Summary – Going Direct Reset

(Translations courtesy Children’s Health Defense Europe: French, German, Italian, Spanish)

By John Titus

The “novel” coronavirus pandemic marks the greatest turning point in U.S. monetary history since the creation of the Federal Reserve in 1913. In large measure, the “novel” coronavirus pandemic narrative serves as a convenient cover story that distracts from and even masks the Federal Reserve’s unprecedented maneuvers in 2020—maneuvers that happen to have been planned and discussed in August 2019 some four months prior to the first mention of any “novel” virus in Wuhan, China.

What marks the Fed’s maneuvers in March 2020 as unprecedented really is not its sudden creation of $3.5 trillion in reserves; that amount, $3.5 trillion in a few weeks, was unprecedented to be sure, but that’s merely a matter of degree: the Fed created over $1 trillion in the space of a few short weeks back in September 2008 during the global financial crisis (GFC). In that light, and purely in terms of reserves, the Fed’s sudden creation of $3.5 trillion beginning in March 2020 wasn’t novel at all; it was merely bigger than what it had done starting in 2008.

No, what made the Fed’s 2020 pandemic maneuvers novel was what the Fed did with its new reserves: it disbursed them so as to cause the parallel, mirror-image creation of $3.5 trillion in new bank money. That simply did not occur during the GFC. This is the defining feature of the Fed’s 2020 pandemic maneuvers. To understand this, however, requires at least rudimentary knowledge of the split-circuit debt-based monetary system¹ that’s in place in nearly all parts of the world (the exceptions all coming, curiously, in “anti-USA” flavors like the Taliban, Libya, etc.).

To be clear up front, what creates the need for two separate circuits of electronic money is the fact that all electronic money is created as debt. The electronic money we use as ordinary people is created by commercial banks when they lend money. Commercial banks are different from other financial institutions and businesses in that they create “money” out of thin air when they lend it. Other entities (ordinary financial institutions and businesses as well as people) are dispossessed of the money they lend out.

When “we” lend, it only changes the composition of assets on our balance sheets. A $100 loan to a friend only changes the asset side of our balance sheet, where the entry of “$100 in cash” gets replaced by “$100 IOU from Tom.” The liability side of our balance sheet remains the same.

This is not so with commercial banks. The asset side of their balance sheet isn’t amended at all—it is supplemented with the $100 IOU from Tom. When a commercial bank lends out $100, the asset side of its balance sheet increases by $100. The liability side increases by $100 as well, when Tom’s electronic checking account is increased by $100 in new “money.” That “money” is actually (and legally) an IOU from the commercial bank to Tom. The commercial bank simply creates a $100 IOU electronically, which is credited to Tom’s account. The commercial bank isn’t dispossessed of any money in this transaction. This is what distinguishes commercial banks from everyone else.

This is easy enough to understand, but it doesn’t explain why two separate circuits of electronic money are needed. To understand why another circuit needs to be added, we need to consider the things that Tom might do with his new $100 account money. One of those things, and this is what necessitates the addition of a second monetary circuit, involves the transfer of some or all of the new $100 to another commercial bank—call it Bank B (Tom’s bank being Bank A). This might occur if Tom proposes to pay Jerry $100, and Jerry banks with Bank B.

Because the $100 in Tom’s account is legally an IOU from Bank A to Tom, Bank B is not—without more inducement—going to willingly take on Bank A’s IOU as its own. Bank A would be perfectly fine with that proposal, as it would convert $100 of liability into $100 of equity and thereby fatten Bank A’s bottom line. Contrawise, however, Bank B’s liabilities would increase by $100 and its equity would be reduced by $100. So without more of an incentive, Bank B would simply refuse the transfer of Tom’s $100 account at Bank A to Jerry’s account on the liability side of its own balance sheet.

To make the transaction work, i.e., for Bank B to add $100 to the liability side of its balance sheet, Bank B is going to need a counterbalancing sweetener; that is, Bank B is going to need $100 added to the asset side of its balance sheet at the same time.

There are any number of ways that Bank A could make this happen. Bank A could send over to Bank B $100 in cash. That way, Bank B’s balance sheet would increase by $100 on both its asset side (with $100 in new cash) and its liability side (with $100 in Jerry’s account). However, cash is physical and slow, when what’s really needed is electronic and fast.

And this is where reserves come into the picture. Reserves are electronic IOU money too, but the issuer of reserves cannot be a commercial bank because commercial banks’ IOUs are liabilities, when what is needed to make the transaction work is an electronic asset.

The issuer of reserves is a central bank. They issue (electronic) reserves out of thin air just like commercial banks issue (electronic) bank money out of thin air. And reserves are IOUs just like bank money is an IOU. Only the “I” and the “U” in IOU are different. With bank money IOUs, the “I” is a commercial bank and the “U” is anyone who banks with (has an account at) a commercial bank.

With reserves, the “I” is the Federal Reserve and the “U” is anyone who banks with (has an account at) the Fed, including commercial banks. Just as commercial bank IOUs are money (an asset) to us, Fed IOUs are money (an asset) to commercial banks.

Whenever bank money, then, is transferred from one customer at one commercial bank to a second customer at a second commercial bank, what really goes on is this (using Tom and Jerry as our example): one, Bank A deletes $100 from Tom’s account; two, bank B adds $100 to Jerry’s account; three, Bank A transfers $100 in reserves to Bank B.

Now, let’s turn back to what made the Fed’s “pandemic” response in 2020 different from its response to the GFC starting in 2008. As mentioned, the Fed created over $1 trillion in new reserves starting in September 2008, and it created $3.5 trillion in new reserves starting in March 2020. Viewed just in light of reserves, the difference between the GFC and the pandemic insofar as the Fed is concerned is merely one of degree: the banking system got more sudden new reserves in 2020 than it did in 2008.

However, the bank money circuit is another story altogether, and this is what makes 2020 novel. Whereas there was no new bank money created starting in September 2008 (when the Fed created over $1 trillion in new reserves), in March 2020 there was $3.5 trillion in new bank money created (when the Fed simultaneously created $3.5 trillion in new reserves).

Put in different terms, in 2008 the Fed’s creation of wholesale money (reserves) did not occasion the parallel creation of new retail money (bank money), whereas in 2020, the Fed’s creation of wholesale money caused the parallel creation of an essentially matching amount of retail money.

This duality is reflected in the Fed’s monetary data. Wholesale money is shown in blue (digital liabilities on account at the Fed), and retail money (cash plus bank money, or M2) is shown in green.²

Figure 1: The fundamental difference between the GFC (big gray bar) and the pandemic (small gray bar) is the use of reserves to lever up retail money (green line) in 2020, which did not occur during the GFC.

To understand the mechanism used by the Fed to effect the parallel increase of retail money in response to new reserves in 2020 but not in 2008, see the author’s video, “Quantitative Easing Is the Biggest Sham Ever,”³ which walks through the transaction structures used to pull off this David-Copperfield-like feat of financial legerdemain.

The magnitude of the Fed’s shift in monetary policy in 2020 is remarkable all by itself, to be sure. For the first time ever, the Fed used its power to create new reserves in the wholesale monetary circuit to effect the parallel creation of new bank money in the retail circuit, and it did so to the tune of about $3.5 trillion.

But there is something else about the Fed’s actions in 2020 that makes them independently remarkable in a truly breathtaking way: while the Fed insisted throughout this episode that the extraordinary actions it took were all emergency measures necessitated by the onset of an alleged virus pandemic beginning in December 2019, the irrefutable fact of the matter is that the Fed’s novel and extraordinary acts were carried out in accordance with the plan presented to the Fed on August 22, 2019—four months before anyone had ever heard of SARS-CoV-2.

What’s more, this plan was presented to the Fed by BlackRock, which the Fed later appointed to assist the Fed in executing the $3.5 trillion plan. To put it bluntly, the actions taken by the Federal Reserve starting in March of 2020—actions that represented a massive departure from the Fed’s responses to crises before that time, as we have just seen—are exactly what BlackRock told the Fed to do in Jackson Hole, Wyoming over half a year before the World Health Organization (WHO) declared a pandemic. It was in August 2019, months before the first coronavirus story broke, that BlackRock instructed the Fed to get money into wholesale and retail hands when “the next downturn” arrived—which, as luck would have it, occurred less than a month later.

This was, in its essence, BlackRock’s “going direct” plan,⁴ and it anticipates exactly what the Fed began doing—quite successfully—under the cover of the pandemic. Thus, when the WHO officially declared the onset of the pandemic, it provided perfect cover for the Fed to implement BlackRock’s plan, under which the Fed effected the creation of $3.5 trillion in retail bank money to buy low-yielding bonds from the Fed’s billionaire buddies, who then turned around with the proceeds and put them to work in special purpose acquisition companies (SPACs) and high-flying stocks.

In a nutshell, the arrival of the 2020 pandemic was about as accidental as an assassination. The pandemic narrative is nothing but a cover story to conceal from the public what in reality is the biggest asset transfer ever.

Related Reading:

For complete coverage of the Going Direct Reset, see the full report by John Titus on the Going Direct Reset and central bank digital currencies (CBDCs) at the Solari Report at https://solari.com and John’s videos at his Best Evidence channel at https://www.youtube.com/channel/UCLvRDyn_rVvZ7RRwdcEiJGw.

Endnotes:

^{1. The term “split circuit” comes from chapter 4 of Joseph Huber’s book, Sovereign Money (2017), which is a magnificent introduction to the very concept of electronic money that exists in two separate and distinct realms despite sharing exactly the same currency denomination (e.g., U.S. dollars).}
^{2. As noted, cash is included in M2. If cash were backed out of the graph, leaving only (electronic) bank money, it would merely offset the level of the green line without altering its essential shape.}
^{3. “Quantitative Easing Is the Biggest Sham Ever,” Best Evidence, Dec. 16, 2020. https://www.youtube.com/watch?v=rDtVABEzcy4}
^{4. See Elga Bartsch, Jean Boivin, Stanley Fischer, and Philipp Hildebrand, “Dealing with the next downturn: from unconventional monetary policy to unprecedented policy coordination,” BlackRock Investment Institute, Aug. 15, 2019. https://www.blackrock.com/corporate/insights/blackrock-investment-institute/publications/global-macro-outlook/august-2019}

Category	Catherine’s 2017 Grade	Catherine’s 2018 Grade	Catherine’s 2019 Grade	Catherine's 2020 Grade	Dr. Farrell’s 2017 Grade	Dr. Farrell’s 2018 Grade	Dr. Farrell’s 2019 Grade	Dr. Farrell’s 2020 Grade
Vision	B-	C+	B-	C	B-	B-	B	C-
Recruiting a Team	B-	D+	D	D	C	C-	C-	D
Building a Team	D	F	F	F	C	D-	C-	F
Accomplishments To-Date	B+	B-	B-	B	B	C+	A-	B+
Effort	B	B+	A	A	—	B+	A	A
Communication	C+	C-	B	B-	C+	C-	B+	C+
War Games (Mapping the Swamp)	C-	B+	A	C-	B	B	B+	D
Building Bottom-Up Support	D	C	C	B-	C-	C	B+	B+
Introducing Important Change	B	B	B	B	C	B	B	C
Building Bridges Internationally	C-	C	C-	C-	—	C	C-	C-
Building Bridges Domestically	F	D	C-	C-	D	C-	B	C
Managing the Executive Branch Bureaucracy	C-	D	D	D	C / C-	D	C-	D
Grand Strategy for America and Our Role In the World	Too Early To Grade	C	C+	C+	A-	C	C-	C-
Managing the Federal Budget and Contracting Budget	F	F	F	F	F	F	G	G-
Staying Physically and Emotionally Healthy	B-	B+	B	B	B+	B+	A-	B+
Growing in the Job	B-	A-	B-	B-	B / B-	B+	B	B-

Date:	Comment:
2019	Since Federal Reserve went operational in 1914, the U.S. dollar has lost 97% of its purchasing power. Since 1910, the U.S. national debt has grown from $2.6 billion to $22 trillion with unfunded liabilities for social security and health care benefits estimated at $240 trillion.
2019-01	Germany, France, and the UK introduce INSTEX (Instrument in Support of Trade Exchanges). The intent of the special-purpose vehicle is to facilitate transactions between Iran and Europe that bypass the U.S. dollar and SWIFT so as to protect EU banks against legal exposure for breaking sanctions against Iran. Five additional countries (Belgium, Denmark, Finland, the Netherlands, and Sweden) announce on November 29, 2019, that they will join the INSTEX mechanism.
2019-03	Italy endorses China's Belt and Road Initiative and signs related commercial deals. Italy also borrows money (in yuans) in China's $12 trillion bond market.
2019-05	The annual Bilderberg Meeting is held in Switzerland. Their number-one topic is "a stable world order."
2019-05-02	'Sullivan & Cromwell's Rodge Cohen: The Untold Story of the Fed's $29 Trillion Bailout 2008 Bail Out. Do we want to include it?'
2019-05-05	The annual Bilderberg Meeting is held in Switzerland. Their number-one topic is a stable world order.”
2019-05-24	SpaceX launches its first 60 operational Starlink satellites.
2019-06	Russian economist and Putin adviser Sergey Glazyev states, "The U.S. is the most powerful economy in the world. If we want to avoid dollar hegemony, the first thing we need to do is to avoid using dollars, because the foundation of the U.S. economy is based on the dollar reserves owned by other countries and this has given it the ability and confidence to press other countries to play by its rules. U.S. influence would eventually be weakened if we do so."
2019-06-06	Xi Jinping and Putin reach currency agreement. The draft decree states, "Settlements and payments for goods, service and direct investments between economic entities of the Russian Federation and the People's Republic of China are made in accordance with the international practice and the legislation of the sides' states with the use of foreign currency, the Russian currency (rubles) and the Chinese currency (yuan)."
2019-06-28	World Bank Launches First-Ever Pandemic Bonds to Support $500 Million Pandemic Emergency Financing Facility
2019-07	JPMorgan strategist Craig Cohen writes in note to investors, "We believe the dollar could lose its status as the world's dominant currency (which could see it depreciate over the medium term) due to structural reasons as well as cyclical impediments."
2019-07	Elon Musk gives presentation about Neuralink brain-machine interfaces, a technology that he views as allowing a "merging with AI." Musk states that he expects to have Neuralink in a human patient by the end of 2020. Harvard professor Charles Lieber, an expert in nanotechnology and "ultraflexible mesh electronics," is one of the top scientists in dialogue with Musk and Neuralink.
2019-07-20	The G7 finance ministers agree to a Crypto Action Plan.
2019-07-28	Bohemian Grove meets
2019-08	President Erdogan says that Turkey's trade with China, Russia, and Ukraine will use national currencies. This statement follows similar agreements reached in 2018 with Iran and Russia to trade in national currencies. In 2018, Erdogan also calls on Turks to convert their dollars and euros into Turkish lira.
2019-08-15	G7 central bankers meet in Jackson Hole Wyoming to review Going Direct" plan by former central bankers of Switzerland Canada the U.S. and Israel now working at BlackRock an investment manager of $7trillion in stock and bond funds soon retained by the Fed to manage some of its "Going Direct" portfolios. MarkCarney of the Bank of England gives an interview stating that the dollar reserve currency system cannot remain as is.”
2019-09	French President Macron gives speech to French ambassadors after the French host G7 meeting. Macron declares the failure of the unipolar model due to American failures and mistakes over several administrations and proposes a radical rethinking of strategy going forward to adapt to the emerging multipolar world and the rise of China.
2019-09-17	U.S. Federal Reserve begins a repo loan bailout program making hundreds of billions of dollars a week in loans by going direct" to the trading houses on Wall Street."
2019-09-19	U.S. Navy confirms that three F-18 gun camera videos first released by The New York Times and a UFO research organization show "unidentified aerial phenomena" or UAPs - a more formal term for UFOs. The implication is that the U.S. military does not control U.S. air space.
2019-09-19	The ID2020 Alliance - led by Microsoft, Accenture, IDEO, GAVI, and the Rockefeller Foundation and incorporated into the UN Sustainable Development Goals - hosts its annual summit in New York City. Among other goals, ID2020 aims to offer "a persistent digital identity from birth" using "cutting-edge infant biometric technologies" and microchip implants.
2019-10-05	Pentagon awards $10 billion JEDI cloud computing contract to Microsoft.
2019-10-07	The BIS publishes the G7 Working Group on Stablecoins report Investigating the impact of global stablecoins."
2019-10-18	A rising number of CEO resignations Johns Hopkins Center for Health Security and World Economic Forum hold Event 201 a pandemic tabletop exercise" simulating the outbreak of a novel coronavirus that becomes a pandemic."
2019-10-18	The Bill & Melinda Gates Foundation, Johns Hopkins Center for Health Security, and World Economic Forum hold Event 201, a "pandemic tabletop exercise" simulating the outbreak of a novel coronavirus that becomes a pandemic.
2019-10-25	Pentagon awards $10 billion JEDI cloud computing contract to Microsoft.
2019-11	Vaxxed II: The People's Truth (a sequel to the 2016 documentary Vaxxed) is released, providing overwhelming documentation that vaccines are neither safe nor effective - and are directly connected to an epidemic of autism and chronic disease slowly destroying the American people and their family wealth.
2019-11	Following BRICS meeting, President Putin says, "The dollar enjoyed great trust around the world but for some reason it is being used as a political weapon, imposing restrictions. Many countries are now turning away from the dollar as a reserve currency. The U.S. dollar will collapse soon."
2019-11-13	Italy endorses China's Belt and Road Initiative and signs related commercial deals. Italy also borrows money (in yuan) in China’s $12 trillion bond market. Xi Jinping and Putin reach a currency agreement. The draft decree states Settlements and payments for goods service and direct investments between economic entities of the Russian Federation and the People's Republic of China are made in accordance with the international practice and the legislation of the sides'' states with the use of foreign currency the Russian currency [rubles] and the Chinese currency [yuan].” Following the 11th BRICS summit in Brazil on November 13-14 President Putin states "The dollar enjoyed great trust around the world but for some reason it is being used as a political weapon imposing restrictions. Many countries are now turning away from the dollar as a reserve currency. The U.S. dollar will collapse soon.” In mid-November reports emerge from Wuhan that there is a lockdown for a coronavirus.
2019-11-13	Denmark-based tech company BiChip cancels launch of microchip implant readable from a distance and connected to the Internet in the face of protests by Christian activists. BiChip has contracts to produce the microchip implants for the Danish governmentand U.S. Navy. A 2018 update to the implants allows wearers to store Ripple cryptocurrencies using Ripple's payment system.
2019-11-14	Amazon, which manages the CIA and intelligence clouds, notifies U.S. Court of Federal Claims of its intent to protest award of JEDI contract to Microsoft.
2019-12	U.S. creates the United States Space Force to be the space operations service branch of the United States Armed Forces.
2019-12	Verizon 5G rollout in several U.S. cities, including Los Angeles, goes into effect. The 5G rollout has begun and accelerates to support the "Going Direct" global reset, marked by competition between the U.S. and China over who controls the telecommunications hardware and AI access to data.
2019-12-2,3	Video footage from the Global Vaccine Safety Summit - organized by the World Health Organization and held at the WHO's headquarters in Geneva, Switzerland - captures reports of growing global resistance to vaccinations based on the absence of any scientific studies showing that individual or collective vaccinations and vaccination schedules are safe and effective. It appears that the global vaccine push is about to stall for lack of scientific support.
2019-12-09	U.S. creates the United States Space Force to be the space operations service branch of the United States Armed Forces
2019-12-12	Basel Committee invites comments on the design of a prudential treatment for crypto-assets by March 13, 2020.
2019-12-15	Verizon 5G rollout in several U.S. cities including Los Angeles goes into effect. The 5G rollout has begun and accelerates to support the Going Direct” global reset marked by competition between the U.S. and China over who controls the telecommunications hardware and AI access to data."
2019-12-18	MIT researchers publish study—funded by the Gates Foundation and directly requested by Bill Gates—that establishes a proof of concept for intradermal on-person vaccination record keeping." The study uses dissolvable microneedles to codeliver vaccines and "near-infrared quantum dots" into the skin that encode information about vaccination status readable by modified smartphones. The senior author says the invisible "tattoos" could create "new possibilities for data storage bio-sensing and vaccine applications.”
2019-12-31	China's WHO office is informed of "unknown pneumonia" cases in Wuhan.
2020-01,02	A rising number of CEO resignations permits corporate leaders to sell their stocks at or near the market high. Reports of selling by members of Congress who receive early briefings on Covid-19 circulate. Jeff Bezos of Amazon is reported to sell $4 billion of Amazon stock.
2020-01-09	WHO announces "coronavirus-related" pneumonia in China.