Shocking Proof? Crisis Imminent?

by David EngstromDecember 01, 2015

How soon we forget.  Crises come and crises go and as each passes we settle into the belief that it will not happen again.  The last crisis, under the strain of $10 trillion dollars of debt, struck main street without warning and nearly collapsed the financial structure of the entire world.  

Insiders, however, knew full well the devastation that was about to befall the world.  How else would they have been able to convince, then Secretary of Treasury, Hank Paulson, to write a $700 billion dollar check, out of the taxpayer’s account, to bail out big banks, big businesses and insurance companies?  It has been widely reported that this was done with just hours to spare.  Insiders knew!

Now our debt approaches $19 trillion dollars and once again, main street has fallen into a stupor state incapable of comprehending another financial crisis.  $19 trillion of debt is now considered the new normal.  Totally ignored is the fact that our real debt is closer to a not-so-normal $166 trillion.  Throw in a few hundred trillion of derivative debt, held by our largest financial institutions and the reality is so incomprehensible it has become deniable.

Until this . . .

In a recent Presidential debate, candidates were asked the point blank question.  In the event of another financial crisis, like the one in 2008, would you bail out the banks? 

Some candidates said “no.”  Others danced around the topic and said they would put policies in place to prevent another crisis and at least one candidate said kinda yes but by saying kinda yes he really meant kinda no.  Then a defining moment.  One of the moderators, in response to a candidate’s answer of “no” reiterated . . .

Sir, I understand that. I just want to be clear, if you don’t mind, that millions of depositors would be on the line with that decision. And I just want to be clear. If it were to happen again, for whatever the reason, you would let it go, you would let a Bank of America go?  

At this point the political jargon, offered in response, became irrelevant when the moderator identified who would be on the hook to bail out the bank if it were not bailed out by government.  DEPOSITORS!   

News Flash!  When asked the question about whether or not government should bail out the banks again, no one, neither Democrat nor Republican, answered by saying, “What are you talking about?  The economy is recovering.  The markets are back near record highs. There is no evidence another crisis is coming.”

Here are the harsh realities:

  • If government bails out the banks again – taxpayers all pay the price. 
  • If government does not – DEPOSITORS pay the price.
  • The entire line of questioning and the answers thereto all but PROVE – THERE WILL BE ANOTHER CRISIS!

As I listened with earnest, it occurred to me, why would anyone want their money in the bank at all?  At least not all of it.  It seems to me we are being told, it may be the worst place to have your money.  One candidate, in an attempt to set the masses at ease, said . . .

I would figure out how to separate those people who can afford it versus those people, or the hard-working folks who put those money in those institutions…

At this point he got booed.  How comforting would that be to let some government or banking official decide whether or not you need your own money.

In his 2014 Letter to Shareholders, JPMorgan CEO, Jamie Dimon told shareholders, “There will be another crisis.”  Whether or not you believe there will be another crisis is for you to decide.  But, the facts paint a very dire picture of our debt and the health of our savings and retirement accounts.

Some say the very notion of FDIC Insurance is a myth.  About $50 billion of reserves is insuring more than $13 trillion in assets.  The problem is $13 trillion does not come close to quantifying the total of assets at risk.  A 2013 infograph illustrates how measly FDIC Insurance coverage is as it relates to the derivative exposure of our banks.

“Derivatives are wild financial bets made by banks [in] order to speculate or hedge risk, ranging from stocks, bonds all the way to weather.  In essence a casino style bet.”  In 2013 it was estimated the top 25 holding companies in the U.S. held $297 trillion worth of derivatives.

To believe $50 billion in reserve insurance funds can cover this amount of financial exposure is to believe one grain of sand can build a sand castle.

When you pay attention, there are very few who believe there will not be another financial crisis.  Post crisis 2008, the media warned us for two years that all the Fed was doing was kicking the can down the road.  Warnings in the alternative media are now coming from a countless number of insiders to include former budget officials, Fed Presidents and even the Maestro himself.  CEOs of huge banks are declaring the onset of another crisis and billionaires are bailing on the dollar. 

Karl Icahn, David Einhorn and Stan Druckenmiller are among those billionaires who have begun to bail on the dollar and buy gold.  And guess what, some of our largest banks are now building huge stockpiles of both gold and silver.  JP Morgan has taken delivery of more than 2000 tonnes of physical silver.  HSBC has stockpiled more than 5.9 tonnes of gold and Goldman Sachs, once a well-known critic of gold has just taken delivery of 7.77 tonnes of physical gold from Comex inventories. 

They all see something coming and they are all preparing.  How are big banks and billionaires preparing for another financial crisis?  There are two strategies.  Strategy one is to build huge stockpiles of physical gold and silver.   They have learned the lesson of crises past.  You don’t have to be a genius to see what happens to the gold and silver price in the event of another financial crisis.  The crash of 2001 saw stocks crater in August 2002.  By that time, Gold had already moved 17% higher off its May 2001 low.  By May 2006, gold had risen 180%. 

The crash of 2008 saw stocks bottom in March 2009, sending gold to a record nominal high above $1900 an ounce by September 2011.   The silver moves were even more dramatic.  This is what big banks and billionaires are set to take advantage of right now. 

Strategy two is to legally ready the banks for another banking crisis.  Every major bank in the world has adopted a bail-in strategy in order to survive the next crisis.  A bail-in is simply an adjustment to bankruptcy law which now allows banks to legally take depositor money to fund its own bailout.  For more information on this, see the link below.

If you are among those who believe there will not be another debt crisis; that somehow it will never matter how much debt we pile on to our existing debt, then ignore everything you just read.  It you think otherwise, consider these truisms.

The consequence of either a bailout or bail-in is lost wealth.  A bailout wipes out dollar value by way of printing money and devaluing the currency being printed.  A bail-in wipes out dollars in hand.  Either way, your savings and retirement takes a hit.  This is why banks and billionaires are making moves now to back their own wealth with gold and silver.

If you believe what you just read is proof another crisis is imminent, then you have to believe in either another bailout or a bail-in.  In so doing you also have to believe the time to prepare is now.      



FDIC Infograph


Bail-In Report


An Underfunded FDIC


FDIC Status Report


Republican Debate Transcript


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