Bail-ins and bailouts are both designed to prevent the complete collapse of a failing bank. Their difference lies primarily in who bears the financial burden of rescuing the bank.
With bailouts, the government injects capital into banks. During the financial crisis in 2007-2008, the government bailed out major banks by injecting $700 billion from taxpayer funds into Bank of America, Citigroup and American International Group.
Bail-ins, on the other hand, provides immediate relief. Banks use money from their unsecured creditors, including depositors and bondholders, to restructure their capital and stay afloat. Put simply, they can convert their debt into equity to increase their capital requirements. However, banks can only use deposits in excess of the $250,000 protection provided by the Federal Deposit Insurance Corporation (FDIC).
That's why financial analyst Gregory Mannarino is adamant in his belief that this is an engineered collapse.
"What more do we need to see to realize that the economy is freefalling by design? The debt is inflating by design and corporations are getting tens of billions of dollars by design. That's the failsafe in case you don't know. We have a failing system, but the failsafe is bail-ins and bailouts," Mannarino said.
"So understanding the current environment – it is failing. And the failsafe is bail-ins, bailouts; that's it and you are seeing it now. Whatever they have to do, you can expect to see moving forward with many more hundreds of billions of dollars created out of thin air to fund this, to fund that and to fund the other thing and then they are going to sell it to you."
Mannarino, an active and full time trader, noted that central banks are buying all the debt. Central banks have sent a clear message to the market that they got their back and that they are going to continue to inflate the debt. (Related: Central banks are willing to destroy the global economy if it means saving the stock market.)
According to Mannarino, the European Central Bank (ECB) is now involved in an unlimited bond-buying program and the Federal Reserve is following suit.
"People now see the biggest wealth transfer in the history of the world, with the rich getting richer because of corporate bailouts that are now in effect," he said, while noting that small businesses are struggling in the U.S. with almost 52 percent saying they are more than likely going to fail.
The financial analyst explained that there is no connection between what the stock market does and what the economy is doing because everything is a distraction and a lie. He pointed out that America is completely broke as a nation with trillions of dollars in debt and it cannot borrow its way into prosperity.
The central banks are the strongest entities on the planet right now, Mannarino said. He noted that the Federal Reserve exists because of the fiat monetary system and the petrodollar.
"The entire military might of America is in the back pocket of the Federal Reserve," he said, adding that the U.S. military is mandated to protect the petrodollar.
Mannarino compared the situation to a Ponzi scheme. "In order to keep going, it must continually find sources to pull more cash into the system to make it run," he said.
Eventually, the system will implode. And an implosion in the debt market is going to change the financial landscape of the world. The financial analyst said a debt market implosion is going to wipe out the stock market, with the S&P 500 falling at least 80 percent from its all-time high.
When that happens, Mannarino said, people will be moving their cash into commodities, hard assets and cryptocurrencies.
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Watch the video below to know why bail-ins and bailouts from central banks are the system failsafe.
This video is from the High Hopes channel on Brighteon.com.