Servias Ministries Blog

This is not your parents’ era where there were no worries about the money in the bank being at risk.  It is important to understand what is being contemplated to save those “too big to fail” banks.  Don’t think that local banks are isolated.  When I was in banking, I studied and analyzed the operations of the “Cash Desk” where Fed Funds (excess bank cash on hand) were traded on a daily basis.  I would buy $10 million from a community bank, packaged it up with other community bank Fed Funds purchases and sale up to $250 million of Fed Funds overnight to a NY money center banks such as Chase Bank.  The next morning the funds would be returned to us, then the community banks.  Then the process would start all over.  On Friday we would sell for 3 days to cover the weekend.  What would happen if a Black Swan event happened on Friday night?  On Monday, all the downstream banks would be out of cash.  Oops!

Resolving Globally Active, Systemically Important, Financial Institutions
A joint paper by the Federal Deposit Insurance Corporation and the Bank of England
10 December 2012

From the FDIC Paper Executive Summary:

In the U.S., the strategy has been developed in the context of the powers provided by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Such a strategy would apply a single receivership at the top-tier holding company, assign losses to shareholders and unsecured creditors of the holding company, and transfer sound operating subsidiaries to a new solvent entity or entities.

As a depositor, you are an unsecured creditor.  Think about it.  What is your tolerance for risk?

See: http://www.fdic.gov/about/srac/2012/gsifi.pdf

In the big picture, the central planners are still trying to keep the wheels on the wagon as is goes down the mountain of debt and derivatives with huge boulders in the way.  There is no way to navigate past all of the obstacles and safely make it back to normality in the financial markets.  Our parents were given 5 decades of rather reliable economic times in the West.  That reliability is gone.  Greed has been raising its ugly head for the last 30 years and the politicians on both sides of the aisle have accommodated  big business in changing laws to exploit the weak and helpless in all aspects of the current system.  Antitrust legislation has been gutted, financial institutions have removed any barrier that would prevent them from gambling with depositor money, and in the name of technological advancement, the population has been convinced that electronic money is superior to physical money.  Nothing could be further from the truth.

Once you remove the physical characteristics of money, you have complete central control of all money.  The individual becomes servant to the system.  You can no longer make your own decisions without potential intervention.  The value of your stored wealth can be manipulated with one keystroke and there is nothing you can do about it.  What are we to do?

Debasement of currency value can be offset by investing in real value.  Owning a physical asset offsets the attempts to control your stored wealth by electronic keystrokes.  There is likely a Black Swan event coming.  There is no way that central planners can perfectly execute a plan without flaw.  That unforeseen flaw will cause the tide to turn dramatically and when it does the entire financial system will be turned upside down.  All the wheels on the proverbial wagon will come off simultaneously.

The Fed will not reduce Quantitative Easing (aka money printing) before the Christmas season.  Thee is too much to lose.  But after Christmas, they will attempt to slow down the money printing efforts and that will backfire.  Once the market perceives the issue, gold and silver will make a dramatic move upward and other physical assets in demand will do the same.  In the meantime, I am still prepared for gold and silver to be slammed again.  If so, many of us will be buyers.  If silver goes below $20 and the related silver producer stock hit 52 week lows, I hope to have some cash to add to my current positions.  The same for gold going below $1,300.  The precious metals are the enemy of central planners in the West.  They will try to dissuade investment in gold and silver with any means possible.  Their marketing,advertising campaign attempting to slam precious metal investing is no longer working.  Savvy investors are just buying the metals at bargain prices.

John Williams at www.shadowstats.com continues to see the setup for hyper-inflation.  He may sound like a broken record, but he remains firm in his belief that we are nearly at the point of this extreme event.  His latest comments:

Market Instabilities Suggestive of Nearing, Hyperinflation End Game

Monthly Retail Sales Gain Was Statistically Insignificant; Recession Signal Intact

Consumer Liquidity Remains Heavily Impaired

The consumer has no money to bring the economy into recovery, the double-dip recession is at hand, and hyper-inflation is close.  If there is ever a time to focus on hearing Our Heavenly Father’s voice, it is now.  HE has the only answer to the failing, complex environment man has created.  Don’t be a victim to the current system.

“When you don’t know what’s happening in the market, don’t do anything, because anything you do might turn out to be stupid.  If you’re an amateur watching a poker game being played by professional gamblers, just keep watching.  You’ll probably be better off watching the game than joining the game.”