On The Verge Of Systemic Breakdown?

I think we are fairly close to a systemic breakdown and if that occurs, the price changes in all asset classes are going to be extreme. Gold and silver bullion and their respective equities are arguably the cheapest assets on the planet today and remain historic safe havens even if most of the morons in our society fail to realize that fact at the present time. I have always found that buying undervalued, under-owned and, most assuredly, under-loved quality assets to have been a sound strategy. The fact that we are at historic extremes in everything today just reinforces that opinion. I may be underestimating the opposition but I think they are in deep trouble. I would much rather be playing our hand rather than theirs at this moment.  – an email to me from John Embry

Since the de facto collapse of the U.S. financial system in 2008 – accompanied by the Taxpayer bailout of the Too Big To Fail Banks – the Federal Reserve and the U.S. Government have been throwing trillions at the system in order to keep the system from collapsing again.

Please note:  the underlying system problems have never been addressed.  Rather, they’ve been medicated with $3.6 trillion in money printing and a $7.5 trillion increase (70%) in Treasury debt since then of 2008.

The markets are beginning to show the stress from 6 years of Fed and Government intervention (Govt = the Treasury’s Working Group On Financial Markets).   The central planners have created a catastrophic degree of moral hazard by removing all downside risk from the paper asset markets.  This in turn has created the biggest stock and bond market bubbles in the history of the known universe.

But yesterday Zerohedge published an article which shed some light on just how dangerous the stock and bond markets have become.   The article revealed that several of the largest fund management companies have lined up bank credit lines as an attempted means of creating the liquidity that will be needed when the inevitable investor exit from these catastrophically rigged markets commences:

Vanguard, the second-largest U.S. ETF provider, lined up its first committed bank line of credit last year and now has a $2.89 billion facility backed by multiple banks and accessible to all of Vanguard’s funds, covering some $3 trillion in assets, the Pennsylvania-based fund company told Reuters.  Zerohedge link

Of course, I laughed out loud when saw that Vanguard was planning on using $2.8 billion to support the potential selling that will occur across $3 trillion in insanely  overvalued assets.  The selling will take prices down in very large “step function” fashion – the $2.8 billion safety net will be like bringing a bottle of Elmer’s glue to fix a huge break in the Hoover Dam.

The investing public has been entrusting their retirement money to the bankers and fund managers who have all willingly participated in the greatest financial Ponzi scheme in the history of the world.  Enron and Madoff were mere sideshow distractions to the real theft of wealth going on right under our collective noses.

Make no mistake about it, we are indeed “fairly close to systemic breakdown” and this is the reason the Government/Pentagon has been tightening down its regimen and training for the control of mass civil unrest when the collapse occurs – LINK.

Anyone who has the ability to get their money out of any retirement fund custodial structures should proceed immediately.   The frenetic volatility of all the markets and the open blatantness with which the central planners are trying to hold up the markets indicates to people like John Embry and myself that we are drawing closer to a collapse.

I can guarantee you that the paltry billion dollar credit lines being arranged by the biggest fund management companies will be completely flattened by the steamroller coming down the Street at your money.

6 thoughts on “On The Verge Of Systemic Breakdown?

  1. “fairly close to systemic breakdown”.

    Agreed. The question being? Will this “breakdown” be a catastrophic “Mad Max” scenario? Or will the masses quietly accept the new paradigm? Somehow I foresee an upcoming Summer, that will truly be “The Summer of Our Discontent”.

  2. This is the kind of article that I as an awakend sheeple needs to read in order to look through the fog of daily financial news. Not that I as a common guy located in Deutschland (Merkel Land) understand all of what Dave is writing about (especially the recent article http://investmentresearchdynamics.com/is-the-global-financial-system-on-the-brink-of-collapse/ explaining “reverse repo” was hard to comprehend for me, but overall, Dave helps me to understand that something “big” is coming down the pipe, some kind of game changer in the financial world that will probably change the life of many, especially western spoiled people.

  3. Indeed. It almost seems comical that they would use a bank line of credit as a backstop. I’m too tired and jaded to think of a funny visual analogy.

  4. Yikes. Shit your pants scary indeed. I’ve got my physical silver, I just hope my cash in the bank and brokerage accounts survives.

    I still think the system survives this crash, it will just be “2008 on steroids”. I’m making money trading gold and natural gas, but I’m just fed up of the “buy the dip” blowhards who think the equity market is invincible. I hope those clowns get wiped out.

  5. Lake Mead is at historical lows due to the drought but still love the Elmers glue analogy!

    A whole lot of paper and promises are close to defaulting, no doubt. It will be very interesting to see which asset classes in which jurisdictions maintain value and liquidity. With that, there are going to be some real bargains out there……For those with the fortitude to move quickly while the streets are still red.

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