Yesterday we made a bold claim. The second American revolution is currently underway.
Except this revolution isn’t being fought on the battlefield. It’s financial in nature.
It all centers around something called the Secured Overnight Financing Rate (SOFR). SOFR (pronounced “so-fur”) is now the benchmark interest rate for dollar-denominated loans and derivatives. It was created in 2018. And it replaced the London Interbank Offered Rate (LIBOR) in January 2022.
This is an esoteric corner of the global financial system… but it’s critical to understanding what’s playing out today. Especially on the geopolitical and macroeconomic level.
Simply put, SOFR connects the dots.
When LIBOR was the benchmark rate for dollar-denominated loans, the US economy was tied to the agenda established by the power factions controlling the European Union (EU). That’s because 11 panel banks in Europe could manipulate interest rates through LIBOR, as we discussed yesterday.
With SOFR now in place, those European banks have no influence on dollar-denominated interest rates. SOFR liberated US monetary policy… and paved the way for what I’m calling the Great Reorganization.
Continue reading “The Great Reorganization – Part 2”