Dear A-Letter Reader,
In French, it’s called ‘legerdemain.’
Scientifically, it’s called prestidigitation.
But we all know it from some point or another as ‘sleight of hand.’ It’s that old trick—namely the trick of speed and deception—by which a magician secretly and swiftly manipulates objects to complete his illusions.
But what happens when a magician’s hands are full?
Well, we all know there’s no such thing as magic—so something’s got to go…
Replace the magician with central bankers of 40 devastated countries desperate for credit, and you’ll get a glimpse of reality.
Central bankers have been engaging in such deep financial chicanery for so long that trying to make any sense of it all could either drive you insane or make you impossible to talk to.
And remember; I’m talking about almost all of the world’s central bankers, not just the ones you know by name…
Last summer, Latvia narrowly avoided a default in the legal sense of the word. Dubai passed off its obligations to a non-government subsidiary, a backdoor way of avoiding a sovereign default. Major countries have already turned to the printing press, relying on money printing as they always have in times of crisis.
In the U.S., Treasury auctions are increasingly comprised of assets either bought directly by the Fed, or acquired by the Fed through intermediaries a few days later. We’re hardly alone in this kind of activity.
We’re not seeing the whole illusion here—and that’s exactly what these magicians want.
But from what we have seen, accidentally or deliberately, it’s obvious it can’t go on much longer… at least under the current names… TARP, quantitative easing (which just ended at the end of March), tax breaks, and so on.
You can rest assured as one form of government intervention is relaxed, another one will either be implemented or will sit ready to be implemented if chaos ensues.
Same Playbook, Different Page…
The debt crisis is one that can continue a bit longer, but nobody knows for certain when and where we’ll finally reach the tipping point of debt that will trigger a major crisis of confidence.
It wasn’t Latvia. It wasn’t Greece. It wasn’t Dubai. But there are still 40 more countries past the historical tipping point for a major default—and all the chaos that comes with it.
Now’s the time to sneak out—before there’s a mad rush for the exits. Central bankers are playing with fire—and they’d rather you burn than them.
Stay Sovereign (and away from Sovereign Debt)!
Andrew Packer,
Managing Editor of The Sovereign Individual