reminder-america-was-in-a-national-debt-crisis-in-2019-and-a-liquidity-crisis-occurred-in-the-2-4-trillion-repo-market-in-september-of-the-same-year

Reminder: America Was in a ‘National Debt Crisis’ in 2019 and a ‘Liquidity Crisis’ Occurred in the $2-4 Trillion ‘Repo Market’ in September of the Same Year


Here’s a reminder of how the United States was acknowledged to be (even by the mainstream media) in the midst of a “national debt crisis” toward the end of 2019, just before the COVID-19 “pandemic” hit. Not only had the government’s debt surpassed $22 trillion, but there was a key indicator of financial collapse in September of the same year: a liquidity crisis in the $2-4 trillion “repo” market that required the Federal Reserve to continuously pump more than $125 billion dollars into it.


While it’s easy to get lost in the minutiae of the madness that was and continues to be the COVID-19 “pandemic” and worldwide response to it, understanding the root “Why” behind all that began to unfold in 2020 must remain paramount. One giant (often overlooked) piece of the answer lies in the fact that America was firmly in the grips of a “national debt crisis” in 2019. And, toward the end of the same year, faced a “liquidity crisis” in its $2-4 trillion repurchase (or “repo”) market. Two factors that led to dire predictions for America’s financial future by anybody with knowledge of what was happening.

“The U.S. government’s total public debt outstanding has nearly reached $22.6 trillion with two weeks left to go in the government’s 2019 fiscal year,” the Independent Institute wrote in a blog post on September 16, 2019. The Institute, an American libertarian think tank based in Oakland, California, added in the post that—critically—the ratio of America’s debt to its annual income was growing wildly out of control.

Image: The Independent Institute

“Over time, it is the spikes in this ratio of national debt to the federal government’s tax income that stand out,” the Institute added in its post. The think tank noted that “Nearly all coincide with or follow events that would be described as crises, which have each involved the level of national debt rising to be greater than five times the U.S. government’s annual tax revenues.”

Indeed, as the graph above—assembled by the Institute with data from the U.S. Treasury Department, the U.S. Census Bureau, and the White House Office of Management and Budget—shows, every time there has been a spike in the ratio of U.S. national debt to its yearly tax revenues, a “crisis” has occurred: namely, a war.

Link to tweet

In 1791, for example, the ratio of U.S. national debt to yearly tax revenues hit 20-to-1, and the Revolutionary War took place. Around 1857, the ratio hit 10-to-1 and the Civil War broke out. In 1935, the ratio hit 11-1 and America—because of Pearl Harbor, of course…— entered World War 2.

Beginning in 2001, although, in earnest in 2007, the country again saw a spike in the ratio of its debt-to-tax revenues; hitting a peak in 2013 and then again in 2019 not seen since the end of World War 2. And the above graph was made before the $2 trillion “CARES Act” was passed in response to the COVID-19 “pandemic.” And the $370 billion “Inflation Reduction Act.”

Not only did America’s ratio of debt to yearly tax revenues hit a climax in 2019 (again, still before the big spending that has occurred since 2020), but something particularly noteworthy happened in September of 2019: The repo market—or the market wherein the sellers and buyers of government securities (specifically the largest four banks in the U.S., including Bank of America, J.P. Morgan, et al.) trade “repurchase agreements” for said securities—faced a sudden and stark “liquidity crisis.” As Georg Erber at the European Productivity Research Center wrote in October of 2019 on Research Gate:

“On Tuesday, September 17th the Repo Market in the US deteriorated in a dramatic surge of demand for liquidity in the night from the 16th to the 17th to 10% far above the target rate of the Fed. It needed massive intervention of the Fed to counter a lasting major increase in the short-term interest rates afterwards. The Fed’s [sic] had to supply a $53.2 billion liquidity injection on Tuesday. The Federal Reserve had again immediately to inject an additional $75 billion on Wednesday the 18th September into U.S. money markets. This brought the repo rate for general collateral repurchase agreements down to 2.175%, down about where it was last week from Tuesday’s record high of 10%. However, the New York Fed said on Wednesday that the effective fed funds rate busted through policy makers’ 2.25% cap the day before, coming in at 2.30%. That’s bad because it shows the Fed was losing its grip on short-term interest rates, undermining its ability to guide the financial system.”

The fact that COVID hit exactly when the liquidity crisis in the repo market did could be considered pure luck for the Fed; with COVID as an excuse, it was able to print the trillions it needed to solve the repo market issue. (At least temporarily.) As US National Defense Fellow and MIT graduate Jason Lowery said in a tweet on September 30, 2021: “Never forget… the repo market blew up 2 months before COVID 2019 outbreak. The chain of events leading towards a liquidity crisis was already unfolding… The Fed basically lucked out with the ultimate printing excuse of a lifetime.”

Of course, there are those who think the simultaneous arrival of the repo crisis and the COVID narrative was not just a coincidence. Former BlackRock fund manager Edward Dowd, for example, continues to find more and more evidence that “COVID may have been planned.” And he undoubtedly has a powerful understanding of the way the world’s current financial system works.

In the video immediately above—in an interview with “Bitcoin maximalist” and author Layah Heilpern—Dowd goes over the repo crisis, as well as how “COVID is… being used as cover to prevent the coming riots from the [world’s] financial collapse.”


Feature image: Federal Reserve

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