Day Before the Meltdown

By Mike Johnson

Posts written during stressful current events rarely age well. But sometimes, they need to be written anyway, just to clarify thought.

Silvergate Capital and Silicon Valley Bank (SVB) had bank runs and collapsed on Friday. Now many other bank runs are underway across America and Europe.

Silvergate held lots of deposits for cryptocurrencies. SVB was the the 16th largest bank in the USA and the main bank for the Silicone Valley technology sector. It also attracted many celebrity deposits. Oprah is rumored to have $600 million on deposit there. Prince Harry & Megan had millions there. TV streaming company Roku had 25% of its cash parked there. Once word got out hinting trouble, both banks experienced bank runs that wiped them out. The FDIC took over on Friday.

Now all the people who lost their money at Silvergate and SVB canít pay others they owe. So other banks and other companies will now go under. Employees will not be paid and jobs will be lost. Goods and services provided by those failed companies will disappear from the marketplace.

This cascade of defaults is called counter-party risk. On Friday, the bad news and lost confidence whacked bank stocks by about 5% overall but some banks lost 20% to 50%. When markets reopen on Monday, carnage is expected. More banks are expected to go under.

SVB also had $25 TRILLION in derivatives. Silvergate had $5 TRILLION in derivatives. These are off-the books bets against certain bad financial results. The bets are ďinsuredĒ by paying other companies a fee to guarantee pay-out if the unlikely financial results occur.

No one knows the extent of these bets or who has lost the bets or who cannot pay-off the bets. So defaults and collapses are now dominoing through the entire financial system in unknown directions. No one can predict who will go under next. No one can guarantee that any money, deposited anywhere, is safe.

This includes cryptocurrency because Silvergate just failed. In addition, Circle lost access to $3.3 billion at SVB. Their stable coin, USDC, is a crypotocurrency that's supposed to have a minimum base value of $1 at all times. It's now valued at 92 cents. So confidence is shattered in all cryptocurrencies too.

So right now, anyone paying attention, has no confidence in banks. In Cryptocurrency. In stocks. In bonds. In retirement accounts. In money managers.

Because digits and paper money have no value in themselves, the smart money has long ago been converting digits and dollars into real physical goods, held in their personal possession. These people saw this weekend coming years ago.

Those whose entire wealth is stored in digits and dollars are going to get a massive haircut or be wiped out entirely. Today, it is obviously better to have cash in hand than in some bank. But the cash itself only has value in what it can buy. With REAL inflation of 17% ( the purchase power of everyoneís dollars are melting far greater than their investments or pay raises are growing. So everyone was already getting poorer before this crisis arrived.

The US Treasury Secretary announced today that SVB would NOT be bailed out by the US government. She said NO bank bailouts to banks would be given. This stokes the fear and loss of confidence.

It also signals that the global cabal WANTS the collapse to occur. After all, they CREATED it on purpose by all their actions in the years leading to today. They want us all in such pain that we beg them to launch their no-cash, 100% digital currency system that eliminates all freedom from mankind forever.

The FDIC insures deposits up to $250,000. That covers most people. Unfortunately, the FDIC only has enough cash on hand to cover 1% of all US deposits. So this is an empty promise.

The US government must now decide whether to take any emergency actions that erase fear and restore confidence in the financial system.

Can they pull something big out of their butt? Perhaps. Good luck with that. Even if they stop this bank run, once burned or frightened, people never forget.

I imagine everyone who is aware of this cascade of default will be making cash withdrawals as fast and as large as possible. This will amplify the cascade of losses. And there is nowhere near enough cash printed to supply the demands of a nationwide bank run.

Thanks to the cold, cruel slap of experience, more people now realize that if they canít touch it, they donít own it.

More enlightening than that, they now also know that they can no longer blindly trust any authority, about any topic, in any industry, in any location.

Itís just sad it took losing all their money to get to this more enlightened perspective.

So is this The Big One? Time will tell. But it's certainly a big warning.

Remember that crazy uncle with all the conspiracy theories? You better start listening. He's been right about everything all along.

But things are far worse than even he can imagine.

Many more shocking revelations and events are coming.


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