LIONS! A US DEBT DEFAULT? WE MAY BE CLOSE... Here Is Why.
From Greg M
Lions…
Reuters just reported this yesterday.
NEW YORK, May 9 (Reuters) - The cost of insuring exposure to U.S. government debt has climbed noticeably over the past month and remains stubbornly high. Spreads on U.S. credit default swaps (CDS) - market-based gauges of the risk of a sovereign default - widened to their highest since the debt ceiling crisis of 2023 in recent weeks.
What it means.
When U.S. sovereign credit default swaps (CDS) widen like this, especially outside of a formal debt ceiling crisis, it means ONLY one thing. A potential U.S. debt default.
What would be the fallout?
1. A Lock-Up in the Credit Markets.
This is something we have spoken about would eventually happen FOR YEARS. (Its not happening yet, but the potential is rising).
Lions… as you know if you have followed my work. The flow of debt/credit = is the lifeblood of the entire financial system. If that flow stops, liquidity vanishes almost instantly. Banks stop lending. Interbank markets seize. Overnight funding dries up.
2. A Banking Crisis Ripple Effect.
Investment banks/financial institutions with ANY market exposure would face massive margin calls, collateral revaluations, and obvious insolvency. Remember 2008? This would be magnitudes worse.
3. Global Contagion.
U.S. Treasuries are the global reserve asset. The dollar, also a unit of debt, is the reserve currency.
>If the market begins doubting their safety or liquidity, foreign central banks/nations/investors/etc. will unload. (THIS IS WHEN WE WOULD SEE MASSIVE SPIKES IN BOND YIELDS! AGAIN AS I HAVE BEEN WARNING ABOUT FOR YEARS.
Stock Markets MELT DOWN.
Stocks WILL collapse. Bond yields WILL skyrocket. And the entire derivative market would implode.
5. System Reset Becomes Reality. THIS IS IT!
Central Bank Digital Currency (CBDC), new tokenized system followed by some kind of restructuring of sovereign debt in exchange for total control.
(I will cover this at length, and more, in my Markets A Look Ahead Video tomorrow, Sunday, 5/11/25.)
GM
And then it’ll get blamed on a cyberattack by Russia/China/Iran or some BS
Central banks are hiding the truth about what is driving inflation and how bad it is going to get. They want you to believe that what is happening is a result of government stimulus in response to the pandemic. Total nonsense. Look up quantitative easing. Look up the Fed balance sheet. That 8.9 trillion dollars worth of assets that they purchased to prop up the economy in the years following the 2008 crisis dwarfs the stimulus. Every dollar that sits on central bank balance sheets is money that was created out of thin air and injected into the system. This is what created the inflation we are seeing now. Raising interest rates can't bring it down. That would only work if the inflation was caused by excessive lending, but it wasn't, and they know that it wasn't. The only way to prevent Venezuela style hyperinflation at this point would be to remove 8.9 trillion dollars from the U.S. economy and approximately the same amount from the EU economy. This would obviously have catastrophic consequences and draw attention to their insane monetary experiment, so instead they are playing dumb. They acknowledge that raising interest rates will likely cause a deep recession, but what no one seems to be talking about is what happens to interest payments on government debt as these rates climb. With the U.S. national debt sitting at 30 trillion, the prospect of a full fledged default isn't just likely, it's inevitable. When the U.S. government defaults, the global financial system will grind to a halt (as will international supply chains). Most people can't even imagine the implications.
This cannot be fixed. That's why they cooked up the "Great Reset". Don't let them get away with it.