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Systemic "Holidays" Are Coming to Banks, Money Market Accounts and More in the Weeks Ahead
This morning both the NYSE broke (canceling all open orders) and China outlawed selling stocks for large investors.
These two items seem completely unrelated… however, the reality is they are both based on a them we outlined back in May 2015.
That theme is as follows: that as the next Crisis unfolds, it will more and more difficult to get your money out of the financial system.
The reason for this concerns the actual structure of the financial system. As we’ve outlined previously, that structure is as follows:
1) The total currency (actual cash in the form of bills and coins) in the US financial system is a little over $1.36 trillion.
2) When you include digital money sitting in short-term accounts and long-term accounts then you’re talking about roughly $10 trillion in “money” in the financial system.
3) In contrast, the money in the US stock market (equity shares in publicly traded companies) is over $20 trillion in size.
4) The US bond market (money that has been lent to corporations, municipal Governments, State Governments, and the Federal Government) is almost twice this at $38 trillion.
5) Total Credit Market Instruments (mortgages, collateralized debt obligations, junk bonds, commercial paper and other digitally-based “money” that is based on debt) is even larger $58.7 trillion.
6) Unregulated over the counter derivatives traded between the big banks and corporations is north of $220 trillion.
When looking over these data points, the first thing that jumps out at the viewer is that the vast bulk of “money” in the system is in the form of digital loans or credit (non-physical debt).
Put another way, actual physical money or cash (as in bills or coins you can hold in your hand) comprises less than 1% of the “money” in the financial system. Suffice to say, one of the biggest concerns for the Federal Reserve is what would happen if a significant percentage of investors decided to move into physical cash.
Indeed, this is precisely what happened in 2008 when depositors attempted to pull $500 billion out of money market funds.
A money market fund takes investors’ cash and plunks it into short-term highly liquid debt and credit securities. These funds are meant to offer investors a return on their cash, while being extremely liquid (meaning investors can pull their money at any time).
This works great in theory… but when $500 billion in money was being pulled (roughly 24% of the entire market) in the span of four weeks, the truth of the financial system was quickly laid bare: that digital money is not in fact safe.
To use a metaphor, when the money market fund and commercial paper markets collapsed, the oil that kept the financial system working dried up. Almost immediately, the gears of the system began to grind to a halt.
When all of this happened, the global Central Banks realized that their worst nightmare could in fact become a reality: that if a significant percentage of investors/ depositors ever tried to convert their “wealth” into cash (particularly physical cash) the whole system would implode.
As a result of this, the Fed and the regulators are looking to implement moves that would make it much harder to move money OUT of the markets and into cash.
Consider the following… the SEC has actually implemented regulations to stop withdrawals from happening should another crisis occur.
The regulation is called Rules Provide Structural and Operational Reform to Address Run Risks in Money Market Funds. It sounds relatively innocuous until you get to the below quote:
Redemption Gates – Under the rules, if a money market fund’s level of weekly liquid assets falls below 30 percent, a money market fund’s board could in its discretion temporarily suspend redemptions (gate). To impose a gate, the board of directors would find that imposing a gate is in the money market fund’s best interests. A money market fund that imposes a gate would be required to lift that gate within 10 business days, although the board of directors could determine to lift the gate earlier. Money market funds would not be able to impose a gate for more than 10 business days in any 90-day period…
Also see…
Government Money Market Funds – Government money market funds would not be subject to the new fees and gates provisions. However, under the proposed rules, these funds could voluntarily opt into them, if previously disclosed to investors.
http://www.sec.gov/News/PressRelease/Detail/PressRelease/1370542347
In simple terms, if the system is ever under duress again, Money market funds can lock in capital (meaning you can’t get your money out) for up to 10 days. If the financial system was healthy and stable, there is no reason the regulators would be implementing this kind of reform.
This is just the start of a much larger strategy of declaring War on Cash. Make no mistake, it is a full scale war that will involve regular tactics such as “breaking” the market so you cannot sell stocks… all the way up to the nuclear option: OUTLAWING physical cash altogether.
Indeed, we've uncovered a secret document outlining how the Fed plans to incinerate savings to force investors away from cash and into riskier assets.
We detail this paper and outline three investment strategies you can implement
right now to protect your capital from the Fed's sinister plan in our Special Report
Survive the Fed's War on Cash.
We are making 1,000 copies available for FREE the general public.
To pick up yours, swing by….
http://www.phoenixcapitalmarketing.com/cash.html
Best Regards
Phoenix Capital Research
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And on a final note... Fuck you to the Federal Reserve and the Federal Government...
Came across this in my random web surfing this evening.
http://www.freemansperspective.com/money-issues-in-the-us/
Great article.
Essentially, in 100 years, we have gone from saving our bounty (half of our production) in order to take care of ourselves, to turning all our savings over to .gov so they can make our lives "better".
And the beast we have created will only want more.
Cash will be king (Benjamins in the mattress cash) when the digital system locks up. Cyprus and Greece have shown it to be true.
How do you stuff Benji's in Select Comfort?!??!?!?
Last month my credit union talked me into switching my funds from a regular savings account to a money market account. They told me I could make withdrawls at any time 'just like a savings account'. It did seem strange that they were trying to 'help me' get a slightly better interest rate. Why? Nothing in it for them - right? NOW I see the light! First thing tomorrow, I'm switching the money market back to a savings account. If they give me any sh*t, all the money is coming out!
Had to read in order to do the opposite..Phoenix Capital..who are their clients?
Real question: How the hell do you know that what you see as stock market trades are even real? All you see is a monitor and data that comes from a computer program.
This is how the next down turn will be "softened" and no one will be the wiser.
'
"Indeed, we've uncovered a secret document outlining how the Fed plans to incinerate savings to force investors away from cash and into riskier assets."
Now that is one statement that has piqued my interest. Anyone have any more insight on this?
Yea, it's call "asset forfieture". The cops see you have a lot of money in your car or in your safe at home and they have a financial incentive to take it. YOU are not guilty but your money is guilty.Look it up, happens all the time these days...in America.
There really is no such thing as a coincidence in the stock market.
The 10 day rule is designed to allow BWANKERS and regulators time to implement "emergency" rules to hold the gates closed for longer than the 10 in 90 rule. Mark my words, if it gets to bail-in time, these 10 day rules will evaporate so fast the Venusians will feel the wind of it. Anybody with more than a few months operating expensies in these institutions is barking mad.
;-D
retail banks can act on their own discretion when it comes to cash withdrawals. other than that depositors should be free to do what they want, if you want to order gold, or bitcoin. i dont think the banks fear the old fashioned bank run like they used to, there are so many liquid alternatives.the fed recently set up the reverse repo to protect MM accounts. they are much better prepared than they were in 2008. that doesnt mean there wont be asset value shifts, either up or down, who can say.
Fractional Reserve systems mean that they reserve the right to use your money, on their timetable for their needs, not yours.
1.36 trillion total cash. are you saying that if 100MM americans each ask for $1400 in cash from the banks next monday, the entire cash will be gone??? I better run and get my 1400 first
I’ve withdrawn money in the past few weeks and was told “we are out of 100’s and 50’s, will you take 20’s?”
Fellow ZH’ers told me that banks don’t like the large bills and this is normal.
Please, I'll take all 1000 copies and pass them out in my town of 7000.
Pheonix has yet to understand, or tell all (some) of what is going on in China.
1. China is still a communist political system and that includes the central bank (PBOC: People's Bank of China)
2. China has experienced large capital out flows leaving the country and is stopping the outflow as to the executives that has public stock.
3. PBOC is taking in mass quanities of stock from insolvent levered accounts.
So what is the result.. More communist control and the intake of gold and silver holdings that the levered accounts may have had within reach. this has caused the down push of gold and silver due to those that are seeking to go fiat cash (currency betting) or bonds and 'escape' with their profits.
In the end, China dumps US obligations and gets stocks in companies that it can conttrol by being 'with in' and with legislation. Pertty savy I think, as the US Bonds, T-Bills and Dollars will quickly flow to the US, causing a mess that will be local for the most part (NYC and Miami for a large part).
That theme is as follows: that as the next Crisis unfolds, it will more and more difficult to get your money out of the financial system.
That's what MyRa is for lulz.
The following information is only available to the first 1000 readers;
OK, let's say the buck gets broken. Will an ounce of silver weigh less than 31.1 grams? Gold?
And to think that both qualify for IRA investments?
"And to think that both qualify for IRA investments?"
"... if they can keep it."
https://www.youtube.com/watch?v=50_iRIcxsz0
Uh, Du, hell yes.. You forgot to put the "troy" in front of ounce, so that get you only 25.4 grams and that is quite a loss (-18.33%). A text book scam that the 'crooked hock shops' use every day.
Abet minted coin is consitutional, you have to be trading with another savy customer to get a good deal, as that fiat paper is going to be universal the second it is presented to even the most ignorant person. It is in hyperinflation that bullion and 'real' coin have their value, but again only with the savy.
Traditional IRA all in money market right now. Cash out and pay the penalties? Then what? Seems like any asset these days is risky.
If your house is paid for, let it ride.
If you don’t have a paid off house. Where will you be brining the hungry babes for their bread and water shows?
I like the way you think. Hungry babes will be so weary of sleeping in trucks, vans and tents. Anyone with an actual roof and walls be a rock star... if they can keep it.
Where in the queue do you prefer? 1st or last to cash out?
TO MR. PHOENIX CAPITAL:
Could you please stop dropping context? Specifically - one minute you're talking about digital money, the next you're talking about physical cash... then you start talking about liquidity and people making withdrawals from money market funds!
Could you please be clear at EACH AND EVERY STEP OF THE WAY about what you mean... you may know what you're talking about, and it may be true, but I haven't a clue what your reasoning is because you keep dropping the context of what you are writing!
It looks interesting, but my head's not filled with apple sauce and I can't follow you... my thought processes are generally more precise than that.
Please help me here...
PS: if I didn't think you might have something important to say, I wouldn't pay any attention to you.
I can't resist.
http://www.youtube.com/watch?v=vAN_4wgm9t8
Yeah... I remember my dad complaining about having to horse around with Wilbur and the producer during the filming of that thing. But the family make some hay off of it, so he couldn't complain too much!
It's what eventually got me interested in finance, btw.
dupe
Bitcoin user NOT affected.
OR BitGold???
When computers go down on a widespread basis, digital money will loose alot of t's value.
Yeah but what about Bitgold?
Indeed, its value will be 'loosed' to government agents...