Beyond Basel III

Basel III was (still is -, and still is in full operation too) a set of international agreements between banks, ratified by governments through various legal (legalistic) means to supposedly mitigate risk within the international banking sector. 

By 'international banking sector' the participants simply mean to do with the flows of money via global exchange processes, which are ultimately sovereign moneys ( belong to countries/nations). And by 'risk' they mean anything that stops a particular currency from finding a market at domestically and politically acceptable rates of exchange - as what happened when the Oil Crisis of the late 1970's took place.

It's traditional and it looks good.
There is no point though, thinking to stuff
it with paper notes - money - to take to some
Swiss numbered deposit account.
Those things are not only not possible
any more, but they are a pointless
exercise!

However by the time of Basel III, all previous pretense of actually having national currencies maintain authentic independent and objective 'hard value' was totally abandoned. 

The creation of a completely new asset class - mortgage-backed securities (aka 'securitization of debt') - which was deemed literally to be a 'Tier 1' capital asset (which is utter BS in any realistic sense), meant that instead of standard traditional universally-accepted capital assets, an entirely new and in financial economics, completely fictional thing (MBS's) was being used to say that a national currency had a hard core liquidity underlying all of its paper out on issue.

As Gregory Mannarino just said earlier this week, there are no new trades happening in banks, no new inflows of cash, no meaningful or realistic earnings and way too much debt outstanding - aka the sector is bankrupt.

When we consider the idea of multiples of value, it is impossible to think that the fact that the Canadian government has recently issued more than eight times the amount of paper (un-backed currency notes) to GNP, unlocked from the faked capital values of bank stocks and MBS equity capital and any other of several similar financial nomenclature things - will see market realizable gains in prices of anything that you can invest in. 

Instead you are bound to see catastrophic losses and falls sooner rather than later...

Unless, that is, the Basel Accords as they stand today, find some way of forcing Saudi Arabia or China to accept worthless Canadian bits of paper whether digital bits of something or actual paper/plastic slips of something designated as 'money.'

This is also ancient and traditional,
even a bit rustic you would say - 
and you could have the experience of it;
if you had a wooden floor to sleep
on, and an eider quilt to throw
into an empty room...
Empty room of old wooden house =
ten fifty hundred-ty million dollars!
Who cares what counting is?!

When the Iran Revolution occurred back in 1978 and then the Oil Crisis quickly followed which saw Middle Eastern countries refuse to 'roll over' their US and other bond holdings on maturity, demanding these be met with real money such as gold - cataclysms happened with global markets and equity values and with whole national economies.

Today we stand on the precipice of the exact same phenomenon except this time, national currencies have not only no hard-core backing in the static sense, but they have debt to many many times what they could ever hope to claw in annually via revenues from net national outputs. 

The real pricing of things which can be and are really sold, absent of the last forty years of falsified national currency accounts, always reflects the balance of true scarcity with actual demand.

In the place of that, for the last forty years at least, multiples of value have been witnessed mostly in asset classes where the Basel II and III credit creation 'dollars' have been intentionally flowed: mortgage-backed securities and hence, real estate and everything tied to that.

Is it too much to expect that when the re-adjustment takes place, these asset classes will also show their multiples going back down?

It is too much to ask for.

Governments will do anything and everything, and in this case it will necessarily be illegitimate things, to make absolutely sure the public who were led into believing this insane phenomenon of 'free money' and never-ending upswings in real estate 'values,' do not experience any hard reality setting in on them. 

I am horrified even thinking what this extended insanity might turn out to be...

But armed with what was just said, it will be clear enough to you what things are happening when they happen from now on in. And for sure you can take a view about whether it is possible to gain any advantage from the new directions for growth multiples.

For me, I will be falling back on very old school concepts of limited supply things, and the inevitable pricing of those, in the face of real demand.

First of all, our thinking has to adjust
to a completely new and different
world.

Digital assets, software assets, and thus AI-related anything - are all commoditizable and in no way at all capable of being locked up into very limited supply scenarios.

AI-based real estate research programs, for instance, are operating right in the area of the highest multiplication of value on core worth as supported by governments and the mentality of Basel III - but they cannot be relied upon to reflect the downside multiple factor implicit in the coming economic and financial Doomsday environment simply because, as I said, they are not capable of being kept unique and/or limited in supply or in people's access to them. Besides which governments will not allow there to be a nominal Crash in the prices of real estate.

Of course there should be, but there won't be. Instead, we will have a two-money environment - one where fictional figures dominate all thinking, and worthless bits of 'official' paper are used to manufacture an apparently 'viable' marketplace consisting of vast sums of 'money' being 'traded,' and another where a very small range of very limited supply goods and maybe some services command multiples of value and for which very different kinds of money are used to pay for, and be paid for these things.

This is almost impossible for you to envisage prior to when it actually happens before your very eyes.

And this will all be even while governments pretend it is not happening.

...I suppose one really great big, no - the truly great big secret, is how to have utter and complete happiness, and have every material thing you want, while the rest of world goes quite mad, and governments ride off into the sunset with their politicians and bureaucrats and officials driveling on about 'rules-based' junk and jabbering with total nonsense-speak about silly things that literally do not even exist. 

What exists is - and as I have talked about here before - the black flags of Khorasan, have gone up on the Al Reza Mosque; and that means the likelihood of a nuclear 'event' is er...