What lies beneath the surface in the United States banking system could become the beginning of the end for banks as we know them.
Imagine a day where you can’t pull money out in cash.
Imagine the President by executive order “forbidding the hoarding of cash.”.
Imagine, a stock market decline so severe that it will be unrecoverable for retirement investors.
If you think this is crazy, think about this…
Back in 1929 it was real. The banks closed, cash was limited and the Government confiscated the gold.
What is different today is that the 401k savings is the target of Government tax revenue. Could the Government confiscate your 401k?
If they can confiscate your healthcare, I don’t think there is any question they can confiscate a Government sponsored retirement savings plan.
The real integrity of the banking system and the bankers will shortly unveil itself.
What Lies Beneath The Banks
For several years we have been wondering why the “Fed” did not raise interest rates above zero. In December 2015, seven years after the financial crisis they made their first move from zero. The real integrity of the banking system is why they waited so long.
Two weeks ago The Fed started stress testing 33 banks to see how they would perform under a negative interest rates scenario and severe global recession.
What are negative interest rates?
Quite simply, you pay the banks to hold your money.
Instead of interest being paid on your money, you pay the banks interest. It sounds unbelievable, but it’s happening now in banks around the world. It’s indicative of how fragile the global financial system is right now.
And now you know why the Government may be preparing for a run on cash. Nobody wants to leave money with an institution that is going to charge them interest.
Oil – Flashpoint Of The Crisis
When you look deeper and start to question the real integrity of the banking system you have to ask questions like…
How exposed are the banks to a spiraling oil industry? Most oil companies in the Baakan fields doing fracking were highly leveraged with loans. How far does this go?
What about the major oil companies? What about their subcontractors? How leveraged are all these companies and to what extent will it hurt the banks?
If you look outside of the United States, the OPEC countries are in liquidation. These countries are used to living with $100 a barrel oil. At $40 a barrel estimates are that the foreign reserve of even the wealthiest countries can last about 5 years.
And then there is the question about the connection to the U.S. banking system. How many of these countries have loans connected to companies like Citibank, Bank Of America, J.P. Morgan Chase?
What is the exposure? What happens if Americans start pulling money out of the banks? Is it a death spiral for the banking system?
China – What We Don’t Know
China just experienced the greatest stock market crash in the history of that country. It’s so bad, the Government has been buying shares of stock to provide liquidity, and put controls on the sale of stock. Massive fraud and losses have occurred.
Because China is a communist country, we don’t really know the extent of the damage. Nor, do we know the full connection to the U.S. Banking system. Time will tell, but there are certainly stresses going on right now. China is just another crushing boulder piling on top of the banks.
Screeching To A Halt
The U.S. economy is slowing. According to Bloomberg News, just five weeks into 2016, seven of the 21 strategists they track have lowered their projections for the Standard & Poors 500 index.
Another sign of a slowing economy is what is happening in trucking, rail and air freight companies. This sector has seen a 30 percent decline in shipments since it peaked May of 2014. All of this portrays a different picture than what Government officials are telling us.
Oh, and one more thing…that darn Government debt crisis.
It’s been time to think differently about money and retirement in America for a long time.