DJ: DID YOU KNOW?
You hear about PPP’s , or Private Placement Programs/Trade Platforms but what are they, how do they work and are they real? In short they are real but not in the way they are often described.
PPPs were first developed in the 1930’s by the U.S. and Switzerland following the global recession as a means to create working capital. Then were no longer used and remained in the books of economic history, before regaining interest in 1944 after the second World War.
They were an attractive alternative to obtain Non-refundable funds for humanitarian projects generally focusing on infrastructure development. Which after the second World War, was drastically needed to rebuild the war torn countries.
PPPs’ are secure because they are carried out as arbitrage, that is to say that the purchase / resale of financial instruments is carried out immediately with predefined prices.
They are often described as “risk-free” investments where one prime bank issues discounted financial instruments (such as MTNs -medium-term notes, SBLCs- Standby Letters of Credit, or BGs – Bank Guarantees and other similar instruments) to a purchaser at another prime bank who has committed to purchase the notes at an agreed-upon price.
The “purchaser” is generally several banks. They are most often used in international commerce where a seller might be unsure about a buyer’s ability to pay for goods received. One way to overcome this impasse is to utilize a SBLC or BG.
Supposedly, the purchasing bank needs a large deposit from a new client to create the line of credit that will be used for the purchase. The deposit is placed in a “blocked “ account and held untouched by the bank until the transaction has been completed. An SBLC or BG is simply a promise to pay on the part of the bank involved in the transaction.
Banks get themselves over-leveraged, where they loan out more funds than they have reserves. (Banking laws require banks to carry a certain reserve to loan ration) In order to re-capitalize their reserve ratio, to loan out more money, they sell their financial instruments at a discounted price. While other banks have too much capital and need to invest in negotiable financial instruments. It’s a balancing act.
At the end of the day it has become a huge shell game and a lot of global financial hocus-pocus and a manipulation of the global money supply. It is this type of activity that has thrown the global financial systems into chaos.
The fix-its are things like Basel accords 3, 4 and now 5, QFS (Quantum Financial System) , GCR/RV (asset backed currencies) , Historic Bond Redemption ( releasing the gold, silver, and land values they represent)
Remember it’s all theory…… Until it’s not ! DJ