Bundesbank: A Ticking Time Bomb

07.03.2017 • Central Banks

Guest Contributor – Wealth Protection Today (Germany) –

 The Bundesbank will publish its annual balance sheet on 2 March. This balance could contain a lot of explosives and attract great attention in the mainstream news. The Bundesbank is likely to set up considerably higher provisions. For the major financial risks it has incurred in recent years. Risks affecting every individual citizen. The Bundesbank is directly linked to the German federal budget.

Bundesbank sucks up with bonds like a vacuum cleaner
For many years the Bundesbank has been buying bonds from European crisis countries as well as European companies. In other words, it lends money and receives a promissory note, ie a bond.
The sum total of all the funds lent has increased dramatically last year. The Bundesbank’s balance sheet total now amounts to more than EUR 1.39 trillion (see chart).
An almost unimaginable sum. A year ago, the balance sheet total was around one trillion. Added to this, almost 400 in twelve months! Billion euros . In 2002, the balance sheet total was 222 billion.
The total portfolio of the Bundesbank bonds is borrowed from debtors who currently still have a good credit rating. The Bundesbank currently holds German government bonds with a volume of 322 billion euros. A failure or payment problems are rather unlikely. However, the Bundesbank also has billions of bonds from crisis countries such as Greece, Spain, Italy and others. The risk of these bonds, defaults or lack of payment increases every day . Tensions in the eurozone have risen dramatically in recent months.
In addition, the Bundesbank holds corporate bonds, which are partially rated so badly that massive losses are also expected.
An additional problem could arise in the case of claims against the European payment system Target 2. The so-called target claims amount to 800 billion euros.
Bundesbank balance is a time bomb
This bond carrousel of the Bundesbank is a ticking time bomb. It still works, because each wheel is adjusted to it. The borrowers (ie the crisis countries and crises) are getting fresh money from the Bundesbank and the European Central Bank again and again, issuing new bonds, ie debts. This allows them to use their old bonds again, thus paying back the debts. Dead patients are thus artificially kept alive.
The bomb bursts when interest rates rise, countries or companies are insolvent, Europe breaks or countries leave the EU. Higher interest rates mean higher payments for debtors. Should countries or companies go bankrupt, the claims are completely lost and would have to be written off. If a country leaves the monetary union, the national central bank would have to pay the liabilities against the euro system.
And above all, the Federal Reserve and the federal budget also depend on the European Central Bank. Again, the game with the bonds still works. If the ECB’s card house decides, Germany is threatening high bill payments.
The system only works as it is currently
The building of gigantic debt and borrowing from the central banks threatens to break. An imbalance and even more imbalances can trigger dramatic chain reactions. The structure must remain as it is. No matter what happens. The interest must remain in the cellar. Central banks must continue buying bonds.
All this is a perverse game at the expense of citizens, the taxpayer. The biggest financial repression for decades has long begun. Because the system does not find a way out of the debt crisis and the debts of the economies are crushing, the citizens are involved in the costs. Through penalties, fees, inflation and other things.
For you, this means you have to rethink. Keep your money in any account. But on the contrary. Many banks are now charging account charges or even penalties. Inflation eats your savings. Set your money so that it increases sensibly and compensates for the state and intended destruction of money.
Thomas Schwarzer
Thomas Schwarzer

-Read more at www.pronomio.de (German)-

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