obvious…and becoming so imminent…that only a fool could miss it. Yet, somehow…in one of the great mysteries of modern democracy, ‘the people’ have elected about 450 of them. The trouble is when the whole system relies on the printing press, every dollar in your pocket is worth less. The economy is being gutted from the inside. As we demonstrate in [The Great American Shell Game]( when economic anxiety rises, civil society breaks down. The more we see random and organized violence, the more politicians will use the decay to get elected, the more bad policies will find their way into our books. So it goes, Addison Wiggin, The Wiggin Sessions P.S. Jennifer found an old frame covering parchment paper at a flea market in rural Maryland a few years ago. The saying reads: Rags make paper Paper makes money Money makes banks Banks make loans Loans make poverty Poverty makes rags We can only imagine it was made in the 1930s. The frame now rests above the fireplace on the mantel in my office. POWERED BY SAFE HAVEN METALS The Secret Wealthy Insiders Are Using To Escape The Stock Market Why are central banks "panic-buying" gold at historic rates? A new consumer guide exposes their secret plot. Revealing how banks are legally protecting themselves and supercharging a new gold rush before it hits the floodgates. A massive opportunity to protect and grow your retirement is unfolding. [Click here before your cash is officially obsolete>]( The Daily Missive from The Wiggin Sessions is committed to protecting and respecting your privacy. We do not rent or share your email address. By submitting your email address, you consent to The Wiggn Sessions delivering daily email issues and advertisements. To end your The Daily Missive from The Wiggin Sessions e-mail subscription and associated external offers sent from The Daily Missive from The Wiggin Sessions, feel free to [click here.]( Please read our [Privacy Statement.]( For any further comments or concerns please email us at feedback@wigginsessions.com. If you are having trouble receiving your The Wiggin Sessions subscription, you can ensure its arrival in your mailbox by [whitelisting The Wiggin Sessions.]( © 2023 The Wiggin Sessions 808 Saint Paul Street, Baltimore MD 21202. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized financial advice. We expressly forbid our writers from having a financial interest in any security they personally recommend to our readers. All of our employees and agents must wait 24 hours after online publication or 72 hours after the mailing of a printed-only publication prior to following an initial recommendation. Any investments recommended in this letter should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company. Sent to: {EMAIL} [Unsubscribe]( Consillience, LLC, Saint Paul Street, 808, Baltimore, Maryland 21202, United States