24 Mar ⚠️ “Already past the point of no return” ⚠️
Image by Gerd Altmann from Pixabay
Crossover event – you can find this content on my podcast as well at: https://www.buzzsprout.com/1125110/12493051
If you are waiting to be officially told by some talking head or politician:
- Oopsy daisy, we’re in a banking crisis.
- Oopsy daisy, we’re in a financial freefall.
- Uh-oh, the recession has officially started.
YOU ARE WAITING TOO LATE!
IMO, we’re going to be breadcrumbed into this thing. And what I mean by that is: you’ll get little hints and little glimpses of the truth, but you won’t be allowed to know exactly how bad it really is. And you may not be allowed to know that until years after all of this blows over, if it blows over. To some degree, we’re only just now being allowed to know how crippling things were in 2008 and 2009.
The powers-that-be want you to do whatever they want you to do, which is not panic, not have bank runs, and not freak out. And for the record, I’m not telling you to do any of those things either. I think it’s better to be prepared than panicked, and I would never tell somebody, “Go take all of your money and hide it in a jar in the backyard or put it under the mattress.”
The reality is: if you have to pay taxes, if you’re a business owner, if you make trade and commerce with other companies, you’re going to have to have money in the bank. These are the times in which we live. Perhaps in great grandma or great-great grandma’s time, they could hoard money under the mattress or they could bury it in a coffee can out in the backyard where granddad wouldn’t find it. Personally, I don’t think that we live in that age anymore, but you have to do what you feel is best for yourself and your family.
An article caught my attention on Yahoo by way of Fortune:
–https://www.yahoo.com/lifestyle/already-past-point-no-return-171434984.html
Reading this, especially in light of that Frontline documentary I recorded the podcast episode about yesterday, really drove it home to me: the finances you save could be your own. Hiding in the dark and staying ignorant would probably not be the best strategy right now. If you look at this headline, they’re still using equivocal language: “probably headed for a recession.” 😣
Let’s be real: in my opinion, I think we’re already in a recession. What comes next? I dunno. Does it look like the 1982 recession? Does it look like the 2008 global financial crisis? Does it look like the 1930s era Great Depression? That’s not a question that I have the answer to. My concern is that if you have not already roughed out an RTO survival plan, if you have not already roughed out a job loss survival plan, if you freelance or you own & operate your own business and you haven’t developed a Plan B, C, D, E, F of how you’re going to make money during this downturn, you might have waited too late. By the time that people start FTFO, I think you’ve waited too late. You don’t want to be in a horde of panicky people losing their minds.
“It adds up to an impossible choice the Federal Reserve has to make when officials meet on Wednesday: Slow down the pace of interest rate hikes or plow ahead to bring down resurgent inflation and risk amplifying damage to the economy. But as far as the Fed is concerned, hopes of engineering a soft landing for the economy and avoiding a recession may already be in the rearview mirror.
‘The Fed is facing a difficult task on Wednesday, but it is likely already past the point of no return,’ JPMorgan strategists led by Marko Kolanovic, the bank’s chief global markets strategist, wrote in a note to clients Monday. ‘A soft landing now looks unlikely, with the airplane in a tailspin (lack of market confidence) and engines about to turn off (bank lending).'” -Yahoo, Ibid.
So this is what the clients are being told privately, which is worth noting. What the fat cats say in public to the unwashed masses like us – no. What they say to the “important people” – yes.
They’re telling the clients: we’re already likely past the point of no return. A soft landing now looks unlikely with the airplane in a tailspin – lack of market confidence – and engines about to turn off – banks not lending money. I feel like this is important information that we should pay attention to. If, historically, every time that there’s been a lack of market confidence and the economic engines have turned off, i.e., the banks quit lending and everything grinds to a halt, we’ve had one hell of a recession or an economic depression, what does that tell you?
It tells me that we’re in for a 💩storm.
“As a consequence of its COVID crisis asset purchase program and the subsequent increases in interest rates needed to fight inflation, the Fed is now losing billions of dollars a week. The Fed’s most recent H.4.1 statement shows that the Fed has borrowed $41 billion to pay its cash losses, but these borrowings do not count as U.S. Treasury debt and are not counted against the congressional Treasury debt ceiling limit.
In the past week, the Fed’s financial statement shows it borrowed an additional $143 billion to fund the FDIC’s bailout of Silicon Valley Bank (SVB) and Signature Bank, even though the FDIC is supposed to fund bank bailouts using the deposit insurance fund and, if need be, by borrowing from the U.S. Treasury. Instead, the Fed borrowed these funds and lent them to the FDIC to keep these bank failures from reducing the Treasury’s cash balances. You may recall that the Treasury is already precluded from any additional borrowing under the current congressional debt limit.
The Fed is now losing billions of dollars each month. The losses are a consequence of the Fed’s huge investment portfolio that yields around 2 percent but costs about 4.6 percent to finance. Measured using generally accepted accounting principles, the Fed is now approximately bankrupt. As operating losses mount in the months and years to come, its cumulative operating losses and the Fed’s GAAP equity capital deficit will grow.” –https://thehill.com/opinion/finance/3908515-the-fed-circumvented-the-debt-ceiling-to-borrow-billions-for-failed-banks/ emphasis mine
Wow. The Fed is borrowing $ off the books to avoid the debt ceiling and they are approximately bankrupt. What could possibly go wrong there?!
“As of year-end 2022, The deposit insurance fund had assets of a little over $128 billion invested in government securities. The Fed’s $143 billion loan to the FDIC indicates that the actual cash needs of the SVB and Signature Bank failures would have more than exhausted the FDIC’s deposit insurance fund. Beginning a potential banking crisis with a fully depleted insurance fund would not have instilled confidence in the administration’s claim that the banking system is ‘sound.’” -The Hill, Ibid. emphasis mine
Well yes. Bien sûr. If people truly knew and understood this information, of course they wouldn’t assume the system is sound.
This is the kind of thing you watch in real time and you know that a decade from now, you’re gonna see a commentator talking about how foolish and risky all of this was. You can see the history being written and the future criticisms coming from a mile away.
I feel like there is a window of time – and I don’t know what that window of time looks like. That’s one of the reasons why I don’t use clickbait titles like we see on YouTube because I don’t know. Plus that window will be different for each person. Someone with $1mil in the bank who’s trying to figure out what to do for wealth protection is in a different set of circumstances than someone who’s living paycheck-to-paycheck making decisions about, “Do we buy the ramen noodles this week or do we buy mac & cheese?”
If you haven’t thought about what you would do if the system goes pear-shaped in the near future, when are you planning to do that? Once it’s too late and people are in panic mode? In the event that this downturn makes ’08/’09 look like a cakewalk, what will you do?
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