China’s gonna get blamed for this crisis:

China’s going to get blamed for this crisis.

The Western media will do everything they can to point the blame at China.

But there’s a massive issue underlying the stock market that no one is paying attention to.

The massive over-leveraging of hedge funds into naked shorting meme stocks which is going to cause short squeezes and bankruptcies of multiple funds and potentially banks.

Yet no one is discussing this issue.

The market makers and hedge funds are doing everything to survive to make sure they don’t get margin called.

All it takes is a random event that takes down the value of their portfolios enough where they can’t satisfy their margin call.

That’s why I think Evergrande could be the tipping point in this next crisis.

It’ll be the tip of the iceberg into the most interesting few years of my lifetime.

Imagine a world where meme stocks keep rising into the thousands while the rest of the financial world bleeds it’s money into a small number of companies.

The largest redistribution of wealth we’ve ever seen in the stock market.

That part of it is super exciting, but the devastation to so many businesses, countries and companies is going to be sad and scary.

Even though millions around the world went into poverty during Covid, imagine millions more joining them because companies aren’t surviving.

The reset is coming.

Rich people own too much.

Asset prices are too high.

They’re running up the prices making everyone else try and jump in on the fun.

It’s all fun and games when things go up.

It’s not when they go down.

Leverage wipes out people.

Don’t buy things with money you don’t have, especially when you’re dealing in the millions/billions of dollars.

That’s how much risk some people are taking by betting with the bank's money.

I don’t even think the problem is the public hedge funds.

It’s the family offices like Archegos.

Their disclosure policy is bullshit.

These guys don’t have to tell regulators anything about positions, short or long.

And they don’t have to report their derivative transactions.

That’s why Warren Buffet called derivatives financial weapons of destruction.

There’s too much money involved in that market that can absolutely wipe out banks.

That’s what I think is coming soon.

It’s taken longer than I thought, mostly because Jerome Powell and his criminal enterprise at the Fed keep buying 120 BILLION DOLLARS WORTH OF BONDS. EVERY MONTH.

ARE YOU KIDDING ME?

The latest news – no taper.

They’re still buying the same amount.

Meanwhile 3 of the Fed presidents have been confirmed to have actively traded stocks and/or having part of their portfolio in the assets that the Fed is buying.

They’re buying their own portfolio.

The problem in today’s society is not enough people understand or are following this story close enough.

Just finished an incredible movie called the Flaw (link here). It’s a movie from 2010 about the last financial crisis and how the American elite continued to steal from the poor through the use of mortgages.

Capitalism as currently constructed does not work. Where people aren’t paid a living wage that increases as costs increase, you get massive problems. Education has gone up 100s of % in the last 30 years while wage growth for the average person has barely beaten inflation. Same with healthcare.

Now the inflation problem is even worse.

Everything is more expensive.

It’s everywhere. Asset prices. Crypto prices. Housing prices. Stock prices.

But even real goods.

Food.

Energy.

Rent.

The basic necessities of life are becoming more expensive for the average person to afford.

Historically when food prices get too high for the average population, a lot of social instability follows because more people are hungry.

Revolutions are coming.

People are tired of the grift at the top.

When the story gets told on what these funds were doing exactly, people will want answers.

These guys at the top have to suffer consequences otherwise even bigger revolutions will come.

History has told us that when enough people get too tired of a system of economics that doesn’t help the average person, revolutions occur.

This time will be no different.

China will be what the American media will get everyone to believe is the reason for this crisis, but wait till the meme stocks start squeezing.

Then the story will have really begun.

We’re entering uncharted waters because central bankers don’t have options these days to keep things under control.

It’s almost like they want a crash to happen so that the prices get knocked down again.

The problem is supply chains are still fragile.

There’s like 40 ships just sitting in the port in LA because they’re not turning over and emptying ships fast enough.

China, one of the world’s largest exporters of goods had to shut down ports and cities because of Covid.

People won’t be getting their Christmas presents on time.

So what does it mean when this whole thing kabooms?

I have no idea but it’s fun to think about it.

My sense is China gets blamed for what’s coming, but there’s much more underlying the market that people aren’t paying attention to.

Time will tell…