In the last 24 months, Canada, Cyprus, New Zealand, the US, the UK, and now Germany have all implemented legislation that would allow them to first FREEZE and then SEIZE bank assets during the next crisis.
Most large financial entities are insolvent. As a result, if a significant amount of digital money is converted into actual physical cash, the firm would very quickly implode.
Perhaps the most concerning is the fact that should a “systemically important” financial entity go bust, any deposits above $250,000 located therein could be converted to equity… at which point if the company’s shares, your wealth evaporates.
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. This is just the start of a much larger strategy by the Fed to declare War on Cash.
Will Greece default or is this a bluff? The larger implication is that Greece may be the straw that breaks the proverbial camel’s back: a Greek default or breakup from the Euro would, trigger considerable US Dollar strength.
Put simply: the market is quickly running out of props. Eventually we’re going to get a correction. But with so little buying power in the markets that could correction would very easily become a Crash.
You’re talking about a joint economy of $16 trillion in which 30%-56% of the population is employed b the Government and the Government is shredding democracy and the legal system. The cultural reactions will have financial repercussions for years to come.
This is jut one small part of the massive $9 trillion in US Dollars that has been borrowed and invested elsewhere. To put this number into perspective, it’s larger than the economies of Germany and Japan combined.
As far as the Central Banks are concerned, this is a good thing because if investors/depositors were ever to try and convert even a small portion of this “wealth” into actual physical bills, the system would implode (there simply is not enough actual cash).
The Greek mess has lit a fire under Gold again, which appears to have bottomed in both the Euro (blue) and the Japanese Yen (red). The one exception is Gold priced in US Dollars mainly because the US Dollar has been so strong for much of the last 9 months.
