It's now: people vs. the banks

Key Market update for Friday, 17 January 2025

Bank of England: the heart of darkness

During yesterday's confirmation hearings of the Treasury secretary nominee Scott Bessent, this exchange caught my attention (at about 52-min. mark of the video linked above):

Sen. John Cornyn (R-Tex): As you know, the market for U.S. Treasuries is the largest in the world at $28 trillion, and it's critical for the financial stability of the United States. There's actually a proposal for an entity to clear U.S. treasury futures at the London clearing house which is overseen by the Bank of England. Some argue that the Bank of England would have control over ... a default scenario in this critical market instead of the U.S. Is this of concern to you? Scott Bessent replied:

You raise a very important question and one that I will investigate further. I was unaware, until the past few days, of this with the new exchange. What I can tell you, as a student and professor of economic history, is that it is important for the U.S. - for the U.S. Treasuries, for us to be able to resolve any stress issues in the markets in the U.S. We saw during the Lehman Brothers bankruptcy, that much of the, many of the problems emanated from the U.K. subsidiary, so this is something that ... my inclination is that the resolution authority must lie here in the U.S., but I will get back to you in writing with an answer on this, if confirmed.

Before declaring his "inclination," Bessent thanked Senator Cornyn for bringing the matter to his attention, and during their exchange, Cornyn made it clear that the two have visited together at his office and discussed the issues. The first, obvious question is, why should American treasuries be cleared in London, through a clearing house under Bank of England's control, and where did such a proposal originate from? Why is there no public debate about such a major development?

Moving the market for U.S. Treasuries - the world's largest market - to London is a huge deal with important consequences that should have to be explored, disclosed publicly, and clearly understood by the American people. Yet, even a learned professor of economic history wasn't even aware of this? I did find it interesting that it was a sitting U.S. Senator who brought the issue to Bessent's attention. What could possibly be the attraction of clearing US Treasury futures through London? For the U.S., nothing: this is yet another story exposing the hidden hand of London manipulating the internal and foreign policies of the United States.

The Great Red Dragon

In his book, "The Great Red Dragon," American author L. B. Moolfolk explained how, in the second half of the 19th century, many U.S. farmers were ruined after the establishment of centralized clearing houses ("boards of trade") which were under control of British financiers or their agents. The clearing houses were able to manipulate the prices of crops and depress them to drive farmers out of business and thereby acquire large swathes of fertile agricultural land at fire-sale prices.

Scott Bessent's mention of Lehman Brothers reminded me of another kind of manipulation described by Moolfolk. I condensed Moolfolk's prose in this newsletter last May (I later posted it on Substack - it is at this link):

In broad strokes, [The Great Red Dragon] documents the takeover of the American economy by British banking interests. Their methods entailed periodically flooding the economy with credit and generating a boom. Then, when the bankers' nets were full and everyone was in debt, the bankers would abruptly withdraw credit. The practice was simply predatory. The triggering event usually involved a high-profile bank failure, which would cause an economy-wide avalanche of bankruptcies. Large, politically connected banks would then take over choice businesses, farmland and real estate for pennies on the dollar. Within our lifetimes, the Lehman Brothers’ failure in 2008 would have been a typical example of this, but Covid pandemic response in 2020 served the same predatory purpose.During the 19th century, US economy endured three major financial crashes: in 1837, 1857, and in 1873. Each crash triggered major economic depressions with mass-scale culling of smaller banks and other businesses. The collapse enabled the ruling oligarchy to consolidate monopolies over all the key industries.

Relinquishing control over the U.S. Treasuries market to the Bank of England could enable similar manipulations.

Hmm… OK, so someone in London is into dragons.

World system of financial control in private hands

In "Tragedy and Hope," Carroll Quigley warned us that, "The powers of financial capitalism had [a] far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. … The growth of financial capitalism made possible a centralization of world economic control and use of this power for the direct benefit of financiers and direct injury of all other economic groups.”

Quigley wrote those words in 1965, suggesting that the conspiracy was discernible many decades ago. Some 18 years later (1983), Lord Jacob Rothschild suggested that, "Two broad types of giant institutions, the worldwide financial service company and the international commercial bank with a global trading competence, may converge to form the ultimate, all-powerful, many-headed financial conglomerate."

Soft disclosure foreshadowing the coming battle

The exchange between Senator Cornyn and Mr. Bessent seems to be a part of the 'soft disclosure' of the secretive arrangements and relationships involving Great Britain, which have influenced global events during the past decades. We've seen Elon Musk attack the British government in a series of searing posts on X. Donald Trump did not invite Britain's Prime Minister to his inauguration, but he did invite the Russian and Chinese presidents.

Earlier this week, former British MP Andrew Bridgen gave an interview in which he disclosed some shocking information about the sickening depravity and the utter moral bankruptcy of Britain's political class - at the very least a significant part of it. The relevant 2-minute segment of that interview is at this link.

More than a century ago Lord Acton prophesied that, “the issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the bankers.” It may be that this fight is now upon us. It seems that the “monolithic and ruthless conspiracy” that JFK warned us about is now facing an existential struggle for survival. The signals coming out of the Trump team through these 'soft disclosure' communiques may be foreshadowing what is to come. Apparently Trump has over 100 executive orders already written and he'll be signing them on his first day in office.

FTSE: will it soar or tank?

These events are relevant to investors since they'll impact world geopolitics, the "special relationship" between the United States and Britain, as well as Britain's debt, currency and its stock market. Something fascinating that I recently learned is that Britain is still heavily reliant on its former colonies for its GDP and public revenues.

Namely, according to a 2016 report, "New Colonialism: Britain's Scramble for African Energy and Mineral Resources," 101 companies listed on the London Stock Exchange, most of them British, have mining operations in 37 sub-Saharan African countries. They collectively control over $1 trillion worth of Africa's most valuable resources. The UK government has used its power and influence to ensure that British mining companies have access to Africa's raw materials. This was the case during the colonial period and is still the case today. The decolonization movement that has now largely deprived France of its African dependencies could do the same to Britain.

The reason I bring this up is because in the past I predicted that Britain's gathering financial and economic crisis will cause a strong rally in the British stock markets. But if Britain loses control over resource rich areas of Africa (and the Middle East), then its stock market could collapse. Either way, I believe the most reliable way to trade these events is through trend following, which is why I included the GBP, FTSE and gilts in this report: if the coming trends are bullish, we'll be long; if they’re bearish, we'll be short. The market itself will tell us.

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Trading signals for Key Markets, 17 Jan. 2025

With yesterday’s closing prices we have the following signals: